18th Annual Workplace Class Action Report - 2022 Edition

458 Annual Workplace Class Action Litigation Report: 2022 Edition Plaintiffs thereafter filed a motion for leave to file a fourth amended complaint to add a claim for a violation of the UCL in this action. The Court denied the motion on the grounds of unjustified delay, prejudice, and lack of good cause. The Court noted that it had repeatedly requested input from Plaintiffs including their perspectives on the legal issues being litigated, including whether bringing a claim under the UCL would be appropriate, and Plaintiffs never moved for leave to file an amended complaint to assert UCL claims. The Court observed that since granting leave to amend would modify the scheduling order, it should analyze the motion pursuant to Rule 16(b). The Court also considered the motion under the framework of Rule 15, and weighed several factors, including: (i) bad faith; (ii) undue delay; (iii) prejudice to the opposing party; (iv) futility of the amendment; and (v) whether the movant previously amended its pleadings to cure deficiencies. Id. at *13. The Court reasoned that the schedule for this action was coordinated with two other related cases; one of which had been tried and was pending appeal and one of which had settled. Id . at *14. The Court also explained that the class certification hearing schedule already overlapped with trial preparation due to grants of extensions. The Court determined that Plaintiffs’ request would substantially disrupt the schedule. Further, the Court found no reason why Plaintiffs delayed in raising this issue. The Court also opined that the proposed amendments would widen the scope of the action by adding a fraud component, which would cause a need for additional discovery and expert witnesses. The Court concluded that Plaintiffs unduly delayed in seeking leave to add their UCL claim, such that their motion to amend must be denied. (iv) American Pipe Tolling In Class Actions Aly, et al. v. Valeant Pharmaceuticals International Inc., 2021 U.S. App. LEXIS 17928 (3d Cir. June 16, 2021). Plaintiffs, a group of shareholders, filed a putative class action alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5, after Defendant’s stock prices plummeted as a result of revelations of Defendant’s fraudulent practices. Before the District Court had ruled on class certification, Plaintiffs filed an opt-out complaint bringing the same claims in their individual capacities. The District Court dismissed the opt-out complaint as untimely under the applicable two-year limitations period on the basis that the tolling doctrine established in American Pipe & Construction Company v. Utah did not apply because the District Court had not yet ruled on the certification motion. The District Court reasoned that putative class members may recover as part of the class or seek individual recourse, but they generally cannot do both. Further, class members may initially intend to proceed as part of a class, but certification may be denied months or years later for reasons outside their control. Alternatively, during the pendency of a class action, class members may discover that their individual claims are more valuable than those of the class and decide to pursue them in an opt-out complaint even if certification is likely. In either case, class members are generally allowed to initiate an individual action, but may run into limitations issues given the delay, as American Pipe tolls the limitations period governing the individual claims of putative class members. On Plaintiffs’ appeal, the parties disputed whether American Pipe tolling applied to individual claims that are filed before a class certification decision is made. Plaintiffs argued that the limitations period was tolled regardless of the point at which individual claims are filed. However, the District Court agreed with Defendant that class members who wish to benefit from American Pipe must wait to file individual claims until after a ruling on class certification, which Plaintiffs did not do in this case. On Plaintiffs’ appeal, the Third Circuit held that the District Court erred in dismissing the individual shareholders’ opt-out complaint as untimely because the shareholders had been putative class members in a prior action that had not yet been certified under Rule 23. In so ruling, the Third Circuit joined the Second, Ninth, and Tenth Circuits in holding that the American Pipe tolling doctrine applied to toll the limitations period for individual claims filed both before and after certification because American Pipe made clear that the filing of a class action was the operative event that tolled the limitations period, and once tolled, it remained tolled for all putative members until they were no longer part of the class. The Third Circuit reasoned that its conclusion that American Pipe was triggered automatically upon the filing of a class complaint is consistent with the well-founded principle that putative class members need not actively monitor case developments to benefit from Rule 23 protection. Moreover, the Third Circuit found it important that Defendant was undisputedly aware of the substantive claims at issue for more than two years before the individual complaint was filed, so it would not be prejudiced. Additionally, the Third Circuit concluded that denying tolling in this context would serve no compelling purpose. For these reasons, the Third Circuit vacated the District Court’s order dismissing Plaintiffs’ individual opt-out complaint.