China Agritech, Inc. v. Resh

(Slip Opinion) OCTOBER TERM, 2017 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

CHINA AGRITECH, INC. v. RESH ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

No. 17–432. Argued March 26, 2018—Decided June 11, 2018

American Pipe & Constr. Co. v. Utah, 414 U. S. 538, established that

the timely filing of a class action tolls the applicable statute of limita-

tions for all persons encompassed by the class complaint and that

members of a class that fails to gain certification can timely inter-

vene as individual plaintiffs in the still-pending action, shorn of its

class character. American Pipe’s tolling rule also applies to putative

class members who, after denial of class certification, “prefer to bring

an individual suit rather than intervene.” Crown, Cork & Seal Co. v.

Parker, 462 U. S. 345, 350. The question presented in this case is

whether American Pipe tolling applies not only to individual claims,

but to successive class actions as well.

This suit is the third class action brought on behalf of purchasers of

petitioner China Agritech’s common stock, alleging materially identi-

cal violations of the Securities Exchange Act of 1934. The Act has

both a two-year statute of limitations and a five-year statute of re-

pose, 28 U. S. C. §1658(b). Here, the accrual date for purposes of the

Act’s limitation period is February 3, 2011, and for the repose period,

November 12, 2009. Theodore Dean, a China Agritech shareholder,

filed the first class-action complaint on February 11, 2011. As re-

quired by the Private Securities Litigation Reform Act of 1995

(PSLRA), his counsel posted notice of the action and invited any

member of the purported class to move to serve as lead plaintiff. Six

shareholders sought lead-plaintiff status. On May 3, 2012, the Dis-

trict Court denied class certification; the action settled in September

2012, and the suit was dismissed. On October 4, Dean’s counsel filed

a new complaint (Smyth), still timely, with a new set of plaintiffs.

Eight shareholders sought lead-plaintiff appointment in response to

the PSLRA notice, but the District Court again denied class certifica-

2 CHINA AGRITECH, INC. v. RESH

Syllabus

tion. Thereafter, the Smyth plaintiffs settled their individual claims

and dismissed their suit.

Respondent Michael Resh, who did not seek lead-plaintiff status in

the earlier actions, filed the present class action in 2014, a year and a

half after the statute of limitations expired. The other respondents

moved to intervene in the suit commenced by Resh, seeking lead-

plaintiff status. The District Court dismissed the class complaint as

untimely, holding that the Dean and Smyth actions did not toll the

time to initiate class claims. The Ninth Circuit reversed, holding

that the reasoning of American Pipe extends to successive class

claims.

Held: Upon denial of class certification, a putative class member may

not, in lieu of promptly joining an existing suit or promptly filing an

individual action, commence a class action anew beyond the time al-

lowed by the applicable statute of limitations. Pp. 5–15.

(a) American Pipe and Crown, Cork addressed only putative class

members who wish to sue individually after a class-certification de-

nial. The “efficiency and economy of litigation” that support tolling of

individual claims, American Pipe, 414 U. S., at 553, do not support

maintenance of untimely successive class actions such as the one

brought by Resh. Economy of litigation favors delaying individual

claims until after a class-certification denial. With class claims, on

the other hand, efficiency favors early assertion of competing class

representative claims. If class treatment is appropriate, and all

would-be representatives have come forward, the district court can

select the best plaintiff with knowledge of the full array of potential

class representatives and class counsel. And if the class mechanism

is not a viable option, the decision denying certification will be made

at the outset of the case, litigated once for all would-be class repre-

sentatives.

Federal Rule of Procedure 23 evinces a preference for preclusion of

untimely successive class actions by instructing that class certifica-

tion should be resolved early on. The PSLRA, which governs this lit-

igation, evinces a similar preference, this time embodied in legisla-

tion providing for early notice and lead-plaintiff procedures. There is

little reason to allow plaintiffs who passed up opportunities to partic-

ipate in the first (and second) round of class litigation to enter the

fray several years after class proceedings first commenced.

Class representatives who commence suit after expiration of the

limitation period are unlikely to qualify as diligent in asserting

claims and pursuing relief. See, e.g., McQuiggin v. Perkins, 569 U. S.

383, 391. And respondents’ proposed reading would allow extension

of the statute of limitations time and again; as each class is denied

certification, a new named plaintiff could file a class complaint that

Cite as: 584 U. S. ____ (2018) 3

Syllabus

resuscitates the litigation. Endless tolling of a statute of limitations

is not a result envisioned by American Pipe. Pp. 5–11.

(b) If Resh’s suit meets the requirements of Rule 23(a) and (b), re-

spondents assert, the suit should be permitted to proceed as a class

action in keeping with Shady Grove Orthopedic Associates, P. A. v.

Allstate Ins. Co., 559 U. S. 393. Shady Grove, however, addressed a

case in which a Rule 23 class action could have been maintained ab-

sent a state law proscribing class actions, while Resh’s class action

would be untimely unless saved by American Pipe’s tolling exception.

Rule 23 itself does not address timeliness of claims or tolling and

nothing in the Rule calls for the revival of class claims if individual

claims are tolled.

The clarification of American Pipe’s reach does not run afoul of the

Rules Enabling Act by abridging or modifying a substantive right.

Plaintiffs have no substantive right to bring claims outside the stat-

ute of limitations. Nor is the clarification likely to cause a substan-

tial increase in the number of protective class-action filings. Several

Courts of Appeals have already declined to read American Pipe to

permit a successive class action filed outside the limitations period,

and there is no showing that these Circuits have experienced a dis-

proportionate number of duplicative, protective class-action filings.

