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Opt-Outs Beware: Arizona Court of Appeals Rejects Cross-Jurisdictional Tolling under American Pipe

(Class Action Lawsuits by Nick Youngson CC BY-SA 3.0 Alpha Stock Images)

In Rader v. Greenberg Traurig, LLP, No. 1 CA-CV 14-0299 (Ariz. App. 6/23/15), the Arizona Court of Appeals recently held that the statute of limitations is not equitably tolled when class members opt out of a federal class action and individually pursue their claims in Arizona state courts. In the federal courts, the long-standing rule has been that the statute of limitations for a class member to opt-out and individually pursue claims in another federal court will be equitably tolled until class certification is denied. See American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974). In Rader, however, the claimants opted out of a federal class and individually filed their claims in Arizona state court. The trial court rejected their assertion of equitable tolling and dismissed their claims as time-barred. The Court of Appeals affirmed the dismissal.

The Court of Appeals distinguished American Pipe due to the fact that there is no savings statute under federal law, leaving the question of tolling up to the federal courts to decide. While the Arizona Supreme Court had previously allowed for equitable tolling it did so only with great hesitation, and while simultaneously calling for the Arizona Legislature to pass a general savings statute. The Legislature responded, engaging in “delicate policy decisions" as to the tolling of limitations periods and enacting a savings statute—A.R.S. 12-504. Given this history, the Court of Appeals in Rader was unwilling to allow for equitable tolling beyond that already provided for by the Legislature in the savings statute. As the parties had stipulated that the savings statute did not apply in their case, the Court of Appeals rejected the Plaintiffs' request for equitable tolling and affirmed the dismissal of their claims.

The ultimate impact of the Rader decision remains to be seen. The Plaintiffs will likely seek review before the Arizona Supreme Court. But even in the absence of further review (or if the decision is affirmed by the Supreme Court) the question remains open whether the statute of limitations may be tolled for Arizona claimants who have opted out of class action in another jurisdiction. Although the parties in Rader stipulated that the savings statute did not apply, the three-judge panel of the Court of Appeals questioned this stipulation and suggested that the statute might have applied to save the Plaintiffs' claims (a link to the oral argument is here). However, given the parties' stipulation the Court of Appeals specifically did not decide the applicability of A.R.S. 12-504 to class action opt-outs, leaving this as an open question in Arizona.