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Federal Court Decisions on Securities Law Doctrines
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Securities Litigation Update: Courts of Appeals Weigh in on American Pipe Tolling and the Affiliated Ute Presumption of Reliance | Cadwalader, Wickersham & Taft LLP
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The Third Circuit Addresses American Pipe Tolling before a Class Certification Decision | Blank Rome LLP
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Based on the facts before it, the Supreme Court in
American Pipe limited the tolling of absent class member claims in at least two ways: (1) to cases in which class certification had been denied and (2) to cases in which the denial of class certification was
not for lack of standing by the named plaintiff.
American Pipe, 414 U.S. at 552–53. While
American Pipe noted these limitations, courts have struggled with both restrictions because they can appear to lead to inequitable results and be inconsistent with the reasoning behind
American Pipe. This has led some courts to allow tolling in both exceptions: cases without denial of class certification and case in which dismissal was based on the named plaintiff’s lack of standing. This has created conflict among lower courts.