HGT Law Wins Third Circuit Appeal, Establishing Precedential Law Under American Pipe
On June 16, 2021, HGT Law secured victory in an appeal before the U.S. Court of Appeals for the Third Circuit in Aly, et al. v. Valeant Pharmaceuticals Int’l Inc., et al., No. 19-3326, one of the shareholder class action “opt-out” lawsuits currently litigated by HGT Law.
The appeal turned on the application of the rule in American Pipe & Construction Company v. Utah, 414 U.S. 538 (1974), which tolls the statute of limitations for the claims of individual class members when a class action complaint is filed. The issue was whether the rule applied to individual claims that are filed before a class certification decision is made. The District Court held that American Pipe tolling does not apply to individual claims that are filed before a certification decision is made. The Third Circuit disagreed and reversed.
The Third Circuit joined the Second, Ninth and Tenth Circuits, which have held that American Pipe tolls the statute of limitations for individual claims, regardless of whether those claims are filed before or after a certification decision. The Third Circuit explained, “American Pipe makes clear that the filing of a class action is the operative event that tolls the limitations period, and once the period is tolled, it remains tolled for all putative members until they are no longer part of the class.” The Third Circuit concluded that “denying tolling in this context, i.e., where members filed individual claims after the initial limitations period expired but before a certification decision, would serve no compelling purpose.” The Third Circuit explained that, if American Pipe tolling applies only after a class certification decision, class members would be forced to delay their claims indefinitely in order to take advantage of American Pipe. The Third Circuit noted that such a requirement could potentially be “costly” and “certainly inefficient.” Importantly, the Third Circuit explained that, although American Pipe was intended, in part, to avoid duplicative filings, “it is, at its core, an equitable doctrine.” And that equitable doctrine was intended to protect class members from being forced to file individual suits in order to preserve their claims. Lastly, the Third Circuit found that the District Court’s holding “untenable” because it would lead to the anomalous situation where claims filed after class certification would be timely, but those filed before certification would not.
A copy of the Third Circuit’s decision can be found here. A copy of HGT Law’s appeal brief before the Third Circuit can be found here. More information on the Valeant opt-out lawsuits that HGT Law has filed can be found here and here.
For more information about the HGT Law’s opt-out lawsuits practice, please contact us at (646) 453-7288 or via email at info@hgtlaw.com.