Dow Chemical Corp. v. Blanco, C.A. No. N11C-07-149 (Del. June 10, 2013)
In a case of first impression, the Delaware Supreme Court answered a certified question of law submitted by the Superior Court regarding whether Delaware recognizes the concept of cross-jurisdictional tolling (i.e., whether the statute of limitations in Delaware is tolled during the pendency of related class action litigation in another jurisdiction). The Supreme Court answered this question in the affirmative and held, as a matter of Delaware law, that the statute of limitations for class action members’ individual claims are tolled while a putative class action on their behalf is pending in Delaware or any other jurisdiction.
This certified question of law arose out of a dispute in which the plaintiff joined a class action lawsuit in Texas against defendants for his alleged exposure to a toxic pesticide while employed by one of the defendants. After several years, the Texas court denied class certification. The plaintiff subsequently filed an action against the defendants in the Delaware Superior Court alleging the same injury as the Texas class action. The defendants moved to dismiss, asserting that Delaware’s two-year statute of limitations barred the plaintiff’s suit. The Superior Court held that cross-jurisdictional tolling such that Delaware’s statute of limitations was tolled while the Texas class action was pending, but limited its holding to the facts of the case. Following this decision, the defendants applied for an interlocutory appeal under Supreme Court Rule 42 and the Superior Court granted the application on the narrow question of whether Delaware recognizes cross-jurisdictional tolling.
Sitting en banc, the Delaware Supreme Court held, as a matter of law, that Delaware recognizes cross-jurisdictional tolling. In so holding, the Delaware Supreme Court followed the reasoning of the U.S. Supreme Court in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), and Crown, Cork & Seal Co. v. Parker, 462 U.S. 345 (1983), which recognized the “intra-jurisdictional tolling exception” in circumstances where the putative class action and individual claims were brought in the same jurisdiction, and extended that doctrine to situations where the putative class action is brought in a foreign jurisdiction. As had the U.S. Supreme Court in American Pipe, the Delaware Supreme Court focused on striking the proper balance between the countervailing policies underlying class action procedures and statutes of limitation. The Court explained that class action procedures are intended to promote judicial efficiency and economy, while statutes of limitation are intended to give defendants fair and timely notice of claims against them. After examining the reasoning of other state supreme courts, the Court found that the policies weighed in favor of recognizing cross-jurisdictional tolling for two reasons. First, the Court concluded that cross-jurisdictional tolling prevents duplicative litigation because it allows plaintiffs to wait until class action litigation is resolved in another jurisdiction before filing suit, rather than filing “placeholder lawsuits” upfront to preserve their individual claims. Second, the Court found that cross-jurisdictional tolling does not impair the notice function of statutes of limitation because a class action lawsuit pending in another jurisdiction provides a defendant with fair notice of the substance and nature of individual claims that might be filed against them.
Dissenting from the majority opinion, Chief Justice Steele disagreed with the majority’s analysis of the countervailing policies. Specifically, he contended that Delaware should not recognize cross-jurisdictional tolling because it promotes forum shopping. He further argued that the majority’s concern with “placeholder lawsuits” was misplaced because such suits do not defeat the purpose of class litigation and can be easily stayed during a pending action for class certification.