# Amicus Curiae Brief — Cal. Pub. Employees' Ret. Sys. v. ANZ Sec., Inc., 137 S. Ct. 811 (2017) (No. 16-373)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2017

## Text

FILED

| MAR -6 2016
No. 16-373 | OFFICE OF THE CI Ex
EE

IN THE
Supreme Court of the Anited States

CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM,
Petitioner,

ANZ SECURITIES, INC., ET AL.,
Respondents.

On Writ of Certiorari
to the United States Courts of Appeals
for the Second Circuit

BRIEF OF DEKALB COUNTY PENSION FUND AS
AMICUS CURIAE IN SUPPORT OF PETITIONER

DAVID R. SCOTT DAVID C. FREDERICK
WILLIAM C. FREDERICKS Counsel of Record
GEOFFREY M. JOHNSON GREGORY G. RAPAWY
ScotTt+Scott, ATTORNEYS JEREMY S. NEWMAN

AT Law, LLP BENJAMIN S. SOFTNESS
The Helmsley Building KELLOGG, HANSEN, TODD,
230 Park Avenue FIGEL & FREDERICK, P.L.L.C.
17th Floor 1615 M Street, N.W.
New York, New York 10169 Suite 400
(212) 223-6444 Washington, D.C. 20036

(202) 326-7900

March 6, 2017 (dfrederick@kellogghansen.com)

TABLE OF CONTENTS

Page
fy.' FP ft wl ty yt | 9): Eee ill
INTEREST OF AMICUS CURIAE ..............224-c0c00c000s l
SUMMARY OF ARGUMENT. .....00............ccccccseeeeeseees 2
Pe seisiik ichdaiitapcaritiihatcniitathriacintdaieidyiakcwcedsiesiins 4

I. THE RULE OF AMERICAN PIPE 18S
AN [INTERPRETATION OF FEDERAL
RULE OF CIVIL PROCEDURE 23................. 4

A. American Pipe Held That A Rule
Requiring Individual Class Mem-
bers To File Duplicate Protective
Actions Is “Inconsistent With Rule

B. Subsequent Decisions Of This
Court Reinforce The Conclusion
That American Pipe Interpreted

SII sy cucastesisbnndnscaaasabeipade ceimbasnndabaddiienesixe 7
C. American Pipe Is Not An Applica-
tion Of Equitable Tolling......................06. 10

D. Rule 23, As Interpreted In Amer-
ican Pipe, Complies With The Rules
a abana 14

Il. ANY CHANGE TO AMERICAN
PIPE’S SETTLED INTERPRETA-
TION OF RULE 23 SHOULD BE
ACCOMPLISHED THROUGH THE
RULES ENABLING ACT’S PROCE.-
DURE FOR AMENDING THE FED-
ERAL RULES OF CIVIL PROCE-

li

A. As An Interpretation Of Rule 23,
American Pipe Has _ Enhanced

Bdaere TOCIGES THUGS oo ccscscccesscescecesceesccesenes: 17
B. Congress Has Set Forth The Pro-
cess For Amending Rule 23...................... 18

CI ee i cesinkncckccscctesscteessssennsssinienecencscnenmnestess 21

ii

TABLE OF AUTHORITIES

Page
CASES
Amchem Prods., Inc. v. Windsor, 521 U.S. 591
RI i cocasccicinaneidbansganteteiaessavenenianindensnentsnbentsinesaestee: 19
American Pipe & Constr. Co. v. Utah, 414 U.S.
BI oo ccinecssomscaiindnio cornices ensecessennennsnpremscionten passim
Bailey v. Glover, 88 U.S. (21 Wall.) 342 (1875) ..... 11, 12
Beach v. Ocwen Fed. Bank, 523 U.S. 410
I io vdiccsciveinssccicn nvcniscacansnasscesnncnsnavovecpasesonsvens 16

Chardon v. Fumero Soto, 462 U.S. 650 (1983) .... 9, 10

Credit Suisse Sec. (USA) LLC v. Simmonds,
— tk @ cg. || an 10, 11

Crown, Cork & Seal Co. v. Parker, 462 U.S.
OE CIID wnccicasescccncersevccecsccsscsesestonecsssctes 8, 9, 10,13

CTS Corp. v. Waldburger, 134 S. Ct. 2175
(DOTS) 0....cccrccerccceessevcccccccnvccesseesereserssonssssorsscecsees 11, 12

DeKalb Cnty. Pension Fund v. Transocean Ltd.,
817 F.3d 393 (2d Cir. 2016), pet. for cert.

pending, No. 16-206 (filed Aug. 12, 2016) ............ 1
Dickerson v. United States, 530 U.S. 428 (2000)........ 17
Dungan v. Morgan Drive-Away, Inc., 570 F.2d

BOT (Bite Cle. 1D FE).....ccesreceesessccscscescsecsssecsenssoscoses 15
Eisen v. Carlisle & Jacquelin, 417 U.S. 156

I saci veccnstiennsiicsctnivnnssinvoneqsenstinancseapsnecinsestere 7,10
Faragher v. City of Boca Raton, 524 U.S. 775

RID on cievecncvescscvsccnessnussevennecnannonsovasssnassvanssneseasnses 18
Greyhound Corp. v. Mt. Hood Stages, Inc.,

BT OED, SI CIID aiskind ss cccsscnesisiccessccsvncevsessevovesns 15

Holmberg v. Armbrecht, 327 U.S. 392 (1946) .......... 11

iv

Kimble v. Marvel Entm’t, LLC, 135 S. Ct.

