It follows then that the Zimmerman Reed motion that specifically defined the prospective class in the Minnesota lawsuits to cover only Minnesota residents halted the American Pipe - Crown, Cork & Seal tolling period as to Ganousis and Cazares. That being so, Ganousis and Cazares have conceded that their actions here are barred by limitations.
There is no dispute as to any of the facts that are material to du Pont's statute of limitations.
Milton I. Shadur
Senior United States District Judge
Date: August 26, 1992
Although Zimmerman Reed have been of no help in providing any real research input for the area of analysis that is dealt with in the final paragraphs of this opinion,
this Court's law clerk Jeremy Feigelson has turned up one case that bears brief comment. In a widely publicized securities fraud class action, Ross v. Warner, 80 F.R.D. 88 (S.D. N.Y. 1978), the plaintiffs' counsel had originally drafted their complaint by defining the proposed class in one way (covering securities purchases during a four-year period). Some months later the class counsel filed an amended complaint of much wider scope (covering a ten-year period of purchases instead)--and that was done without counsel's having to get court approval, because they were exercising the "one free bite" option that is available under Rule 15(a). That amendment expanded the potential class about tenfold (from some 90,000 to nearly 1 million).
About a year later the same plaintiffs' counsel sought leave of court to file still another amendment to the complaint, this one proposing to cover a different period of stock purchases altogether and thereby shrinking the prospective class back to about its original size ( Ross, 80 F.R.D. at 91 says "This would represent the elimination of some 90% of the current class, or approximately 875,000 persons"). When he received that motion District Judge Charles Tenney voiced a serious concern about the possibility that a very large group of people who had formerly known themselves to be putative plaintiffs would be unaware that they were no longer such, so that the American Pipe doctrine would place them at peril if they failed to act promptly on their own. Consequently Judge Tenney required that the proposed shrinkage of the putative class had to be widely publicized before he would take the step of approving the proposed further amendment of the Complaint.
Three points should be made about Ross:
1. Judge Tenney did not at all consider the question that this Court has had to deal with here--he had no need to do so. Instead he simply assumed from the way in which the matter was presented--a motion to file an amended complaint--that the operative event for American Pipe purposes would be the granting of the motion to amend.
2. Even in those terms, however, Judge Tenney emphasized that he was not "now deciding the propriety of certifying the newly narrowed class" ( Ross, 80 F.R.D. at 92). Instead, he announced his intention to grant the motion to amend as soon as a notice had been published stating that the excluded persons "will henceforth be required to pursue their rights, if any, individually" (id.). In effect, then, his order contemplated that the proposed narrowing of the class by a choice exercised solely by plaintiffs' counsel, and not a later court order of certification of that narrower class, would be the event that halted the tolling effect of American Pipe.
3. Moreover, Judge Tenney's stated concern was with the prospect that, given the very large public company whose stock was involved (General Telephone & Electronics Corp.) and the notoriety in the investing community of the lawsuit pending before him, there were very likely large numbers of prospective class members who had received actual notice and hence had placed actual reliance on their potential inclusion in that lawsuit ( id. at 91, citation omitted):
The gravamen of the action questions whether GT&E's stock prospectuses, proxy material and other shareholder reports and solicitations "fairly and honestly described the improper transactions and business practices of GT&E and the improper and wrongful commercial bribes and political contributions" allegedly made in this country and abroad. Second Amended Complaint P 4(D). Such serious and newsworthy allegations made against a huge corporation force the Court to consider the probability that many of the soon-to-be-abandoned class members received actual notice of the institution of this suit through national publicity and were perhaps deterred from instituting their own suits in reliance on their class membership. Equity dictates that these possible litigants not forfeit their rights for lack of knowledge that they are once again on their own.
As indicated earlier, Ross is the only case that has been located with a fact situation that also involved a narrowing adjustment in the class definition proposed by counsel for the prospective class--but nothing in the discussion there appears to provide guidance for this case, or if it does it supports the analytic route this Court has taken.
For one thing, it would of course be possible to liken the proposed amendment to the pleadings tendered in Ross to Zimmerman Reed's filing of their motion for a Minnesota-only class certification in the Minnesota lawsuits. But even if such a parallel were drawn, the second point that has just been made about Ross tells us that Judge Tenney viewed the class lawyers' proposed narrowing definition of the prospective class, and not any later court order deciding on certification, as the event that restarted the limitations clock.
Moreover, nothing in this case has suggested that the institution or pendency of the Minnesota lawsuits created any meaningful amount of actual notice, and actual reliance of the kind spoken of by Judge Tenney, as contrasted with the fictions of constructive notice, and therefore of presumed reliance, that have been discussed in the text of this opinion. Perhaps most importantly, however, this Court has been required to focus directly on the legal issue as Judge Tenney had no occasion to do--and as already stated, this Court finds nothing in the Ross opinion to suggest a result different from that reached in this opinion.