For Whom The Case Tolls

The U.S. Court of Appeals for the Third Circuit has issued an interesting decision on the tolling of the statute of limitations for class claims. In Yang v. Odom, No. 03-2951 (3rd Cir. Dec. 15, 2004), the court found that “where class certification has been denied solely on the basis of the lead plaintiffs’ deficiencies as class representatives, and not because of the suitability of the claims for class treatment,” the statute of limitations is tolled for subsequent class claims from the commencement of the earlier case until there is a final adverse determination of the earlier class claims. As a result of this holding, the plaintiffs will be able to proceed with their securities class action brought in the D. of N.J. even though a “substantively identical” securities class action brought in the N.D. of Ga. had previously had been denied class certification. (Note that there appears to be a circuit split on this issue that is discussed in the opinion.)

Quote of note: “Drawing the line arbitrarily to allow tolling to apply to individual claims but not to class claims would deny many plaintiffs with small, potentially meritorious claims the opportunity for redress simply because they were unlucky enough to rely upon an inappropriate lead plaintiff. For many, this would be the end result, while others would file duplicative protective actions in order to preserve their rights lest the class representative be found deficient under [F.R.C.P.] 23.”

Thanks to Adam Savett for sending in the case.

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