EE, CI inc. cousnsenancededenanduendenandrecsebtiens 17, 18. 19
Kirtsaeng v. John Wiley & Sons, Inc., 133 8.

fe a IS eee rea ee 13
Lampf, Pleva, Lipkind, Prupis & Petigrow v.

Gilbertson, 501 U.S. 350 (1991) .................ccceee ees 11
Landgraf v. USI Film Prods., 511 U.S. 244

ee cn agiand anaes 20
Mohawk Indus., Inc. v. Carpenter, 558 U.S.

OSS Sa, tee, etal ee 19
Patterson v. McLean Credit Union, 491 U.S.

aa aaa 17
Police & Fire Ret. Sys. of Detroit v. IndyMac

MBS, Inc., 721 F.3d 95 (2d Cir. 2013) ....... 1, 10, 14
Realmonte v. Reeves, 169 F.3d 1280 (10th Cir.

SITTIN ck tds ccs spinabhachaiegsiieiebecg ditetcalalingtamemseninncisaintnh cain akan 7
Shady Grove Orthopedic Assocs., P.A. v.

Allstate Ins. Co., 559 U.S. 393 (2010) ................. 15
Sibbach v. Wilson & Co., 312 U.S. 1 (1941)........ 16, 17

Society for the Propagation of the Gospel v.
Wheeler, 22 F. Cas. 756 (C.C.N.H. 1814)

I iad il a ertieatninlmebindensinintes 20
United Airlines, Inc. v. McDonald, 432 U.S.
I ean diniebonialadamndaientedie 8, 10

Utah v. American Pipe & Constr. Co., 50 F.R.D.
99 (C.D. Cal. 1970), remanded in part, 473
F.2d 580 (9th Cir. 1973), aff'd, 414 U.S.

SSSR GE RN Ts Re 15
Walker v. Armco Steel Corp., 446 U.S. 740
ESE LE EE SE ae 18

West v. Conrail, 481 U.S. 35 (1987)..........00.00 16

STATUTES AND RULES

Clayten Act, 16 U.B.C. § 18 66 @6G. ..cccccccccccscccceessscees 4
§ 5(b), 15 U.S.C. § 16(b) (1970).....cccccceeeceeeeee 4, 5,14
FR BF oe a ee eee rarer 14

Rules Enabling Act, 28 U.S.C. § 2071 et seq. ....... es

11, 14, 15,

16, 17, 18, 19, 20

Be es te I itis cncocesaplneiakaincocedenimedc 11,18
I ad a i 18
Fee PAAR TE SS ne neem re SPOR 14
SE I a hint ieccincnsccletnaeb einen basaeletandiiesaes 19
fh 8 SEIS eae mer aR Or eRe 19
ee ee ais aie Stetscebcdsacisniodudeiasenantons 18, 20

Securities Act of 1933, 15 U.S.C. § 77a et seg. .... 3, 14
Ok TOO Oi ek co, 14

ae Oe acts eldirenittiilinistilniicintnsahataanadiasaisbncdinedt 16

eS a Ee rae eee 9, 10

8 8 AAS SN pee Map ee am RL ce en 9

Fed. R. Civ. P.:

ili ae oA ch aah estas csinalcaceleonane 16
AAS ES LES OE oe OES passim
I iiss Saisie ivan iessouns lenis ieee oniaaeaoin ible 7

Sup. Ct. R.:

FE erate MA Ae eee l

eR ET a RS ak Dk oI OT Ree PM OSS 1

vl

OTHER MATERIALS

Hadley Arkes, A Natural Law Manifesto or
an Appeal from the Old Jurisprudence to
the New, 87 Notre Dame L. Rev. 1245
(2012), available at http://scholarship.law.
nd.edu/cgi/viewcontent.cgi?article=1024&

A ai bre reece carci canestadeslauiiesss 12
3B James W. Moore, Federal Practice (2d ed.) .......... 5
Stephen R. Munzer, A Theory of Retroactive

Legislation, 61 Tex. L. Rev. 425 (1982) .............. 20

Petition for a Writ of Certiorari, American
Pipe & Constr. Co. v. Utah, 414 U.S. 538
(1974) (No. 72-1195) (U.S. filed Mar. 2,
Nee ee 15

A. Benjamin Spencer, Plausibility Pleading,
49 B.C. L. Rev. 431 (2008), available at
http://lawdigitalcommons.bc.edu/cgi/
viewcontent.cgi?article=2383&context=belr .......... 18

U.S. Courts:

How the Rulemaking Process Works, http://
www.uscourts.gov/rules-policies/about-
rulemaking-process/how-rulemaking-
process-works (last visited Mar. 5, 2017)........... 19

How to Suggest a Change to the Rules of
Practice and Procedure and Forms, http://
www.uscourts.gov/rules-policies/about-
rulemaking-process/how-suggest-change-
rules-practice-and-procedure-and-forms

SE WEE IG Gy BPE FD acceivcsc cp ncvceseonecasscovsecess 19

INTEREST OF AMICUS CURIAE'!

Amicus DeKalb County Pension Fund administers
a pension plan that manages approximately $1.3
billion in assets on behalf of current and former
employees of DeKalb County, Georgia. As part of its
duty to protect the retirement savings of participants
in the pension plan, amicus has participated in class-
action lawsuits seeking to recover damages from
securities issuers that have violated federal securities
laws and caused losses to the fund. Because amicus
manages the retirement savings of civil servants,
amicus has a longstanding institutional interest in
preserving the viability of the class-action mechanism
for protecting the rights of investors — those who, on
their own, could not feasibly or economically press a
securities lawsuit. In fact, amicus has itself been
prevented from seeking to recover for losses to its
pension plan under the rule announced in Police &
Fire Retirement System of Detroit v. IndyMac MBS,
Inc., 721 F.3d 95 (2d Cir. 2013), and applied in the
proceedings below. See DeKalb Cnty. Pension Fund
v. Transocean Ltd., 817 F.3d 393 (2d Cir. 2016), pet.
for cert. pending, No. 16-206 (filed Aug. 12, 2016).

