In Re Copper Antitrust Litigation

CUDAHY, Circuit Judge,

for the panel and concurring in Part II.

The plaintiffs argue with respect to the Heliotrope California class action that membership in the Heliotrope class should not only toll the statute of limitations with respect to individual state antitrust claims but also the federal statute of limitations governing claims under the Clayton Act. Not only is there no suggestion in American Pipe, 414 U.S. 538 , 94 S.Ct. 756 , 38 L.Ed.2d 713 , or in Crown, Cork & Seal, 462 U.S. 345 , 103 S.Ct. 2392 , 76 L.Ed.2d 628 , that these decisions construing Federal Rule of Civil Procedure 23 have any direct application to parallel state procedures, but the policies underlying Ameri *794 can Pipe and like precedents simply do not apply in the cross-jurisdictional context.

The essential rationale of American Pipe is that members of a class whose claims are embodied in a class action should not be required by the exigencies of the statute of limitations to clutter the courts with duplicative lawsuits as long as their claims are encompassed by the class action. In other words, as long as they are in effect passively tendering their claims through inclusion in the class action, they should not be forced to proceed individually, whether by intervention or otherwise.

The situation contemplated by the plaintiffs here is, however, quite different. Here plaintiffs have become members of a class in a state class action but want the federal statute of limitations governing a factually similar federal claim to be tolled. But, in this situation the state claimants are not being forced by the federal statute of limitations to file duplicative claims since, in any event, it is necessary at some point to file suit in federal court if the plaintiff desires to invoke federal antitrust protection. This procedural requirement is unaffected by the status-of an ongoing state class action.

Since filing in federal court is a prerequisite to pursuing a federal remedy regardless of the state class action, there will be no efficiency gain whether the federal filing is made while the claimant is part of the state class action or later (or never). However similar or dissimilar the function of federal antitrust law may be with respect to state law, the federal claim is part of a distinct body of law that must be pursued in a wholly different court system. This fact cuts decisively against the application of the policies of American Pipe across jurisdictional lines to respond to state class actions, even if some federal interest in such an application could be divined.

Another way of approaching this problem is to recognize that Rule 23 allows litigants to protect their rights passively— to “sit on the sidelines,” so to speak— without individually asserting their own claims in accordance with the theory that someone else is making identical claims on behalf of silent and absent class members. The key difference between an ordinary Rule 23 situation and the present case is that no one here is asserting a federal claim for those sitting on the sidelines. No one has filed a federal antitrust claim at all, and no one may ever file a federal antitrust claim. Hence, tolling the federal statute of limitations may be a futile gesture of benefit to no one.

Judge Wood in dissent asserts that “different tribunals that entertain fundamentally the same case should not be hermetically sealed off one from the other.” Dissent of Wood, J., at 799. But this rhetorical conclusion overlooks the fact that, however similar the purposes of federal and state litigation, they must still be maintained by filing complaints and pursuing remedies in different courts. This fact may be decisive for procedural issues like the one here. The issue before us is a federal issue to be decided under federal law. If it were a state issue, there is no reason to believe that California would purport to toll the limitation contained in the Clayton Act, no matter how similar a Clayton Act claim might be to the claim under a California antitrust statute that was the subject of a state class action (like Heliotrope). This conclusion is particularly inescapable in light of California’s analogous refusal even to apply its law of claim preclusion (res judicata) to federal antitrust claims that are factually similar to state claims.

Under California preclusion law, in order for res judicata to apply to claims not raised in previous proceedings, the court rendering the prior judgment *795 must have jurisdiction to hear such claims.... Because federal antitrust claims are within the exclusive jurisdiction of the federal courts ... [a] California court ... would have had no jurisdiction over ... federal antitrust claims. Therefore, applying California res judi-cata principles, [a] prior California suit cannot preclude [the similar] federal action.

Eichman v. Fotomat Corp., 759 F.2d 1434, 1437 (9th Cir.1985) (citations omitted).

