On January 10, 2018, Judge Paul Engelmayer of the United States District Court for the Southern District of New York held that plaintiffs who were allegedly injured between 1965 and 1990 on banana plantations outside the United States can proceed with product liability suits that would otherwise have been time-barred by New York’s statute of limitations [1] under the theory that the New York Court of Appeals will recognize cross-jurisdictional class action tolling in class actions originating in other states. The court certified the question to the New York Court of Appeals and stayed discovery in the matter pending hearing and decision of the expected appeal. The court reasoned that because (1) New York has applied the holding of American Pipe & Construction Co. v. Utah [2] to New York state class actions, it can be expected that the Court of Appeals will do so for class actions that were commenced in foreign jurisdictions; and (2) lower courts in New York have applied the tolling statute to dismissals in certain cross-jurisdiction class actions.

Procedural History

Several thousand individuals commenced a putative class action [3] in 1993 against Occidental Chemical Corp. and others for purported injuries resulting from exposure to DBCP (dibromochloropropane) while they worked on banana plantations in various Central American, South American, and African countries. Although those cases were originally commenced in Texas state court, [4] they were removed to federal court after an Israeli corporation, impleaded by defendants, removed the matter to federal court. [5] Although the parties addressed class certification in pre-motion correspondence, before a ruling was made, the court ruled that subject-matter jurisdiction was proper and then conditionally granted defendants’ motions to dismiss for forum non conveniens. It also denied as moot all pending motions. [6] Before the memorandum and order were finalized, the parties had to meet certain conditions, including domestic discovery and waiver of certain defenses. The court’s memorandum and order enjoined “plaintiffs (and intervenor plaintiffs) in the actions before the court” from bringing any new cases. It also included a provision allowing plaintiffs to resume their case in Texas federal district court if plaintiffs were found to lack jurisdiction in their home countries. The plaintiffs appealed to the United States Court of Appeals for the Fifth Circuit, which held that the district court did, in fact, have subject-matter jurisdiction. Certiorari was denied by the U.S. Supreme Court in 2001. While waiting for a decision from the Fifth Circuit, the Costa Rican plaintiffs filed suit in Costa Rica where the Costa Rican Supreme Court ultimately determined that Costa Rican courts did not have jurisdiction. Plaintiffs sought reinstatement to the Texas District Court.

Meanwhile, in 1997, another group of plaintiffs had begun suit in Hawaii against the same defendants, which followed a path similar to the Texas cases, although on plaintiffs’ appeal to the Ninth Circuit, that court held the district court did not have subject-matter jurisdiction. Since this decision was apposite to the Fifth Circuit’s decision, the U.S. Supreme Court granted certiorari and held that the district court did not have jurisdiction, so removal was improper. [7] The Hawaii plaintiffs returned to state court, which denied class certification. The defendants sought and were granted summary judgment on statute of limitations grounds, but the highest court vacated the order and reinstated the cases.

In 2004, following the Ninth Circuit decision, the Texas District Court dismissed the cases for lack of jurisdiction, granted Costa Rican plaintiffs’ motion to remand to state court, and vacated its injunction against filing claims in other jurisdictions. Plaintiffs’ subsequent motion to reinstate in Texas state courts was granted and, after defendants’ appeal, the Texas Court of Appeals affirmed. In September 2009, plaintiffs sought class certification in Texas state court. Despite defense attempts to again remove to federal court, removal was denied. On June 3, 2010, class certification was denied, and on June 4, 2010, plaintiffs voluntarily dismissed the complaint.

The Chavez plaintiffs originally filed suit in the United States District Court for the Eastern District of Louisiana in June 2011. In early June 2012, the same plaintiffs also filed suit in the United States District Court for the District of Delaware. These were originally dismissed as to Occidental because of the pending cases in Louisiana. The Louisiana claims were dismissed in September 2012 on statute of limitations grounds under Louisiana law. The Third Circuit affirmed the District of Delaware’s dismissal, but an en banc decision by the Third Circuit revived the cases. Once the cases were back in Delaware District Court, defendants, including Occidental, moved to dismiss for lack of personal jurisdiction, and plaintiffs requested transfer of the claims against Occidental to the Southern District of New York, based on diversity of citizenship. The court dismissed the claims against the other defendants as being time-barred and granted the transfer request.

On plaintiffs’ appeal of the dismissals, the Third Circuit certified the following question to the Delaware Supreme Court:

Whether [under Delaware law] “class action tolling end[s] when a federal district court dismisses a matter for forum non conveniens and, consequently, denies as moot ‘all pending motions,’ which include the motion for class certification, even where the dismissal incorporated a return jurisdiction clause stating that ‘the court will resume jurisdiction over the action as if the case had never been dismissed for [forum non conveniens].’”

To date, the Delaware Supreme Court has not answered the question.

Meanwhile, in New York, Occidental moved for dismissal on statute of limitations grounds. New York’s statute of limitations generally expires three years after plaintiffs’ discovery of their injury, which in these cases, would be in 1996, three years after plaintiffs first learned of their injuries.

Plaintiffs argued that “cross-jurisdictional class action tolling,” a doctrine by which a limitations period is tolled when a putative class action complaint is pending in any state, should apply and that under such a theory, the tolling period in the present cases extended through June 2010, when the Texas state court finally denied class certification. Occidental argues that the doctrine is not applicable because New York’s highest court has yet to decide the issue; if presented with it, would not adopt it; and even assuming it did, the statute of limitations expired in 1995, either when the forum non conveniens motion was granted in July or when the Texas district court entered the final judgment in October, when it dismissed the cases and enjoined the plaintiffs from beginning an action in a separate court.

Although New York has yet to formally opine on the applicability of cross-jurisdictional class action tolling to cases filed in other state courts, and federal district courts in New York have ruled inconsistently on the issue, Judge Engelmayer held cross-jurisdictional class action tolling is appropriate under New York law and that “plaintiffs’ claims were tolled continuously from August 31, 1993 through June 3, 2010, making this action timely.” He opined that New York’s Court of Appeals would likely apply the concept because it has applied it to support tolling for in-state filed claims. Further, while he conceded that the Court of Appeals’ acceptance of the doctrine will be a significant shift in New York’s public policy, and indeed, expressed some concern over making the prediction, he nonetheless decided its application is appropriate.

Unless and “until class certification is denied,” [8] statutes of limitation are tolled. Thus, the court noted that where is no evident or obvious denial; the more appropriate inquiry is whether plaintiffs reasonably relied on the class action to advance their claims. [9] Judge Engelmayer found that in the instant case, the Texas District Court orders were drafted in such a way that absent class members could rely on that court’s intent to maintain the class action because the July order was merely a conditional dismissal, with the expectation that if plaintiffs could not get relief elsewhere, they could return to the Texas District Court. The 1995 denial of all other pending motions as moot, including any motion on class certification, was not on the merits and consequently did not specifically deny class certification.

Judge Engelmayer certified his order for interlocutory appeal, [10] for certification by the Second Circuit to the New York Court of Appeals, and stayed proceedings pending resolution of the interlocutory appeal.

Judge Engelmayer outlined some of the concerns this decision raises: First, is it appropriate for federal courts applying state law to divine how a state will interpret its own laws? Second, should federal courts expand a state’s public policy on specific issues, including limitations periods? Third, does New York public policy truly favor cross-jurisdictional tolling, given the potential that doing so will overburden an already overburdened court system? Most important, however, and not addressed by Judge Engelmayer, is the question vital to defendants in potential class actions: When can a company assure its stakeholders that it is no longer at risk for litigation?