Petitioner ably demonstrates in its brief why, under
American Pipe & Construction Co, v. Utah, 414 U.S.
538 (1974), petitioner’s individual complaint was timely

! Pursuant to Supreme Court Rule 37.6, counsel for amicus
represent that they authored this brief in its entirety and that
none of the parties or their counsel, nor any other person
or entity other than amicus or its counsel, made a monetary
contribution intended to fund the preparation or submission of
this brief. Pursuant to Rule 37.3(a), counsel for amicus also
represent that ail parties have consented to the filing of this
brief by submitting letters granting blanket consent to the filing
of amicus briefs.

2

filed and the decision below should be reversed.
Amicus supports petitioner’s arguments in full.

Amicus writes separately to expand upon a critical
point and to address the implications of that point
for the Court’s resolution of this case. Specifically,
amicus will develop further the explanation why
American Pipe can properly be understood only as
an interpretation and application of Federal Rule of
Civil Procedure 23, rather than as a judge-made
exception to statutory time limitations. Amicus will
further explain why, so understood, the rule of
American Pipe should remain intact unless and until
Rule 23 is amended under the procedures Congress
provided in the Rules Enabling Act.

SUMMARY OF ARGUMENT

I. This Court explained in American Pipe &
Construction Co. v. Utah, 414 U.S. 538 (1974), that
the basis for that decision is Federal Rule of Civil
Procedure 23. The Court described its opinion as an
“interpretation” of the rule and held that a contrary
rule requiring repetitive protective filings is “incon-
sistent with Rule 23.” Subsequent decisions of this
Court have applied American Pipe in a range of
procedural circumstances and have explained that
the policies underlying Rule 23’s text and structure
required those outcomes.

American Pipe cannot properly be considered an
application of equitable tolling, as the Second Circuit
erroneously suggested. Equitable tolling is a case-
by-case doctrine that protects specific plaintiffs who,
though diligently pursuing their rights, are unable to
bring a timely cause of action and put the defendant
on notice of their claims. American Pipe lacks these
characteristics. It is not applied case-by-case, but
rather applies to all members of a timely filed putative

3

class action, notwithstanding any specific plaintiff's
diligence. And American Pipe does not excuse a
plaintiff’s failure to put a defendant on notice of a
claim. When American Pipe applies, the filing of a
class complaint has notified the defendant of each
plaintiff’s claim. There is nothing for equity to excuse.

American Pipe also complies with the Rules Ena-
bling Act, as this Court held in American Pipe itself.
Section 13 of the Securities Act of 1933 is materially
indistinguishable from the statute this Court addressed
in that case, and the Second Circuit’s contrary
conclusion cannot be squared with this Court’s Rules
Enabling Act precedents.

Il. Because American Pipe interpreted Rule 23, it
is entitled to enhanced “statutory” stare decisis effect.
The Federal Rules of Civil Procedure are adopted by
this Court through a process prescribed by Congress,
and they have the force of law. Accordingly, when
this Court interprets a federal rule, that interpreta-
tion is best reconsidered, if at all, through the rule-
making process Congress provided. Failing to follow
that rulemaking process would unfairly penalize
injured parties with claims that would have been
considered timely and thus litigated on the merits,
had the Second Circuit followed American Pipe.

4

ARGUMENT

I. THE RULE OF AMERICAN PIPE IS AN
INTERPRETATION OF FEDERAL RULE OF
CIVIL PROCEDURE 23

A. American Pipe Held That A Rule Requir-
ing Individual Class Members To File Du-
plicate Protective Actions Is “Inconsistent
With Rule 23”

In American Pipe & Construction Co. v. Utah, 414
U.S. 538 (1974), this Court interpreted Rule 23 to
require that “the commencemcnt of a class action
suspends the applicable statute of limitations as to
all asserted members of the class who would have
been parties had the suit been permitted to continue
as a class action.” Id. at 554.

There, the State of Utah had commenced a puta-
tive class action under the federal antitrust laws,
alleging that several defendants had conspired in a
bid-rigging scheme concerning the sale of concrete
and steel pipe. See id. at 541. The district court
deemed that private action to be timely under § 5(b)
of the Clayton Act because it was filed within one
year after the conclusion of a civil action brought by
the United States. See id.2 After the court granted
the defendants’ motion for an order that the suit
could not be maintained as a class action, a group of
municipalities and other local government entities

2 Section 5(b) provided that the time for filing a private action
under the antitrust laws was “‘suspended’” during the penden-
cy, and for one year after the conclusion, of any civil proceeding
instituted by the United States; it also stated that, whenever
the suspension provision applied, any private action “‘shall
be forever barred unless commenced ... within the period of
suspension.” American Pipe, 414 U.S. at 541-42 & n.3 (quoting
15 U.S.C. § 16(b) (1970)).

5

that had been members of the putative class filed
motions to intervene as plaintiffs in the case. See id.
at 542-44. If the filing of Utah’s class complaint
stopped the running of § 5(b)’s one-year period for the
time between that filing and the district court’s order
denying class certification, then the municipalities’
motions to intervene were timely. If, however, the
one-year period continued to run against the munici-
palities despite the filing of the class complaint, then
the motions to intervene were time-barred. See id. at
544, 561.