The reference by Judge Wood to issue preclusion as somehow relevant to the tolling of the statute of limitations is wide of the mark. Here, the state claims have never been fully litigated, and the issues eligible to be precluded are therefore unknown. The fact that some issues in the federal courts may someday be precluded by state decisions is not a good reason to delay the corresponding federal actions by tolling the statute of limitations (thereby arguably increasing the chance of preclusion). 1 Judge Wood also argues that somehow fairness, efficiency and like values will be advanced if a state antitrust class action can effect a tolling of the federal statute of limitations applicable to the Clayton Act. As we have pointed out, this is simply not the case. If an unnamed member of the state class wishes also to sue under the Clayton Act, the member must at some point bring a suit in federal court. If the requirements of the statute of limitations result in the federal suit’s being brought while the state class action is pending, there is no inefficiency or unfairness. The plaintiff has simply invoked an additional statutory right at an appropriate time.

It merely confuses the issue to suggest that the Class Action Fairness Act (CAFA), Pub.L. 109-2, 119 Stat. 4 (2005), has anything to do with the issue. If a state class action is removed to federal court — diversity having been found — the substantive law involved is still state law. Claims under an analogous federal statute have not been invoked, and they are not implicated. Similarly, Johnson v. Railway Express Agency, Inc., 421 U.S. 454 , 95 S.Ct. 1716 , 44 L.Ed.2d 295 (1975), relied on by the district court, has been properly invoked because it illustrates the principle that there must be identity of claims for tolling to be operative. It would appear a fortiori that, if the second claim is not only under a different statute but under a statute in another jurisdiction (federal) and invokable only in a different court system (federal), tolling would not be appropriate.

Cullen v. Margiotta, 811 F.2d 698 (2d Cir.1987), cited by Judge Wood, contains dicta that are clearly distinguishable and, in addition, have provoked a telling dissent. First, in Cullen , the claims under RICO and 42 U.S.C. § 1983 were subject to the three-year limitations period imposed by state law. The court noted that when a federal court looks to state law to determine the most appropriate statute of limitations, it must also, so long as federal policy is not offended, apply the state’s *796 rules as to the tolling of the statute. This situation, then, contemplates the involvement of state law in a way that the Clayton Act — with its own statute of limitations and exclusive federal jurisdiction — does not. State courts have the power to adjudicate both RICO and § 1983 cases along with federal courts; only federal courts are competent to hear Clayton Act cases. Thus, it is more palatable to permit state litigation to toll state-based statutes of limitation with respect to claims that could actually be adjudicated in state courts. 2 Here, however, Judge Wood would allow an action in a jurisdictionally incompetent tribunal to toll the limitation for a lawsuit that it could never hear.

Further, Judge Meskill’s partial dissent points out the pitfalls in pushing American Pipe beyond its own rationale. He argued that the majority had broadened the American Pipe rule to an unwise extent, quoting Justice Powell’s concurrence in Crown, Cork & Seal that “[t]he tolling rule of American Pipe is a generous one, inviting abuse.” Cullen, 811 F.2d at 736 (Meskill, J., dissenting) (quoting Crown, Cork & Seal, 462 U.S. at 354 , 103 S.Ct. 2392 (Powell, J., concurring)). While California’s antitrust statute might be “similar” to the Clayton Act, mere similarity is a murky standard for a matter as needful of certainty as the statute of limitations.

Nor are our conclusions undermined by the repeated assertion by Judge Wood that a major purpose of a statute of limitations is “to promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared.” Order of R.R. Tel. v. Ry. Express Agency, Inc., 321 U.S. 342, 348-49 , 64 S.Ct. 582 , 88 L.Ed. 788 (1944). Judge Wood claims the bringing of a state class action asserting a state claim that is similar to a federal claim puts defendants on notice that they might be sued federally and leads to the preservation of evidence and memories. This might well be substantially correct, but notice alone is certainly not enough to toll the statute of limitations. A mere announcement of an intention to sue puts defendants on notice. No one contends, however, that this simple notice is sufficient to toll the statute. If notice were enough, there would be no reason to resume the running of the statute when a plaintiff opts out of the class or is otherwise removed from it. After all, opting out of the class does not withdraw the notice that has been given by filing the class action. American Pipe may claim the additional benefit from bringing a class action of notice to the defendant, but the driving force in that opinion is the gain to an efficient Rule 23 procedure of tolling the statute.