Multiple filings, moreover, could aid a district court in determining,

early on, whether class treatment is warranted, and if so, who would

be the best representative. The Federal Rules provide a range of

mechanisms to aid district courts in overseeing complex litigation,

but they offer no reason to permit plaintiffs to exhume failed class ac-

tions by filing new, untimely class claims. Pp. 11–15.

857 F. 3d 994, reversed and remanded.

GINSBURG, J., delivered the opinion of the Court, in which ROBERTS,

C. J., and KENNEDY, THOMAS, BREYER, ALITO, KAGAN, and GORSUCH, JJ.,

joined. SOTOMAYOR, J., filed an opinion concurring in the judgment.

Cite as: 584 U. S. ____ (2018) 1

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Wash-

ington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

_________________

No. 17–432

_________________

CHINA AGRITECH, INC., PETITIONER v.

MICHAEL H. RESH, ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[June 11, 2018]

JUSTICE GINSBURG delivered the opinion of the Court.

This case concerns the tolling rule first stated in Ameri-

can Pipe & Constr. Co. v. Utah, 414 U. S. 538 (1974). The

Court held in American Pipe that the timely filing of a

class action tolls the applicable statute of limitations for

all persons encompassed by the class complaint. Where

class-action status has been denied, the Court further

ruled, members of the failed class could timely intervene

as individual plaintiffs in the still-pending action, shorn of

its class character. See id., at 544, 552–553. Later, in

Crown, Cork & Seal Co. v. Parker, 462 U. S. 345 (1983),

the Court clarified American Pipe’s tolling rule: The rule is

not dependent on intervening in or joining an existing

suit; it applies as well to putative class members who,

after denial of class certification, “prefer to bring an indi-

vidual suit rather than intervene . . . once the economies of

a class action [are] no longer available.” 462 U. S., at 350,

353–354; see California Public Employees’ Retirement

System v. ANZ Securities, Inc., 582 U. S. ___, ___ (2017)

(slip op., at 13) (American Pipe “permitt[ed] a class action

to splinter into individual suits”); Smith v. Bayer Corp.,

2 CHINA AGRITECH, INC. v. RESH

Opinion of the Court

564 U. S. 299, 313–314, n. 10 (2011) (under American Pipe

tolling rule, “a putative member of an uncertified class

may wait until after the court rules on the certification

motion to file an individual claim or move to intervene in

the [existing] suit”).

The question presented in the case now before us: Upon

denial of class certification, may a putative class member,

in lieu of promptly joining an existing suit or promptly

filing an individual action, commence a class action anew

beyond the time allowed by the applicable statute of limi-

tations? Our answer is no. American Pipe tolls the stat-

ute of limitations during the pendency of a putative class

action, allowing unnamed class members to join the action

individually or file individual claims if the class fails. But

American Pipe does not permit the maintenance of a

follow-on class action past expiration of the statute of

limitations.

I

The instant suit is the third class action brought on

behalf of purchasers of petitioner China Agritech’s com-

mon stock, alleging violations of the Securities Exchange

Act of 1934, 48 Stat. 881, as amended, 15 U. S. C. §78a

et seq. In short, the successive complaints each make

materially identical allegations that China Agritech en-

gaged in fraud and misleading business practices, causing

the company’s stock price to plummet when several re-

ports brought the misconduct to light. See App. 60–100

(Resh complaint), 205–235 (Smyth complaint), 133–156

(Dean complaint). The Exchange Act has a two-year

statute of limitations that begins to run upon discovery of

the facts constituting the violation. 28 U. S. C. §1658(b).

The Act also has a five-year statute of repose. Ibid.1 The

——————

1 A statute of limitations “begin[s] to run when the cause of action

accrues—that is, when the plaintiff can file suit and obtain relief.”

California Public Employees’ Retirement System v. ANZ Securities, Inc.,

Cite as: 584 U. S. ____ (2018) 3

Opinion of the Court

parties agree that the accrual date for purposes of the two-

year limitation period is February 3, 2011, and for the

five-year repose period, November 12, 2009. Brief for

Respondents 8, n. 3.

Theodore Dean, a China Agritech shareholder, filed the

first class-action complaint on February 11, 2011, at the

start of the two-year limitation period. As required by the

Private Securities Litigation Reform Act of 1995 (PSLRA),

109 Stat. 737, Dean’s counsel posted notice of the action in

two “widely circulated national business-oriented publica-

tion[s],” 15 U. S. C. §78u–4(a)(3)(A)(i), and invited any

member of the purported class to move to serve as lead

plaintiff. App. 274–280. Six shareholders responded to

the notice, seeking to be named lead plaintiffs; other

shareholders who had filed their own class complaints

dismissed them in view of the Dean action. On May 3,

2012, after several months of discovery and deferral of a

lead-plaintiff ruling, the District Court denied class certi-

fication. The plaintiffs, the District Court determined,

had failed to establish that China Agritech stock traded on

an efficient market—a necessity for proving reliance on a

classwide basis. App. 192. Dean’s counsel then published

a notice informing shareholders of the certification denial

and advising: “You must act yourself to protect your

rights. You may protect your rights by joining in the

current Action as a plaintiff or by filing your own action

against China Agritech.” Id., at 281–282. The Dean

action settled in September 2012, occasioning dismissal of

the suit. See 857 F. 3d 994, 998 (CA9 2017).

On October 4, 2012—within the two-year statute of

limitations—Dean’s counsel filed a new complaint (Smyth)

——————

582 U. S. ___, ___ (2017) (slip op., at 5) (internal quotation marks

omitted). A statute of repose, by contrast, “begin[s] to run on the date

of the last culpable act or omission of the defendant.” Ibid. (internal

quotation marks omitted).