This Court held that the intervention motions were
timely. That outcome followed from, and reflected an
interpretation of, Federal Rule of Civil Procedure 23.
As this Court stated in the opinion’s very first line,
American Pipe considered — and resolved — “the
relationship between a statute of limitations and the
provisions of [Rule] 23 regulating class actions in the
federal courts.” Jd. at 540.

As petitioner details, American Pipe began by
interpreting Rule 23 on the basis of its history and
purpose. See Pet. Br. 16-19. In its original form,
Rule 23 permitted “spurious” class actions binding
only upon named parties; the spurious class action
was “‘merely an invitation to joinder’™” that allowed
class members to “await developments in the trial or
even final judgment on the merits” to decide whether
to intervene, so that the class members could “benefit
from a favorable judgment without subjecting them-
selves to the binding effect of an unfavorable one.”
414 U.S. at 545-47 (quoting 3B James W. Moore,
Federa/l Practice 4 23.10[1], at 23-2603 (2d ed.)). The
1966 amendments to Rule 23 “were designed, in part,
specifically to mend this perceived defect in the
former Rule and to assure that members of the

6

class would be identified before trial on the merits
and would be bound by all subsequent orders and
judgments.” Id. at 547.

Under Rule 23 as amended, the class action was
transformed from “an invitation to joinder” into “a
truly representative suit designed to avoid, rather
than encourage, unnecessary filing of repetitious
papers and motions.” Jd. at 550. That purpose could
be achieved only if putative class members “stood,”
as of the filing of the class complaint, “as parties to
the suit.” Id. at 550-51. The Court thus concluded
that “the filing of a timely class action complaint
commences the action for all members of the class as
subsequently determined.” Jd. at 550.8

An alternative rule, this Court continued, would
not be “consistent with federal class action procedure”
under Rule 23 because it would preclude the efficien-
cies the Rule was adopted to allow. Id. at 553-54.
The Court thus concluded that a scheme within
which class members “must individually meet the
timeliness requirements ... is simply inconsistent
with Rule 23 as presently drafted.” Id. at 550
(emphasis added). The Court determined that its
“interpretation of the Rule” was “necessary to insure
effectuation of the purposes of litigative efficiency
and economy that the Rule in its present form was
designed to serve.” Id. at 555-56.

* Put differently, under Rule 23, a putative class member's
later-filed complaint should not be treated as “a separate cause
of action which must individually meet the timeliness require-
ments.” American Pipe, 414 U.S. at 550: see Pet. Br. 30-38.

7

B. Subsequent Decisions Of This Court Rein-
force The Conclusion That American Pipe
Interpreted Rule 23

Subsequent decisions of this Court have cemented
American Pipe’s interpretation of Rule 23 as a settled
principle of federal civil procedure. Just a few
months after American Pipe was decided, this Court
held in a federal antitrust and securities case that
each member of a class certified under Rule 23(b)(3)
who can be identified through reasonable effort must
receive notice of the right to request exclusion from
the suit. See Eisen v. Carlisle & Jacquelin, 417 U.S.
156, 159, 173-77 (1974). In so holding, the Court
rejected the argument that “class members will not
opt out because the statute of limitations has long
since run out on the claims of all class members
other than [the named plaintiff].” Jd. at 176 n.13. It
explained that the argument was “disposed of by our
recent decision in” American Pipe, “which established
that commencement of a class action tolls the appli-
cable statute of limitations as to all members of the
class.” Id.

The Court in Eisen thus recognized the critical role
American Pipe plays in ensuring the proper function-
ing of Rule 23’s provisions affording unnamed class
members rights to receive notice and to opt out.
Without American Pipe, those provisions “would be
irrelevant because the statute of limitations period
for absent class members would, more often than not,
have expired, making the right to pursue individual
claims meaningless,” as the Tenth Circuit has recog-
nized. Realmonte v. Reeves, 169 F.3d 1280, 1284
(10th Cir. 1999); see Pet. Br. 10.

Three Terms after Eisen, this Court applied Amer-
ican Pipe’s interpretation of Rule 23 to hold that an

8

unnamed class member could intervene after final
judgment in an employment-discrimination case to
appeal a denial of class certification, even though the
remaining time in the limitations period had run
between the denial] of class certification and the filing
of the motion to intervene. See United Airlines, Inc.
v. McDonald, 432 U.S. 385, 392 n.11, 396 (1977).
The Court relied on American Pipe, explaining that
“[t]he lawsuit had been commenced by the timely
filing of a complaint for classwide relief, providing
United with ‘the essential information necessary to
determine both the subject matter and size of the
prospective litigation.’” Jd. at 392-93 (quoting Amer-
ican Pipe, 414 U.S. at 555). The Court observed that
an alternative rule requiring intervention during
the limitations period “would induce putative class
members to file protective motions to intervene to
guard against the possibility that the named repre-
sentatives might not appeal from the adverse class
determination.” Jd. at 394 n.15. Such filings, the
Court said, “would be the very ‘multiplicity of activity
which Rule 23 was designed to avoid.” Id. (quoting
American Pipe, 414 U.S. at 551) (emphasis added).

In 1983, the Court issued two decisions in which it
again reaffirmed and elaborated on American Pipe’s
interpretation of Rule 23. In Crown, Cork & Seal Co.
vu. Parker, 462 U.S. 345 (1983), the Court held that
American Pipe applies not only when members of a
putative class move to intervene, but also when they
file distinct actions after a denial of class certification
and “within the time that remains on the limitations
period.” Jd. at 346-47. In that case, the original
named plaintiffs filed a putative class action alleging
employment discrimination, but class certification was

9

denied and a member of the asserted class subse-
quently filed his own lawsuit. See id. at 347-48.