Functional equivalence, like simple notice, is not enough to trigger tolling. If functional equivalence were enough, then it ought to apply to individual claims as well, which certainly is not the law. For example, if multiple plaintiffs filed a joint suit against a defendant in state court and one of those plaintiffs immediately dropped out, Judge Wood’s functional equivalence rationale would seemingly toll the statute of limitations and permit that plaintiff to file her own “similar” lawsuit in federal court well beyond the normal statute of limitations. Since that plaintiff was *797 originally part of the state lawsuit, the defendant plainly had notice of that plaintiffs “similar” claim. But notice is not enough; that plaintiff needs Rule 23 to protect her rights as a passive participant. We find the proposition that a defendant in state court can be on adequate notice that someday — two, five, ten or even more years down the road — a plaintiff might bring a functionally equivalent but not identical claim in federal court difficult to accept.

It should finally be noted that our conclusion supports one of the main purposes of the statute of limitations that Judge Wood identifies — to allow a defendant to be free of stale claims in due time. For all these reasons, the plaintiffs’ participation in Heliotrope should have no effect on tolling the statute of limitations applicable to the Clayton Act.

On the other issue of when the plaintiffs’ claims accrued, I concur, although I have some reservations, with the majority. The majority concedes that, by July 23, 1996, the plaintiffs knew, among other things, that Morgan and other banks were under investigation by the Commodities Futures Trading Commission. The district court believed that the plaintiffs at that time “knew enough to suspect a violation that they could have detected with due diligence.” The majority, however, is doubtful that plaintiffs’ diligent inquiries would have uncovered enough information to support a suit. Considering plaintiffs’ highly expert, knowledgeable and well-compensated attorneys, I have somewhat less difficulty in postulating their capacity to uncover enough incriminating facts. There may be enough doubt here, however, to support the majority’s conclusion.

On the issue of equitable estoppel and fraudulent concealment, I have similar reservations, but, again, there may be a sufficient question to deny summary judgment. Hence, I concur in the opinion authored by Judge Wood to the extent that it speaks for a majority and in the judgment which it supports but rely on my own opinion joined by Judge Rovner with respect to the Heliotrope issue.

. If we understand Judge Wood’s invocation of Marrese v. Am. Acad. of Ortho. Surgeons, 470 U.S. 373 , 105 S.Ct. 1327 , 84 L.Ed.2d 274 (1985) and the point that a state judgment might “in some circumstances have a preclu-sive effect” on a subsequent federal action, as to claim preclusion (as we note above), this is certainly not the case in California. On the other hand, preclusion of federal issues by a prior state judgment will certainly not be avoided by tolling the federal statute of limitá-tions and delaying the federal lawsuit. As to the possibility that a federal suit will never be brought, the statute of limitations applicable to such a suit is, of course, irrelevant in the circumstances. But if the problem is that preclusion principles may ultimately provide an affirmative defense to a federal suit, this is certainly not a reason to toll the federal statute of limitations and delay the filing of a federal action.

. This, of course, is not to say that a state statute of limitations implicated by a federal class action might not be tolled under American Pipe . See, e.g., May v. AC & S, 812 F.Supp. 934, 938 (E.D.Mo.1993). That, of course, is not the issue here. The question here is claimed to be whether the limitations attaching to a federal statute may be tolled to improve the efficiency of a state class action. As we have noted, there is no efficiency gain here and no federal interest in tolling.