4 CHINA AGRITECH, INC. v. RESH

Opinion of the Court

with a new set of plaintiffs and new efficient-market

evidence. Eight shareholders responded to the PSLRA

notice, seeking lead-plaintiff appointment. The District

Court again denied class certification, this time on typical-

ity and adequacy grounds. See App. 254. Thereafter, the

Smyth plaintiffs settled their individual claims with the

defendants and voluntarily dismissed their suit. Because

the Smyth litigation was timely commenced, putative class

members who promptly initiated individual suits in the

wake of the class-action denial would have encountered no

statute of limitations bar.

Respondent Michael Resh, who had not sought lead-

plaintiff status in either the Dean or Smyth proceedings

and was represented by counsel who had not appeared in

the earlier actions, filed the present suit on June 30, 2014,

styling it a class action—a year and a half after the stat-

ute of limitations expired. The other respondents moved

to intervene, seeking designation as lead plaintiffs; to-

gether with Resh, they filed an amended complaint. The

District Court dismissed the class complaint as untimely,

holding that the Dean and Smyth actions did not toll the

time to initiate class claims. App. to Pet. for Cert. 36a.

The Court of Appeals for the Ninth Circuit reversed:

“[P]ermitting future class action named plaintiffs, who

were unnamed class members in previously uncertified

classes, to avail themselves of American Pipe tolling,” the

court reasoned, “would advance the policy objectives that

led the Supreme Court to permit tolling in the first place.”

857 F. 3d, at 1004. Applying American Pipe tolling to

successive class actions, the Ninth Circuit added, would

cause no unfair surprise to defendants and would promote

economy of litigation by reducing incentives for filing

protective class suits during the pendency of an initial

certification motion. 857 F. 3d, at 1004.

We granted certiorari, 583 U. S. ___ (2017), in view of a

division of authority among the Courts of Appeals over

Cite as: 584 U. S. ____ (2018) 5

Opinion of the Court

whether otherwise-untimely successive class claims may

be salvaged by American Pipe tolling. Compare the in-

stant case and Phipps v. Wal-Mart Stores, Inc., 792 F. 3d

637, 652–653 (CA6 2015) (applying American Pipe tolling

to successive class action), with, e.g., Basch v. Ground

Round, Inc., 139 F. 3d 6, 11 (CA1 1998) (“Plaintiffs may

not stack one class action on top of another and continue

to toll the statute of limitations indefinitely.”); Griffin

v. Singletary, 17 F. 3d 356, 359 (CA11 1994) (similar);

Korwek v. Hunt, 827 F. 2d 874, 879 (CA2 1987) (American

Pipe does not apply to successive class suits); Salazar-

Calderon v. Presidio Valley Farmers Assn., 765 F. 2d 1334,

1351 (CA5 1985) (“Plaintiffs have no authority for their

contention that putative class members may piggyback

one class action onto another and thus toll the statute of

limitations indefinitely, nor have we found any.”). See

also Yang v. Odom, 392 F. 3d 97, 112 (CA3 2004) (Ameri-

can Pipe tolling does not apply to successive class actions

where certification was previously denied due to a class

defect, but does apply when certification was denied based

on the putative representative’s deficiencies).

II

A

American Pipe established that “the commencement of

the original class suit tolls the running of the statute [of

limitations] 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.” 414

U. S., at 553. “A contrary rule,” the Court reasoned in

American Pipe, “would deprive [Federal Rule of Civil

Procedure] 23 class actions of the efficiency and economy

of litigation which is a principal purpose of the procedure.”

Ibid. This is so, the Court explained, because without

tolling, “[p]otential class members would be induced to file

protective motions to intervene or to join in the event that

6 CHINA AGRITECH, INC. v. RESH

Opinion of the Court

a class was later found unsuitable.” Ibid. In Crown, Cork,

the Court further elaborated: Failure to extend the Ameri-

can Pipe rule “to class members filing separate actions,” in

addition to those who move to intervene, would result in “a

needless multiplicity of actions” filed by class members

preserving their individual claims—“precisely the situa-

tion that Federal Rule of Civil Procedure 23 and the toll-

ing rule of American Pipe were designed to avoid.” 462

U. S., at 351.

American Pipe and Crown, Cork addressed only putative

class members who wish to sue individually after a class-

certification denial. See, e.g., American Pipe, 414 U. S., at

552 (addressing “privilege of intervening in an individual

suit”); Crown, Cork, 462 U. S., at 349 (applying American

Pipe to those who “file individual actions”); 462 U. S., at

352 (tolling benefits “class members who choose to file

separate suits”).

What about a putative class representative, like Resh,

who brings his claims as a new class action after the stat-

ute of limitations has expired? Neither decision so much

as hints that tolling extends to otherwise time-barred

class claims. We hold that American Pipe does not permit

a plaintiff who waits out the statute of limitations to

piggyback on an earlier, timely filed class action. The

“efficiency and economy of litigation” that support tolling

of individual claims, American Pipe, 414 U. S., at 553, do

not support maintenance of untimely successive class

actions; any additional class filings should be made early

on, soon after the commencement of the first action seek-

ing class certification.

American Pipe tolls the limitation period for individual

claims because economy of litigation favors delaying those

claims until after a class-certification denial. If certifica-

tion is granted, the claims will proceed as a class and

there would be no need for the assertion of any claim

individually. If certification is denied, only then would it

Cite as: 584 U. S. ____ (2018) 7

Opinion of the Court

be necessary to pursue claims individually.

With class claims, on the other hand, efficiency favors

early assertion of competing class representative claims.

If class treatment is appropriate, and all would-be repre-

sentatives have come forward, the district court can select

the best plaintiff with knowledge of the full array of po-

tential class representatives and class counsel. And if

the class mechanism is not a viable option for the claims,

the decision denying certification will be made at the

outset of the case, litigated once for all would-be class

representatives.2

Rule 23 evinces a preference for preclusion of untimely

successive class actions by instructing that class certifica-

tion should be resolved early on. See Fed. Rule Civ. Proc.