The Court explained that limiting the American
Pipe rule to intervention would generate “[m]uch the
same inefficiencies” the Court sought to avoid in
American Pipe. Id. at 350. Just as in the case of
intervention, the Court explained, “[a] putative class
member who fears that class certification may be
denied would have every incentive to file a separate
action prior to the expiration of his own period of
limitations,” resulting in “a needless multiplicity of
actions — precisely the situation that Federal Rule of
Civil Procedure 23 and the tolling rule of American
Pipe were designed to avoid.” Jd. at 350-51.

The same year it decided Crown, Cork & Seal, the
Court applied American Pipe’s interpretation of Rule
23 in a case where state law supplied the limitations
period. See Chardon v. Fumero Soto, 462 U.S. 650
(1983). The Court explained that American Pipe had
adopted a “federal rule” that “the statute of limita-
tions is tolled by the filing of an asserted class
action” and noted the court of appeals’ recognition
that American Pipe “had interpreted the Federal
Rules of Civil Procedure” to permit such tolling. IZd.
at 654, 658. ‘The dissenting Justices in Chardon
agreed with the majority that American Pipe “inter-
pretied] Rule 23 to contain a rule that, during the
pendency of a class action, underlying statutes of
limitations would be tolled as to individual class
members.” Jd. at 665 (Rehnquist, J., dissenting); see
id. at 667-68.

4 The plaintiffs’ claims in Chardon arose under 42 U.S.C.
§ 1983, and the Court had interpreted 42 U.S.C. § 1988 to
require courts to borrow both state statutes of limitations and
state rules for tolling those statutes. See 462 U.S. at 657. The

10

This Court’s decisions in Eisen, McDonald, Crown,
Cork & Seal, and Chardon reaffirmed that American
Pipe is an interpretation of Rule 23 and demonstrate
that that interpretation is necessary for Rule 23 to
operate as intended in a rarge of procedural postures.
Moreover, as petitioner correctly explains, neither
Congress nor this Court has sought to amend Rule 23
to operate any differently in the decades since Amer-
ican Pipe was decided. See Pet. Br. 21-22. Rather,
as recently as 2012, this Court described American
Pipe as having “based [its] conclusion on ‘the effi-
ciency and economy of litigation which is a principal
purpose of [Fed. Rule Civ. Proc. 23 class actions].’”
Credit Suisse Sec. (USA) LLC v. Simmonds, 566 U.S.
221, 226 n.6 (2012) (quoting American Pipe, 414 U.S.
at 553) (second brackets added in Credit Suisse).

C. American Pipe Is Not An Application Of
Equitable Tolling

The Second Circuit in Police & Fire Retirement
System of Detroit v. IndyMac MBS, Inc., 721 F.3d 95
(2d Cir. 2013), professed ambivalence concerning “the
source of authority” for American Pipe and suggested
that it might be an application of equitable tolling.
721 F.3d at 108. It is not. See Pet. Br. 18-19.
American Pipe’s holding derives from statutory, not

——$ oe

Court held that, in a § 1983 case, the “federal interest in assur-
ing the efficiency and economy of the class-action procedure,”
embodied in Rule 23, “is vindicated as long as each unnamed
plaintiff is given as much time to intervene or file a separate
action as he would have under” analogous state law. Id. at 661
(footnote omitted). In Chardon, that meant applying Puerto
Rico’s rule providing that the limitations period ran anew from
the denial of class certification. See id. at 661-62. The dissent
would have held that American Pipe requires suspension rather
than renewal in all cases. See id. at 665 (Rehnquist, J., dissent-

ing).

11

equitable, authority. American Pipe relied on an
“interpretation” of Rule 23, 414 U.S. at 555-56, which
is itself an exercise of this Court’s rulemaking power
under the Rules Enabling Act, 28 U.S.C. § 2072.

A proper understanding of equitable tolling
confirms that American Pipe derives from Rule 23,
not equity. The principles of equitable tolling have
been “long-settled” for centuries. Credit Suisse, 566
U.S. at 227. Although courts apply the doctrine in
various circumstances, “[glenerally, a litigant seek-
ing equitable tolling bears the burden of establishing
two elements: (1) that he has been pursuing his
rights diligently, and (2) that some extraordinary
circumstances stood in his way.” Jd. (emphasis omit-
ted); see CTS Corp. v. Waldburger, 134 S. Ct. 2175,
2183 (2014) (equitable toiling applies “when a litigant
has pursued his rights diligently but some extra-
ordinary circumstance prevents him from bringing a
timely claim”). For example, equitable tolling may
excuse an untimely filing in a fraud case “where the
party injured by the fraud remains in ignorance of it
without any fault or want of diligence or care on his
part” or “where the ignorance of the fraud has been
produced by affirmative acts of the guilty party.”
Bailey v. Glover, 88 U.S. (21 Wall.) 342, 347, 348
(1875); see also Lampf, Pleva, Lipkind, Prupis &
Petigrow v. Gilbertson, 501 U.S. 350, 363 (1991)
(citing Bailey’s formulation of equitable tolling).

