It seems fitting during this January thaw that the Supreme
Court focuses on the freezing and thawing of statutes of limitations. This morning, and despite the government shut-down, a divided Supreme Court
significantly extended the limitations periods for state law claims first
brought in federal court and wrecked havoc on document retention policies and witness memories worldwide.
Artis v.
District of Columbia, No. 16-460 (1/22/18). In doing so, it adopted the position taken by
the Sixth Circuit in 2013: when state law
claims (such as whistleblower claims) are brought in a federal question lawsuit
(alleging, for instance, a violation of Title VII), the state statute of
limitations stops running and the clock is frozen until the federal lawsuit is
resolved or dismissed. Then, the clock
thaws and starts running so that the plaintiff can re-file in state court based
on how many days were remaining on the state statute of limitations when she
filed in federal court, or 30 days after dismissal if that period is longer. Accordingly, because Artis still had two years remaining on her state law claims’
statutes of limitations when she filed her federal lawsuit, she had two years
to re-file those claims in state court after her federal lawsuit was
dismissed. The Court was apparently not
concerned with those situations when the lawsuits remain pending for ten or
more years as they work through discovery and appeals. Rather, it focused on the plain meaning of “tolled”
to mean “frozen,” compared it to situations where a federal limitations period
is tolled while the agency exhausts its administrative process, and contrasted it with savings statutes in
other contexts that simply give the plaintiff a certain grace period to re-file
a claim after it has been dismissed without prejudice.
For my non-lawyer readers, in order to bring a lawsuit in
federal court, the underlying claim must be based on a federal statute (i.e.,
raise a federal question) or implicate diversity (i.e., citizens of different
states with an expensive dispute). Once the
federal court has jurisdiction, it may also adjudicate state law claims arising
out of the same underlying event or facts, or, as the busy judges often do,
dismiss the state claims to be re-filed in state court. However, by the time the federal court
dismisses the lawsuit, the state statute of limitations has typically expired,
so a federal statute – 28 U.S.C. § 1367(d) --provides for the tolling of the
limitations period while the lawsuit is pending in federal court and for 30
additional days after the lawsuit has been dismissed (presumably to give the
plaintiff time to consider whether he, she or it wants to try again in state
court). Often, the lawsuit was filed
the day, week or month before the limitations period was about to expire, but
in Artis, the plaintiff filed her
federal Title VII employment discrimination lawsuit two years before her state
law claims (for false claims and whistleblowing) were about to expire. It took the federal court 2.5 years to rule
on her lawsuit and dismiss her state law claims. She then re-filed her state law claims in
state court 59 days later, causing that court to dismiss her claims because she
waited more than 30 days (and creating a malpractice nightmare for the
plaintiff’s attorney). Her
dismissal was affirmed on appeal, but a 5-4 Supreme Court reversed and revived
her claim.
The Court focused on the language of the statute:
“The period of limitations for any [state] claim [joined with
a claim within federal-court competence] shall be tolled while the claim is
pending [in federal court] and for a period of 30 days after it is dismissed
unless State law provides for a longer tolling period.”
Justice Ginsburg posed the question presented by this situation
as:
Does the word “tolled,” as used in §1367(d), mean the state
limitations period is suspended during the pendency of the federal suit; or
does “tolled” mean that, although the state limitations period continues to
run, a plaintiff is accorded a grace period of 30 days to refile in state court
post dismissal of the federal case?
Because “tolling” implies “freezing”, the Court’s majority
concluded that the two years left on her state law claim stopped the “clock”
from running once she filed her lawsuit in federal court, so she had two years after
her case was dismissed to re-file – even if her federal court case had been
pending for ten years or more before it was finally dismissed. (That could easily happen if there were
appeals, etc.).
When the Sixth Circuit addressed this situation in
connection with a case consolidating multi-district class actions in 2013, the Court addressed the
three options before it as follows and adopted the final/suspension approach:
There are three possible interpretations of this statute. See, Turner v. Kight, 406 Md. 167,
957 A.2d
984 (2008); Goodman v. Best
Buy, 755 N.W.2d 354 (Minn. Ct. App. 2008). As set forth in Turner and Goodman, the statute
could arguably be interpreted as "annulling" the state statute of
limitations. In this manner, the state statute of limitations period is
completely replaced " by a fixed period: the thirty-day period after federal
dismissal." This interpretation is known as the "substitution
approach." The second, and related interpretation, is that Section 1367(d)
only tolls the expiration of the statute of limitations,
This interpretation treats that period in the statute— the
federal claim period plus thirty days— as a single span of time. If the state
limitations period runs out during that span, the thirtieth day after dismissal
becomes the new filing deadline. Under these circumstances, the outcome is the
same as under the ‘annul and replace’ interpretations. If, however, the state
limitations period does not run out during that span of time, the state
limitations period is unaffected and terminates without regard to any federal
court filings.
Goodman,
755 N.W.2d at 357. The second interpretation is known as the "extension
approach." The third possible interpretation is that Section 1367(d)
suspends the running of the statute of limitations, i.e., "the clock is
stopped and the time is not counted— while the federal court is considering the
claim and for thirty days after the claim is dismissed." Id. This is referred to
as the "suspension approach."
The Court also rejected the argument that Congress exceeded
its authority by tolling state statutes of limitations while cases are pending
in federal court.
Like me, the dissent preferred the extension - grace period
approach, but no one asked my opinion and they were unable to sway Justice
Roberts.
NOTICE:
This summary is designed merely to inform and alert you of recent legal
developments. It does not constitute legal advice and does not apply to any
particular situation because different facts could lead to different results.
Information here can be changed or amended without notice. Readers should
not act upon this information without legal advice. If you have any questions
about anything you have read, you should consult with or retain an employment
attorney.