23(c)(1)(A). Indeed, Rule 23(c) was amended in 2003 to

permit district courts to take account of multiple class-

representative filings. Before the amendment, Rule 23(c)

encouraged district courts to issue certification rulings “as

soon as practicable.” The amendment changed the rec-

ommended timing target to “an early practicable time.”

The alteration was made to allow greater leeway, more

time for class discovery, and additional time to “explore

designation of class counsel” and consider “additional

——————

2 Encouraging early class filings will help ensure sufficient time re-

mains under the statute of limitations, in the event that certification is

denied for one of the actions or a portion of the class. Subclasses might

be pleaded in one or more complaints and taken up if necessary; as

class discovery proceeds and weaknesses in the class theory or adequacy

of representation come to light, the lead complaint might be amended

or a new plaintiff might intervene. See Brief of Plaintiffs in Post-Dukes

Successor Class Actions as Amici Curiae 8–10 (describing regional

subclasses asserted in the Dukes v. Wal-Mart litigation following this

Court’s decision decertifying the nationwide class, Wal-Mart Stores,

Inc. v. Dukes, 564 U. S. 338 (2011)); Pierce, Improving Predictability

and Consistency in Class Action Tolling, 23 Geo. Mason L. Rev. 339,

349 (2016) (some Dukes plaintiffs moved to amend the original com-

plaint to replead subclasses).

8 CHINA AGRITECH, INC. v. RESH

Opinion of the Court

[class counsel] applications rather than deny class certifi-

cation,” thus “afford[ing] the best possible representation

for the class.” Advisory Committee’s 2003 Note on subds.

(c)(1)(A) and (g)(2)(A) of Fed. Rule Civ. Proc. 23, 28

U. S. C. App., pp. 815, 818; see Willging & Lee, From

Class Actions to Multidistrict Consolidations: Aggregate

Mass-Tort Litigation after Ortiz, 58 U. Kan. L. Rev. 775,

785 (2010) (2003 amendments “raised the standard for

certifying a class from an early, conditional ruling to a

later, relatively final decision” and “expand[ed] the oppor-

tunity for parties to engage in discovery prior to moving

for class certification”).

The PSLRA, which governs this litigation, evinces a

similar preference, this time embodied in legislation, for

grouping class-representative filings at the outset of litiga-

tion. See supra, at 3. When the Dean and Smyth timely

commenced actions were first filed, counsel put any

shareholder who might wish to serve as lead plaintiff on

notice of the action. Several heeded the call—six in Dean

and eight in Smyth. See 857 F. 3d, at 997–998. The

PSLRA, by requiring notice of the commencement of a

class action, aims to draw all potential lead plaintiffs into

the suit so that the district court will have the full roster

of contenders before deciding which contender to appoint.3

——————

3 Although the Private Securities Litigation Reform Act of 1995

(PSLRA), 109 Stat. 737, includes a presumption that the most adequate

plaintiff is the one who moves first and has the largest financial inter-

est in the case, see 15 U. S. C. §78u–4(a)(3)(B)(iii)(I), multiple potential

lead plaintiffs have reason to apply for the role because there may not

be an obvious candidate. Which plaintiff has the largest financial

interest may not be immediately apparent; the statute does not define

the term, and the size of a shareholder’s financial interest can depend

on how many shares were purchased and sold, when, and at what price,

as well as the order in which the losses are tallied. See, e.g., Cortina v.

Anavex Life Sciences Corp., 2016 WL 1337305 (SDNY, Apr. 5, 2016).

District courts often permit aggregation of plaintiffs into plaintiff

groups, so even a small shareholder could apply for lead-plaintiff

Cite as: 584 U. S. ____ (2018) 9

Opinion of the Court

See Brief for Securities Industry and Financial Markets

Association as Amicus Curiae 12–13 (PSLRA “seeks to

achieve Congress[’] goal of curbing duplicative . . . litiga-

tion by encouraging all interested parties to apply to serve

as lead plaintiff at the early stages of the case [and]

providing for the consolidation of similar class actions”).

With notice and the opportunity to participate in the first

(and second) round of class litigation, there is little reason

to allow plaintiffs who passed up those opportunities to

enter the fray several years after class proceedings first

commenced.

Ordinarily, to benefit from equitable tolling, plaintiffs

must demonstrate that they have been diligent in pursuit

of their claims. See, e.g., McQuiggin v. Perkins, 569 U. S.

383, 391 (2013); Menominee Tribe of Wis. v. United States,

577 U. S. ___, ___ (2016) (slip op., at 5). Even American

Pipe, which did not analyze “criteria of the formal doctrine

of equitable tolling in any direct manner,” ANZ, 582 U. S.,

at ___–___ (slip op., at 10–11), observed that tolling was

permissible in the circumstances because plaintiffs who

later intervened to pursue individual claims had not slept

on their rights, American Pipe, 414 U. S., at 554–555.

Those plaintiffs reasonably relied on the class representa-

tive, who sued timely, to protect their interests in their

individual claims. See Crown, Cork, 462 U. S., at 350. A

would-be class representative who commences suit after

expiration of the limitation period, however, can hardly

qualify as diligent in asserting claims and pursuing relief.

——————

status, hoping to join with other shareholders to create a unit with the

largest financial interest. See Choi & Thompson, Securities Litigation

and Its Lawyers: Changes During the First Decade After the PSLRA,

106 Colum. L. Rev. 1489, 1507, 1521, 1530 (2006) (80% of securities

class actions in post-PSLRA data sample had two or more co-lead

counsel firms). Thus, it is a reasonable expectation that, in litigation

governed by the PSLRA, a district court will have several competing

candidates for lead plaintiff to choose among.