Equitable tolling is thus a case-by-case doctrine
concerned with avoiding a specific sort of unfairness
in a specific case. See Holmberg v. Armbrecht, 327
U.S. 392, 396 (1946) (doctrine of equitable tolling
“eschews mechanical rules” and seeks to avoid “an
inequity founded upon some change in the condition
or relations of the property or the parties”) (emphasis

12

added). Specifically, it seeks to protect a blameless
plaintiff who, in a particular case, filed late due to
circumstances beyond his control.5 In operating this
way, equitable tolling excuses the usual requirement
codified in statutory time bars that defendants be
notified of claims against them within a certain time
period, when doing so is necessary to ensure fairness
to the plaintiff. Cf. Bailey, 88 U.S. (21 Wall.) at 349
(observing that allowing a defendant to ensure dis-
missal by intentionally hiding his fraud during the
limitations period would “make the law which was
designed to prevent fraud the means by which it is
made successful and secure”).®

American Pipe is unlike equitable tolling in two
crucial respects. First, it is not applied case-by-case,
plaintiff-by-plaintiff, in an attempt to right wrongs
and preserve fundamental fairness. It is a rule of
procedure that applies to any member of a putative
class, regardless whether the plaintiff acted dili-
gently during the limitations period. As interpreted

5 The moral principle underlying equitable tolling is both
intuitive and fundamental. See Hadley Arkes, A Natural Law
Manifesto or an Appeal from the Old Jurisprudence to the New,
87 Notre Dame L. Rev. 1245, 1252 (2012) (setting forth “one
of the truly ‘first principles’ we draw from the logic of moral
judgment,” namely, “that we do not hold people blameworthy or
responsible for acts they were powerless to affect’), available at
http://scholarship.law.nd.edu/cgi/viewcontent.cgi?article=1024&
context=ndlr.

6 Because equitable tolling is fundamentally concerned with
fairness to the plaintiff, it is understandable that equitable
tolling is incompatible with statutory repose periods, which
prioritize the defendant's right to achieve peace. See Waldburger,
134 S. Ct. at 2183; Pet. Br. 40. American Pipe, however,
elevates the interests of neither the plaintiff nor the defendant;
it furthers the procedural policies of Rule 23. See 414 U.S. at
555-56.

13

in American Pipe, “Rule 23 both permits and encour-
ages class members to rely on the named plaintiffs
to press their claims.” Crown, Cork & Seal, 462 U.S.
at 352-53 (emphasis added). Had equity been its
source, the American Pipe rule would have been
limited to those who reasonably relied on the class-
action filing, whereas the Court in American Pipe
expressly refused to apply a “different ... standard
... to those members of the class who did not rely
upon the commencement of the class action (or who
were even unaware that such a suit existed).” 414
U.S. at 551.

Second, American Pipe does not excuse the failure
to notify defendants of adverse claims, as does equi-
table tolling. On the contrary, this Court has recog-
nized that American Pipe applies where the filing of
a timely class action “‘notifies the defendants not
only of the substantive claims being brought against
them, but also of the number and generic identities
of the potential plaintiffs.” Crown, Cork & Seal, 462
U.S. at 353 (quoting American Pipe, 414 U.S. at 555);
see also American Pipe, 414 U.S. at 562 (Blackmun,
J., concurring) (claims to which American Pipe applies
“invariably will concern the same evidence, memories,
and witnesses as the subject matter of the original
class suit, and the defendant will not be prejudiced
by later intervention”). Thus, under American Pipe,
there is no lack of notice for equity to excuse.’

’ Passing references to American Pipe in a couple of this
Court’s equitable-tolling decisions provide no basis on which
to ignore the fundamental differences between American Pipe’s
interpretation of Rule 23 and the doctrine of equitable tolling.
Cf. Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 1368
(2013) (“Is the Court having once written dicta calling a tomato
a vegetable bound to deny that it is a fruit forever after?”).

14

D. Rule 23, As Interpreted In American Pipe,
Complies With The Rules Enabling Act

American Pipe’s interpretation of Rule 23 comports
fully with the Rules Enabling Act. In IndyMac, the
Second Circuit concluded (in the alternative) that
applying American Pipe to § 13 of the Securities Act
of 1933, 15 U.S.C. § 77m, would modify a “substan-
tive right” protected by § 13 and thereby violate the
Rules Enabling Act. 721 F.3d at 109; see 28 U.S.C.
§ 2072(b) (Federal Rules of Civil Procedure may not
“abridge, enlarge or modify any substantive right”).
That is incorrect.

American Pipe itself rejected an argument that the
“‘substantive’ element” of the statutory time bar
caused the Court’s interpretation of Rule 23 to
violate the Rules Enabling Act. See 414 U.S. at 556-
58. “The proper test,” the Court explained, “is not
whether a time limitation is ‘substantive’ or ‘proce-
dural,’ but whether tolling the limitation in a given
context is consonant with the legislative scheme.” Id.
at 557-58. Allowing petitioner to pursue claims that
were filed on a class-wide basis within the repose
period is consonant with § 13 and the policies statutes
of repose are intended to further. See Pet. Br. 50-51.

In addition, the Second Circuit’s conclusion that
American Pipe implicates the Rules Enabling Act
because §13 is “a statute of repose” defining “a
substantive right,” IndyMac, 721 F.3d at 109 n.17,
ignores that § 13 is relevantly indistinguishable from
the provision at issue in American Pipe. The statute
in American Pipe, 15 U.S.C. § 16(b) (1970) (now
codified at 15 U.S.C. § 16(i)), provided that lawsuits
not “commenced” within one year of a government suit
under the antitrust laws would be “forever barred.”
See 414 U.S. at 542 n.3. Notably, the one-year period

15

ran from the conclusion of the government action —
a time unrelated to a plaintiff’s discovery of a claim.
The provision thus bore the same hallmarks that
respondents claim characterize “statutes of repose.”
See Br. in Opp. 26.8 Accordingly, § 13’s characteris-
tics as a repose period provide no basis to distinguish
this Court’s holding in American Pipe that its rule
was “consonant with the legislative scheme” and did
not implicate the Rules Enabling Act. 414 U.S. at
557-58.

