Supreme Court bars 'stacked' class actions

The U.S. Chamber of Commerce, the Washington Legal Foundation and others supported China Agritech in amicus briefs. Resh drew supporting briefs from a group of plaintiffs in post-Walmart successor class actions, AARP and a group of retired federal judges, among others. (Photo: AP)

Class-action defendants scored an important victory Monday when a unanimous U.S. Supreme Court barred so-called stacked, or follow-on, cases that are filed after the expiration of a statutory time limit.

The justices, ruling in a securities case, said the 1974 decision in American Pipe & Construction v. Utah suspends the statute of limitations while a putative class action is pending, which allows unnamed class members to join individually or to file separate claims if the class fails. “But American Pipe does not permit the maintenance of a follow-on class action past expiration of the statute of limitations,” wrote Justice Ruth Bader Ginsburg for the court in China Agritech v. Resh.

Both the Private Securities Litigation Reform Act, which governed the litigation before the court, and Federal Rule of Civil Procedure 23, which applies to nonsecurities class actions, “evince a preference” for barring untimely successive class actions by emphasizing early resolution of class certification and class representation, Ginsburg wrote.