10 CHINA AGRITECH, INC. v. RESH

Opinion of the Court

Her interest in representing the class as lead plaintiff,

therefore, would not be preserved by the prior plaintiff ’s

timely filed class suit.

Respondents’ proposed reading would allow the statute

of limitations to be extended time and again; as each class

is denied certification, a new named plaintiff could file a

class complaint that resuscitates the litigation. See Yang,

392 F. 3d, at 113 (Alito, J., concurring in part and dissent-

ing in part) (tolling for successive class actions could allow

“lawyers seeking to represent a plaintiff class [to] extend

the statute of limitations almost indefinitely until they

find a district court judge who is willing to certify the

class”); Ewing Industries Corp. v. Bob Wines Nursery, Inc.,

795 F. 3d 1324, 1326 (CA11 2015) (tolling for successive

class actions allows plaintiffs “limitless bites at the ap-

ple”).4 This prospect points up a further distinction be-

tween the individual-claim tolling established by Ameri-

can Pipe and tolling for successive class actions. The time

to file individual actions once a class action ends is finite,

extended only by the time the class suit was pending; the

time for filing successive class suits, if tolling were al-

lowed, could be limitless. Respondents’ claims happen to

be governed by 28 U. S. C. §1658(b)(2)’s five-year statute

of repose, so the time to file complaints has a finite end.

Statutes of repose, however, are not ubiquitous. See

——————

4 Respondents observe that in Smith v. Bayer Corp., 564 U. S. 299

(2011), we held that federal class-certification denials do not have

preclusive effect in subsequent state-court suits, despite concerns about

successive class actions. See Brief for Respondents 40–41. But in

Smith, we were guided by “the fundamental nature of the general rule

that only parties can be bound by prior judgments.” 564 U. S., at 313

(internal quotation marks omitted). The state-court plaintiffs were not

parties to the federal-court litigation, hence they could not be bound by

its holding—despite a “stron[g] argument” about the inefficiencies of

serial class relitigation supporting the contrary position. Id., at 316.

No such countervailing presumption favors Resh’s untimely third

federal class suit.

Cite as: 584 U. S. ____ (2018) 11

Opinion of the Court

Dekalb County Pension Fund v. Transocean Ltd., 817 F. 3d

393, 397 (CA2 2016). Most statutory schemes provide for

a single limitation period without any outer limit to safe-

guard against serial relitigation. Endless tolling of a

statute of limitations is not a result envisioned by Ameri-

can Pipe.5

B

Respondents emphasize that in Shady Grove Orthopedic

Associates, P. A. v. Allstate Ins. Co., 559 U. S. 393 (2010),

we said that “a class action may be maintained,” id., at

398 (internal quotation marks omitted), if the require-

ments of Rule 23(a) and (b) are satisfied, and “Rule 23

automatically applies in all civil actions and proceedings

in the United States district courts,” id., at 400 (internal

quotation marks omitted). See Brief for Respondents 21–

23. If Resh’s suit meets the requirements of Rule 23(a)

and (b), respondents assert, there is no reason why Resh’s

suit cannot proceed as a class action. Shady Grove does

not call for that outcome. In Shady Grove, the Court held

that a federal diversity action could proceed under Rule 23

despite a state law prohibiting class treatment of suits

——————

5 JUSTICE SOTOMAYOR suggests that the Court might adopt a rule

under which tolling “becomes unavailable for future class claims where

class certification is denied for a reason that bears on the suitability of

the claims for class treatment,” but not where “class certification is

denied because of the deficiencies of the lead plaintiff as class repre-

sentative.” Post, at 5; see Yang v. Odom, 392 F. 3d 97, 112 (CA3 2004)

(embracing similar rule). But Rule 23 contains no instruction to give

denials of class certification different effect based on the reason for the

denial. And as the Advisory Committee Notes explain, affording

district courts time to consider competing claims for class representa-

tion will advance the likelihood that lead plaintiff or class counsel

deficiencies will be discovered and acted upon early in the litigation.

See supra, at 7–8. Rule 23 and putative class members’ own interests

in adequate representation, and the efficient adjudication thereof,

weigh heavily against tolling for successive class actions. There is

nothing inequitable in following these guides. See post, at 5, n. 2.

12 CHINA AGRITECH, INC. v. RESH

Opinion of the Court

seeking damages of the kind asserted in the Shady Grove

complaint. 559 U. S., at 396, 416. Our opinion in Shady

Grove addressed a case in which a Rule 23 class action

could have been maintained absent a contrary state-law

command. Id., at 396. Resh’s case presents the reverse

situation: The class action would be untimely unless saved

by American Pipe’s equitable-tolling exception to statutes

of limitations. Rule 23 itself does not address timeliness of

claims or tolling and nothing in the Rule calls for the

revival of class claims if individual claims are tolled. In

fact, as already explained, Rule 23 prescribes the opposite

result. See supra, at 6–8.

Today’s clarification of American Pipe’s reach does not

run afoul of the Rules Enabling Act by causing a plaintiff’s

attempted recourse to Rule 23 to abridge or modify a

substantive right. See Brief for Respondents 23–26 (citing

Tyson Foods, Inc. v. Bouaphakeo, 577 U. S. ___ (2016)).

Plaintiffs have no substantive right to bring their claims

outside the statute of limitations. That they may do so, in

limited circumstances, is due to a judicially crafted tolling

rule that itself does not abridge, enlarge, or modify any

substantive right. American Pipe, 414 U. S., at 558.