The Second Cuircuit’s holding also cannot be
squared with this Court’s Rules Enabling Act prece-
dents. The Second Circuit’s reasoning appears to be:
(1) § 13 protects a substantive right; (2) American
Pipe would affect § 13; therefore, (3) American Pipe
violates the Rules Enabling Act. But the proper test
‘is not whether the rule affects a litigant’s substan-
tive rights; most procedural rules do.” Shady Grove
Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S.
393, 407 (2010) (plurality) (emphasis added). Rather,
“lwjhat matters is what the rule itself regulates.” Id.
(emphasis added); see also id. at 412 n.10 (distin-
guishing between “what the Federal rule regulates

8 In fact, the provision at issue in American Pipe has been re-
ferred to as a “statute of repose.” The district court in American
Pipe called it an “antitrust statute of repose.” Utah v. American
Pipe & Constr. Co., 50 F.R.D. 99, 103 (C.D. Cal. 1970), remanded
in part, 473 F.2d 580 (9th Cir. 1973), aff'd, 414 U.S. 538 (1974).
In their petition for a writ of certiorari, the defendants in that
case referred to the provision as a “statute of repose.” Pet.
for Cert. at 22, American Pipe, supra, No. 72-1195 (U.S. filed
Mar. 2, 1973), 1973 WL 346627. And, four years after American
Pipe, this Court quoted with approval the Ninth Circuit’s
description of the provision as “‘a statute of repose.’” Greyhound
Corp. v. Mt. Hood Stages, Inc., 437 U.S. 322, 334 (1978) (quoting
Dungan v. Morgan Drive-Away, Inc., 570 F.2d 867, 869 (9th Cir.
1978)).

16

[and] its incidental effects”); Sibbach v. Wilson & Co.,
312 U.S. 1, 14 (1941) (“[t]he test must be whether a
rule really regulates procedure”). Here, as petitioner
explains, the rule regulates Rule 23’s precise proce-
dural concern: whether the plaintiff may recover
through a distinct lawsuit or only as part of the
original class action.®

In all events, § 13 does not in fact protect any
substantive right for purposes of the Rules Enabling
Act. See Pet. Br. 50 & n.11. It governs only when
a lawsuit may be brought. When Congress enacts
statutes that create or destroy substantive rights to
relief, it does so in clear terms. See Beach v. Ocwen
Fed. Bank, 523 U.S. 410, 416-17 (1998); compare
15 U.S.C. §77m (governing when a suit may be
“brought”) with id. § 1635(f) (“An obligor’s right of
rescission shall expire three years after the date of
consummation ....”) (emphases added). It did not
do so here.

% Put differently, American Pipe determines what event
constitutes the timely filing of a complaint under a federal
statutory limitations period. This Court has held that such a
determination is procedural and properly made by the Federal
Rules. See West v. Conrail, 481 U.S. 35, 38-39 (1987) (complaint
timely filed under federal statute of limitations because suit
was “commenced” as that term was defined under Federal Rule
of Civil Procedure 3).

17

Il ANY CHANGE TO AMERICAN PIPE’S
SETTLED INTERPRETATION OF RULE 23
SHOULD BE ACCOMPLISHED THROUGH
THE RULES ENABLING ACT’S PROCEDURE
FOR AMENDING THE FEDERAL RULES
OF CIVIL PROCEDURE

A. As An Interpretation Of Rule 23, American
Pipe Has Enhanced Stare Decisis Effect

American Pipe’s interpretation of Rule 23 is
entitled to great weight under this Court’s cases.
The Court has held that, while “{o]verruling prece-
dent is never a small matter,” Kimble v. Marvel
Entm't, LLC, 135 S. Ct. 2401, 2409 (2015), stare
decisis principles apply with even greater force to
decisions interpreting federal statutes, see Patterson
v. McLean Credit Union, 491 U.S. 164, 172 (1989).
In such cases, “the legislative power is implicated,
and Congress remains free to alter” the operation
of the federal rule in issue. /d. at 172-73. The
rationale underlying statutory stare decisis is that,
when this Court interprets a statute (or a rule), the
holding “effectively becomes part of the statutory
scheme, subject ... to congressional change. Absent
special justification, they are balls tossed into Con-
gress’s court, for acceptance or not as that branch
elects.” Kimble, 1358S. Ct. at 2409.

The same rationale applies to interpretations of
the Federal Rules of Civil Procedure. Those rules
“ha[ve] the force of a federal statute.” Sibbach, 312
U.S. at 13. And, just like federal statutes, they can
be changed by Congress. See Dickerson v. United
States, 530 U.S. 428, 437 (2000). Parties unhappy
with the way this Court interprets a federal rule can
simply “take their objections across the street, and
Jongress can correct any mistake it sees.” Kimble,

18

135 S. Ct. at 2409; see also Walker v. Armco Steel
Corp., 446 U.S. 740, 749 (1980) (noting that “the
doctrine of stare decisis weighs heavily against”
overruling a precedent interpreting a Federal Rule of
Civil Procedure).

Indeed, the case for enhanced stare decisis is even
stronger in the context of the Federal Rules because
this Court, in addition to Congress, is empowered
to adopt amendments on its own. See 28 U.S.C.
§§ 2072(a), 2074(a) (rules proposed by this Court take
effect unless Congress provides otherwise by law);
see also A. Benjamin Spencer, Plausibility Pleading,
49 B.C. L. Rev. 431, 462 (2008), available at http://
lawdigitalcoommons.bc.edu/cgi/viewcontent.cgi?article=
2383&context=belr. And it is stronger still here, where,
despite 30 amendments to the Federal Rules since
American Pipe was decided, the rule of American Pipe
has remained undisturbed. See Pet. Br. 21; see also
Faragher v. City of Boca Raton, 524 U.S. 775, 792
(1998) (force of statutory stare decisis is “enhanced”
when Congress amends a statute “without providing
any modification of [this Court’s] holding”).

