A Closer Look: Ninth Circuit Extends American Pipe Tolling to Potentially Excluded Class Members in Face of Ambiguous Class Definitions

In a case of first impression, the Ninth Circuit recently held that when there is ambiguity about the scope of a putative or certified class, American Pipe statute of limitations tolling should generally apply to potentially excluded class members. This question is likely to arise where a proposed class definition is narrowed during the course of litigation such that certain putative members may no longer fit within the definition. Should those now-excluded bystander plaintiffs argue that American Pipe tolling applies to their claims, courts in the Ninth Circuit are now instructed to resolve that ambiguity in favor of such bystander plaintiffs.

In Defries v. Union Pacific RR Co., 2024 WL 2984816, __F.4th __ (9th Cir. 2024), a conductor for Union Pacific was removed from his job in 2018 after failing a routine color-vision test and subsequent referral to a fitness-for-duty program, which the company had recently revised. At the time, a putative class action was pending against Union Pacific alleging violations of the American Disabilities Act ("ADA") on behalf of employees referred to the new program who subsequently lost their jobs. Harris v. Union Pacific Railroad Co., No. 8:16-cv-381 (D. Neb.). While both parties in the Defries litigation agree the plaintiff initially qualified as a putative class member under a broader definition in the complaint, in 2018 the Harris plaintiffs subsequently narrowed the class definition to those who were subject to fitness-for-duty "as a result of a reportable health event[.]" The district court certified the narrowed class in 2019, but that certification was reversed in 2020.

Defries filed his individual lawsuit after the Harris reversal, raising similar claims. Union Pacific argued that because Defries was referred to fitness-for-duty because of a routine test, as opposed to a new health impairment, his referral did not come from a health "event," and thus he no longer qualified as a class member as of 2018. And while the Supreme Court had decided in American Pipe & Construction Co. v. Utah, 414 U.S. 538, 554 (1974) that the "commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class," Union Pacific argued the tolling period ended for Defries when the class was narrowed to exclude his claim in 2018, and thus his individual lawsuit was now time barred.

In Defries, the Ninth Circuit analyzed the history of American Pipe tolling, an equitable doctrine that furthers the purpose of efficiency in class actions by "enabl[ing] class members to rely on class counsel and the district court to represent their interests without the need to seek to intervene or file individual suits," (emphasis in original) until a member opts out or certification is denied. The Court noted that the end of the tolling period is "less clear-cut than its beginning," and analyzed cases from the Tenth and Fourth Circuit holding that tolling is limited to those plaintiffs who ultimately fall within the class definitions that are put forward for certification. The Court determined, however, that the holding of those cases was that "to end American Pipe tolling, the exclusion of a plaintiff from a revised class definition must be 'unambiguous,'" and thus if the bystander plaintiff "arguably" falls within the class defined in a complaint, that bystander is entitled to tolling until the new definition unambiguously excluding them is accepted by a court. Otherwise, the Court feared bystander plaintiffs would be incentivized to intervene or file their own actions while a class action was pending for the sole purpose of preserving their rights, which in turn would negate the efficiencies of the class action system.

Applying that framework, the Court analyzed whether Defries was unambiguously excluded from the Harris class, and found that the reading of "reportable health event"-a term defined in Union Pacific's Medical Rules-was ambiguous, in that it counted "any new diagnosis." This could apply not just to physical changes but also to changes in an employee's awareness of a condition, such as a recent failed eye exam, even if that was a pre-existing condition. The Court further reasoned that its reading was consistent with Union Pacific's interest in the policy, in that Union Pacific would want to know if a conductor was color blind regardless of whether that was a new condition. The Court found that while this "better reading of the definition" included plaintiffs like Defries even as narrowed, the definition was at best ambiguous, and therefore the ambiguity must be resolved in his favor, entitling him to American Pipe tolling until the Harris certification was reversed in 2020, such that his claims were not time barred.

Defries underscores that it is in a class action defendant's interest to resolve any ambiguity in a class definition as early as possible. That certainty is important to ensure that American Pipe tolling ends and statutes of limitation begin to run again for bystander plaintiffs who are ultimately excluded from a class definition.