Without American Pipe, respondents would have no peg to

seek tolling here; as we have explained, however, Ameri-

can Pipe does not provide for the extension of the statute

of limitations sought by Resh for institution of an untimely

third class suit.

Respondents urge that American Pipe’s logic in fact

supports their position because declining to toll the limita-

tion period for successive class suits will lead to a “need-

less multiplicity” of protective class-action filings. Brief

for Respondents 32–34. See also post, at 6–7 (expressing

concern about duplicative and dueling class actions). But

there is little reason to think that protective class filings

will substantially increase. Several Courts of Appeals

have already declined to read American Pipe to permit a

Cite as: 584 U. S. ____ (2018) 13

Opinion of the Court

successive class action filed outside the limitation period.

See supra, at 5; 3 W. Rubenstein, Newberg on Class Ac-

tions §9:64, n. 5 (5th ed. 2012). These courts include the

Second and Fifth Circuits (no strangers to class-action

practice); both courts declined to entertain out-of-time

class actions in the 1980’s. See Korwek, 827 F. 2d 874

(CA2 1987); Salazar-Calderon, 765 F. 2d 1334 (CA5 1985).

Respondents and their amici make no showing that these

Circuits have experienced a disproportionate number of

duplicative, protective class-action filings.

Amicus National Conference on Public Employee Re-

tirement Systems cites examples of protective filings

responding to courts’ disallowance of American Pipe tolling

for statutes of repose, but those examples in fact suggest

that protective class filings are uncommon. See Brief of

the National Conference on Public Employee Retirement

Systems as Amicus Curiae 7–8. Between dozens and

hundreds of class plaintiffs filed protective individual

claims while class-certification motions were pending in

securities cases and the statute of repose was about to run

out, placing a permanent bar against their claims. Ibid.

But none of the plaintiffs appears to have filed a protective

class action—even though, if the statute of repose expired

and the pending class-certification motions were denied,

there would be no further opportunity to assert class

claims.6

Nor do the incentives of class-action practice suggest

that many more plaintiffs will file protective class claims

as a result of our holding. Any plaintiff whose individual

claim is worth litigating on its own rests secure in the

——————

6 The Second Circuit Petrobras litigation, referenced in amicus’ brief,

illustrates that multiple timely class filings do not sow unmanageable

chaos. Five class actions were filed there and consolidated, along with

individual claims, for pretrial purposes, including class-certification

determination. See In re Petrobras Securities, 862 F. 3d 250, 258 (CA2

2017).

14 CHINA AGRITECH, INC. v. RESH

Opinion of the Court

knowledge that she can avail herself of American Pipe

tolling if certification is denied to a first putative class.

The plaintiff who seeks to preserve the ability to lead the

class—whether because her claim is too small to make an

individual suit worthwhile or because of an attendant

financial benefit7—has every reason to file a class action

early, and little reason to wait in the wings, giving another

plaintiff first shot at representation.

In any event, as previously explained, see supra, at 6–8,

a multiplicity of class-action filings is not necessarily

“needless.” Indeed, multiple filings may aid a district

court in determining, early on, whether class treatment is

warranted, and if so, which of the contenders would be the

best representative. And sooner rather than later filings

are just what Rule 23 encourages. See ibid. Multiple

timely filings might not line up neatly; they could be filed

in different districts, at different times—perhaps when

briefing on class certification has already begun—or on

behalf of only partially overlapping classes. See Wasser-

man, Dueling Class Actions, 80 B. U. L. Rev. 461, 464–465

(2000) (describing variety of “dueling” class filings). But

district courts have ample tools at their disposal to man-

age the suits, including the ability to stay, consolidate, or

transfer proceedings. District courts are increasingly

familiar with overseeing such complex cases, given the

surge in multidistrict litigation. See Cabraser & Issa-

charoff, The Participatory Class Action, 92 N. Y. U. L. Rev.

846, 850–851 (2017) (multidistrict litigation frequently

combines individual suits and multiple putative class

actions). The Federal Rules provide a range of mecha-

nisms to aid courts in this endeavor. What the Rules do

not offer is a reason to permit plaintiffs to exhume failed

——————

7 The class representative might receive a share of class recovery

above and beyond her individual claim. See, e.g., Cook v. Niedert, 142

F. 3d 1004, 1016 (CA7 1998) (affirming class representative’s $25,000

incentive award).

Cite as: 584 U. S. ____ (2018) 15

Opinion of the Court

class actions by filing new, untimely class claims.

* * *

The watchwords of American Pipe are efficiency and

economy of litigation, a principal purpose of Rule 23 as

well. Extending American Pipe tolling to successive class

actions does not serve that purpose. The contrary rule,

allowing no tolling for out-of-time class actions, will propel

putative class representatives to file suit well within the

limitation period and seek certification promptly. For all

the above-stated reasons, it is the rule we adopt today:

Time to file a class action falls outside the bounds of Amer-

ican Pipe.

Accordingly, the judgment of the Court of Appeals for

the Ninth Circuit is reversed, and the case is remanded for

further proceedings consistent with this opinion.

It is so ordered.

Cite as: 584 U. S. ____ (2018) 1

SOTOMAYOR, J., concurring in judgment

SUPREME COURT OF THE UNITED STATES

_________________

No. 17–432

_________________

CHINA AGRITECH, INC., PETITIONER v.

MICHAEL H. RESH, ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[June 11, 2018]

JUSTICE SOTOMAYOR, concurring in the judgment.

I agree with the Court that in cases governed by the

Private Securities Litigation Reform Act of 1995 (PSLRA),

15 U. S. C. §78u–4, like this one, a plaintiff who seeks to

bring a successive class action may not rely on the tolling

rule established by American Pipe & Constr. Co. v. Utah,

414 U. S. 538 (1974). I cannot, however, join the majority

in going further by holding that the same is true for class

actions not subject to the PSLRA.

