There the matter would have remained, but for the entry of one William L. Schwartz. Represented by the same counsel as the plaintiffs in the lead Westinghouse case, Schwartz filed a complaint on behalf of himself and the same class of plaintiffs, in which he alleged essentially the same claims that the lead Westinghouse plaintiffs abandoned when they chose to stand on their complaint and take their appeal, as well as the claims that remained for disposition in light of the Third Circuit's decision. The defendants filed motions to dismiss this new complaint, asserting that the Schwartz claims are untimely and barred by the doctrine of judicial estoppel. They are also seeking the imposition of sanctions under the Private Securities Litigation Reform Act of 1995. These motions are now ripe for disposition.
The statute of limitations for the securities fraud claims alleged here is one year from the time the plaintiff discovers the facts constituting the violation, and, in any event, within three years after the violation takes place, whether discovered or not. Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 364, 115 L. Ed. 2d 321, 111 S. Ct. 2773 (1991). The allegedly fraudulent conduct at issue in this case occurred in 1990 and 1991, and thus would ordinarily be time-barred. Schwartz, however, argues that the pendency of the lead Westinghouse case, brought as a class action without a class ever being certified, tolled the statute of limitations under the doctrine set forth by the Supreme Court in American Pipe & Construction Co. v. Utah, 414 U.S. 538, 38 L. Ed. 2d 713, 94 S. Ct. 756 (1974), and Crown Cork & Seal Co. v. Parker, 462 U.S. 345, 76 L. Ed. 2d 628, 103 S. Ct. 2392 (1983). Schwartz's reliance on that doctrine is misplaced.
In American Pipe, the State of Utah filed an antitrust class action just eleven days short of the running of the statute of limitations, but the district court later denied class certification because the numerosity requirement of Fed. R. Civ. P. 23(a)(1) was not satisfied. Eight days after that denial, certain municipal entities which had been members of the proposed class filed motions to intervene. The district court denied intervention, believing that the statue of limitations had run on those claims. A unanimous Supreme Court disagreed, holding that "the commencement 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." 414 U.S. at 554. Because the clock only began to run anew when the district court denied class certification, and because there were eleven days left on it when Utah filed the original action, the municipal plaintiffs' intervention motion filed eight days after the decertification order was timely. Id. at 561.
The Supreme Court refined and extended this doctrine in Parker, in which two plaintiffs filed a Title VII class action against the defendant. Subsequently, another individual, Mr. Parker, who was a member of the putative class, filed an EEOC charge and received a "right to sue" letter. After the statute of limitations had run on Parker's individual claim, the district court denied class certification for lack of typically, numerosity and adequate representation; he then filed his own, separate Title VII action. The Supreme Court held that "the filing of a class action tolls the statute of limitations "as to all asserted members of the class, not just as to intervenors." Id. at 350 (citation and internal quotation marks omitted). Justice Powell, however, expressed caution, opining that "the tolling rule of American Pipe is a generous one, inviting abuse." Id. at 354 (Powell, J., concurring).
Both American Pipe and Parker involved subsequent individual actions filed in the wake of the district court's denials of class certification. In the matter before me, Schwartz argues that this tolling doctrine is equally applicable to a successive class action as well. I cannot agree. As early as 1988, the Sixth Circuit noted that "the courts of appeals that have dealt with [this] issue appear to be in unanimous agreement that the pendency of a previously filed class action does not toll the limitations period for additional class actions by the putative members of the original asserted class." Andrews v. Orr, 851 F.2d 146, 149 (1988) (citing Korwek v. Hunt, 827 F.2d 874, 879 (2d Cir. 1987); Salazar-Calderon v. Presidio Valley Farmers Ass'n, 765 F.2d 1334, 1351 (5th Cir. 1985); Robbin v. Fluor Corp., 835 F.2d 213, 214 (9th Cir. 1987)); see also Smith v. Flagship Int'l, 609 F. Supp. 58, 64 (N.D. Tex. 1985); Burns v. Ersek, 591 F. Supp. 837, 842 (D. Minn. 1984). Numerous other courts have since agreed with the Sixth Circuit. See Griffin v. Singletary, 17 F.3d 356, 359 (11th Cir. 1994); In re Cypress Semiconductor Securities Litig., 864 F. Supp. 957, 959 (N.D. Cal. 1994); Fleck v. Cablevision VII, Inc., 807 F. Supp. 824, 826 (D.D.C. 1992); In re Quarterdeck Office Sys., Inc. Securities Litig., 854 F. Supp. 1466, Fed Sec. L. Rep. (CCH) P98,190, 1994 WL 374452, *3-4 (C.D. Cal. Mar. 24, 1994) (dicta).
The rationale of these courts is clear, uniform and persuasive. "Putative class members may [not] piggyback one class action onto another and thus toll the statute of limitations indefinitely. . . ." Korwek, 827 F.2d at 878 (quoting Salazar-Calderon, 765 F.2d at 1351); accord Griffin, 17 F.3d at 359 (quoting Salazar-Calderon, 765 F.2d at 1351, and declining to permit plaintiffs to "engage in endless rounds of litigation"). As the Flagship court opined, a contrary rule
would allow the attorney for a class to revive the class claims upon denial of certification by simply refiling a new class action using a different putative class member as representative. The attorney would be able to bring a potentially endless succession of class actions, each tolling the [statute of limitations] for its successor. Such a rule would frustrate the principal purpose of the class action procedure--promotion of efficiency and economy of litigation.