“As against this superpowered form of stare
decisis,” respondents “would need a _ superspecial
justification to warrant” abrogating American Pipe.
Kimble, 135 S. Ct. at 2410; see id. at 2409 (such
a justification must rise “above the belief that the
precedent was wrongly decided”). They have presented
no such justification.

B. Congress Has Set Forth The Process For

Amending Rule 23

The Rules Enabling Act authorizes this Court to
prescribe rules of procedure for cases in the United
States district courts. See 28 U.S.C. § 2072. It also
provides for the method of prescribing those rules,

19

see id. § 2073, and for the submission of rules to
Congress before they take effect, see id. § 2074.

In exercising the rulemaking authority Congress
granted, this Court promulgates rules of civil proce-
dure through a “committee process” that invites
input from judges, scholars, government agencies,
and members of the bar and the public.'° Interested
parties can submit suggestions for changes to the
rules.'! “Federal Rules take effect after an extensive
deliberative process involving many reviewers: a Rules
Advisory Committee, public commenters, the Judicial
Conference, this Court, the Congress.” Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997).

Observing the rulemaking process when altering
the way Federal Rules operate honors the statutory
stare decisis principles described above. This Court’s
initial interpretation of a rule puts the ball in
“Congress’s court, for acceptance or not as that
branch elects.” Kimble, 135 S. Ct. at 2409. And
Congress exercises that prerogative through the
process it prescribed in the Rules Enabling Act. Cf.
Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100, 114-
19 (2009) (Thomas, J., concurring in part and concur-
ring in the judgment) (questions committed to the
Court’s Rules Enabling Act authority best addressed
through the “full airing that rulemaking provides”).

Additionally, declining to follow American Pipe’s
interpretation of Rule 23 in this case would retro-

10 U.S. Courts, How the Rulemaking Process Works, http://
www.uscourts.gov/rules-policies/about-rulemaking-process/how-
rulemaking-process-works (last visited Mar. 5, 2017).

\l See U.S. Courts, How to Suggest a Change to the Rules of
Practice and Procedure and Forms, http://www.uscourts.gov/rules-
policies/about-rulemaking-process/how-suggest-change-rules-
practice-and-procedure-and-forms (last visited Mar. 5, 2017).

20

actively deprive petitioner (and similarly situated
plaintiffs, such as amicus) of the ability to have their
claims adjudicated on the merits. Such an outcome
would violate “[e]lementary considerations of fair-
ness,” which “dictate that individuals should have an
opportunity to know what the law is and to conform
their conduct accordingly.” Landgraf v. USI Film
Prods., 511 U.S. 244, 265 (1994); see also id. (“settled
expectations should not be lightly disrupted”). The
Rules Enabling Act mitigates this sort of unfairness
by inserting a delay between a rule’s adoption and its
taking effect and by permitting this Court to prevent
a new rule from applying to pending proceedings
where “the application of such rule in such proceed-
ings would not be feasible or would work injustice.”
28 U.S.C. § 2074(a).!?

Beyond upsetting the settled expectations of peti-
tioner, a retroactive change to American Pipe would
grant respondents an unjustifiable windfall. Under
American Pipe, Rule 23 has long protected the ability
of putative class members to press their own lawsuits
where a timely class complaint has been filed. With
notice of a change in the Rule (or had the Second
Circuit not refused to follow American Pipe’s inter-

12 As this Court has recognized, the law has long disfavored
changes in law that “attach|] a new disability[] in respect to
transactions ur considerations already past.” Society for the
Propagation of the Gospel v. Wheeler, 22 F. Cas. 756, 767
(C.C.N.H. 1814) (No. 13,156) (Story, J.); see also Landgraf, 511
U.S. at 265 (“[T]he principle that the legal effect of conduct
should ordinarily be assessed under the law that existed when
the conduct took place has timeless and universal appeal.”);
Stephen R. Munzer, A Theory of Retroactive Legislation, 61
Tex. L. Rev. 425, 471 (1982) (“The rule of law .. . is a defeasible
entitlement of persons to have their behavior governed by rules
publicly fixed in advance.”).

21

pretation of Rule 23), petitioner would have filed the
requisite protective action and would presumably
have recovered for its injuries. C/. Pet. Br. 14 (noting
that respondents settled with the class members that
did not opt out). Yet, rather than suggest a change to
the Committee on Rules of Practice and Procedure,'*
respondents seek a change in class-action procedure
that would amount to immunity from liability in this

and other pending cases.

CONCLUSION

The judgment of the court of appeals should be
reversed.

13 See U.S. Courts, How To Suggest a Change to the Rules of
Practice and Procedure and Forms, http://www.uscourts.gov/rules-
policies/about-rulemaking-process/how-suggest-change-rules-
practice-and-procedure-and-forms (last visited Mar. 5, 2017).

DAVID R. SCOTT

WILLIAM C. FREDERICKS

GEOFFREY M. JOHNSON

ScoTr+Scot;t, ATTORNEYS
AT LAW, LLP

The Helmsley Building

230 Park Avenue

17th Floor

New York, New York 10169

(212) 223-6444

March 6, 2017

22

Respectfully submitted,

DAVID C. FREDERICK
Counsel of Record

GREGORY G. RAPAWY

JEREMY S. NEWMAN

BENJAMIN S. SOFTNESS

KELLOGG, HANSEN, TODD,
Ficer. & FREDERICK, P.L.L.C.

1615 M Street, N.W.

Suite 400

Washington, D.C. 20036

(202) 326-7900

(dfrederick@kellogghansen.com)

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0709%3A14. Public record. Not legal advice.