I

A

To understand why the PSLRA is essential to the con-

clusion the Court reaches here, recall that this case in-

volves a putative class-action lawsuit brought by a plain-

tiff with a timely individual claim, joined by coplaintiffs

with timely individual claims, on behalf of a putative class

of absent class members with timely individual claims.

See ante, at 4. One might naturally think, then, that the

class claims in the lawsuit are timely. The majority,

however, concludes that the named plaintiffs’ and putative

class members’ class claims are time barred.

At first blush, this result might seem surprising, for the

Court has rejected the idea that class claims are categori-

cally different from individual claims. See Shady Grove

2 CHINA AGRITECH, INC. v. RESH

SOTOMAYOR, J., concurring in judgment

Orthopedic Associates, P. A. v. Allstate Ins. Co., 559 U. S.

393, 398 (2010). Although it did not hold that class claims

may never be treated differently from individual claims,

Shady Grove indicates that there must be a special reason

for doing so.

Here, the PSLRA supplies that special reason. The

PSLRA imposes significant procedural requirements on

securities class actions that do not apply to individual or

traditionally joined securities claims. See §78u–4(a)(1).

Foremost among these requirements is a process for the

“[a]ppointment of lead plaintiff.” §78u–4(a)(3). Under the

PSLRA, the named plaintiff in a putative class action

must publish within 20 days of filing the complaint a

nationwide notice alerting putative class members to the

filing of the suit and informing them that, “not later than

60 days after the date on which the notice is published,

any member of the purported class may move the court to

serve as lead plaintiff.” §78u–4(a)(3)(A)(i). The district

court then must evaluate all prospective lead plaintiffs

and choose the “most adequate” one based on a set of

enumerated considerations. §78u–4(a)(3)(B). The PSLRA

thus contemplates a process by which all prospective class

representatives come forward in the first-filed class action

and make their arguments to the court for lead-plaintiff

status. See H. R. Conf. Rep. No. 104–369, p. 32 (1995).

Respondents here bypassed that statutory process.

They do not dispute that notice was published in the two

earlier-filed putative class actions concerning the same

securities claims as here, as required by the PSLRA. Yet

they did not seek to be chosen lead plaintiffs in either of

those actions. See ante, at 3–4, 8. For that reason alone, I

agree with the majority that respondents “can hardly

qualify as diligent in asserting [class] claims and pursuing

relief.” Ante, at 9. Respondents’ failure to utilize the

PSLRA’s lead-plaintiff selection procedure distinguishes

them from the American Pipe absent class members, who

Cite as: 584 U. S. ____ (2018) 3

SOTOMAYOR, J., concurring in judgment

were subject only to the traditional Federal Rule of Civil

Procedure 23 class procedure, which is “designed to avoid,

rather than encourage, unnecessary filing of repetitious

papers and motions.” 414 U. S., at 550.

Unlike the PSLRA, Rule 23 contains no requirement of

precertification notice to absent putative class members; it

provides only for postcertification notice. See Fed. Rule

Civ. Proc. 23(c)(2). There thus is no mechanism for absent

putative class members to learn that a putative class

action is pending, much less that they are entitled to seek

to displace the named plaintiff in that lawsuit as class

representative. Also unlike the PSLRA, Rule 23 contains

no process for a district court to choose from among the

various candidates for lead plaintiff, nor does it specify

what would make a person the most adequate representa-

tive of the class. See 7A C. Wright, A. Miller, & M. Kane,

Federal Practice and Procedure §1765, p. 321 (3d ed.

2005). In class actions not subject to the PSLRA, the class

representative is generally the first person who files the

suit, and so is self-selected (subject to an adequacy deter-

mination), rather than selected by the court.1 See Rule

23(a)(4) (“One or more members of a class may sue or be

sued as representative parties on behalf of all members

only if . . . the representative parties will fairly and ade-

quately protect the interests of the class”); Rule 23(c)(1)(A)

(“At an early practicable time after a person sues or is

sued as a class representative, the court must determine

——————

1 There may, of course, be competition among putative class members

to proceed on behalf of the putative class in an action not governed by

the PSLRA, and the district court generally considers their relative

qualities. But the point is that the court is not required by Rule 23 to

identify and designate as lead plaintiff the person most capable of

adequately representing the class; it is only required to determine for

certification purposes whether the class representative adequately

represents the class. See 7A Wright, Federal Practice and Procedure

§1765, at 321.

4 CHINA AGRITECH, INC. v. RESH

SOTOMAYOR, J., concurring in judgment

by order whether to certify the action as a class action”);

H. R. Conf. Rep. No. 104–369, at 33–35.

The majority points to Rule 23(c)’s requirement that the

determination whether to certify a class be made at “ ‘an

early practicable time,’ ” ante, at 7, but there is no signifi-

cance to that requirement with respect to the diligence of

would-be class representatives. The Advisory Committee

notes accompanying the 2003 amendment to Rule 23(c),

which changed the recommended timing for a certification

determination from “as soon as practicable” to “at an early

practicable time,” explained that the change would permit

time for “controlled discovery into the ‘merits,’ ” efforts by

defendants “to win dismissal or summary judgment as to

the individual plaintiffs without certification,” and the

considered “designation of class counsel.” Advisory Com-

mittee’s 2003 Notes on subd. (c)(1)(A) of Fed. Rule Civ.

Proc. 23, 28 U. S. C. App., p. 815. The notes say nothing

about lead-plaintiff selection, and Rule 23(c) in no way

ensures that potential lead plaintiffs know about the

putative class action or about their opportunity to repre-

sent the class.

Given these important differences between Rule 23’s

general class procedures and the specific procedures im-

posed by the PSLRA, the majority’s conclusion that absent

class members were not diligent because they failed to ask

to be the class representative in a prior suit makes sense

only in the PSLRA context. The same conclusion simply

does not follow in the generic Rule 23 context, where

absent class members are most likely unaware of the

existence of a putative class action. Cf. American Pipe,

414 U. S., at 551–552 (explaining that even absent class

members who are unaware of the putative class action are

entitled to tolling).

B

In addition to its focus on plaintiff diligence, the majority

Cite as: 584 U. S. ____ (2018) 5

SOTOMAYOR, J., concurring in judgment

offers a separate line of reasoning to support its broad

holding. It explains that its limitation on American Pipe

tolling is necessary to prevent a “limitless” series of class

actions, each rendered timely by the tolling effect of the

previous ones. Ante, at 10. As the majority acknowledges,

however, there is no such risk in this case, see ibid., be-

cause the applicable statute of repose puts a 5-year “outer

limit on the right to bring a civil action.” CTS Corp. v.

Waldburger, 573 U. S. ___, ___ (2014) (slip op., at 6). The

majority is right, of course, that in many other types of

cases, no statute of repose will apply. See ante, at 10–11.

But the Court has elsewhere pointed to the power of “com-

ity among courts to mitigate the sometimes substantial

costs of similar litigation brought by different plaintiffs.”

Smith v. Bayer Corp., 564 U. S. 299, 317 (2011). There is

no reason to assume that this existing safeguard will

prove inadequate if the Court holds that American Pipe

tolling is available for successive class actions outside the

PSLRA context.

Even if principles of comity prove insufficient such that

some modification to the American Pipe rule is necessary

to prevent indefinite tolling, a narrower form of redress is

available. Instead of adopting a blanket no-tolling-of-

class-claims-ever rule outside the PSLRA context, the

Court might hold, as a matter of equity, that tolling only

becomes unavailable for future class claims where class

certification is denied for a reason that bears on the suit-

ability of the claims for class treatment. Where, by con-

trast, class certification is denied because of the deficien-

cies of the lead plaintiff as class representative, or because

of some other nonsubstantive defect, tolling would remain

available.2 See Yang v. Odom, 392 F. 3d 97, 112 (CA3

——————

2 Such an approach would, of course, be “grounded in the traditional

equitable powers of the judiciary,” which are “the source of the tolling

rule applied in American Pipe,” and not Rule 23, which “does not so

6 CHINA AGRITECH, INC. v. RESH

SOTOMAYOR, J., concurring in judgment

2004). This approach would, for instance, ensure that in

cases where the only problem with the first suit was the

identity of the named plaintiff, a new and more adequate

representative could file another suit to represent the

class. Preserving the opportunity for such a fix may seem

unimportant in a PSLRA case like this one, where the

court in the first-filed case will usually have a choice

among possible lead plaintiffs. See ante, at 8–9, n. 3. But,

as just explained, in class actions not subject to the

PSLRA, the certifying court often will have no choice as to

the class representative.

Whether this or another rule ultimately is the right one,

there is no need for the Court today to reach beyond the

facts of this case, where the specter of indefinite tolling is

merely hypothetical, and foreclose the possibility of a more

tailored approach.

C

Finally, the majority suggests that its broader approach

will encourage multiple potential class representatives to

come forward early, which may “aid a district court” in

making class certification decisions. Ante, at 14. This

may well be so in the PSLRA context, given the statute’s

notice requirement and built-in mechanism for selecting

the most adequate lead plaintiff. But in suits not covered

by the PSLRA, absent class members may not know of the

pending class action early enough to “aid” the court, and

will likely have to file a completely separate lawsuit if

what they seek is lead-plaintiff status.

In addition to increasing the number of unnecessary

filings, a result at odds with American Pipe’s concern with

avoiding “needless duplication,” 414 U. S., at 554, the

existence of multiple putative class actions covering the

——————

much as mention the extension or suspension of statutory time bars.”

California Public Employees’ Retirement System v. ANZ Securities, Inc.,

582 U. S. ___, ___ (2017) (slip op., at 10); see ante, at 11, n. 5.

Cite as: 584 U. S. ____ (2018) 7

SOTOMAYOR, J., concurring in judgment

same harm to the same class may lead to a “race toward

judgment or settlement.” Wasserman, Dueling Class

Actions, 80 B. U. L. Rev. 461, 472 (2000). Each class

lawyer knows that only the lawyers in the first-resolved

case will get paid, because the other suits will then be

dismissed on claim-preclusion grounds. Ibid. Defense

lawyers know this, too, so they are “able to engage in a

‘reverse auction,’ pitting the various class counsel against

one another and agreeing to settle with the lawyer willing

to accept the lowest bid on behalf of the class.” Id., at 473.

This gamesmanship is not in class members’ interest, nor

in the interest of justice. I therefore think it unwise to

encourage the filing of such dueling class actions outside

the PSLRA context.

II

Although there is ample support for denying American

Pipe tolling to successive class actions subject to the

PSLRA, the majority’s reasoning does not justify denying

American Pipe tolling to other successive class actions.

The majority could have avoided this error by limiting its

decision to the issues presented by the facts of this case.

Despite the Court’s misstep in adopting an unnecessarily

broad rule, district courts can help mitigate the potential

unfairness of denying American Pipe tolling to class claims

not subject to the PSLRA. Where appropriate, district

courts should liberally permit amendment of the pleadings

or intervention of new plaintiffs and counsel.

Because I agree with the majority’s conclusion just as

applied to class actions governed by the PSLRA, like this

one, I concur only in the judgment.