Resh v. China Agritech, No. 15-55432 (9th Cir. 2017)
Annotate this CasePlaintiffs filed a would-be class-action against China Agritech and others, alleging violations of the Securities Exchange Act of 1934 (Resh Action). Plaintiffs in this case were unnamed plaintiffs in two earlier would-be class actions against many of the same defendants based on the same underlying events (Dean and Smyth Actions). Class action certification was denied in both cases. Determining that appellate jurisdiction was proper, the Ninth Circuit held that the would-be class action brought by the Resh plaintiffs was not time-barred. In this case, plaintiffs' individual claims were tolled under American Pipe & Construction Co v. Utah, 414 U.S. 538 (1974), and Crown, Cork & Seal Co. v. Parker, 462 U.S. 345 (1983), during the pendency of the Dean and Smyth Actions. The panel explained that so long as they can satisfy the criteria of FRCP 23, and can persuade the district court that comity or preclusion principles do not bar their action, they were entitled to bring their timely individual claims as named plaintiffs in a would-be class action. The panel held that permitting future class action named plaintiffs, who were unnamed class members in previously uncertified classes, to avail themselves of American Pipe tolling would advance the policy objectives that led the Supreme Court to permit tolling in the first place
Court Description: Class Actions. The panel reversed the district court’s order dismissing as untimely a would-be class action alleging that China Agritech, Inc. and its managers and directors violated the Securities Exchange Act of 1934, and remanded for further proceedings. The panel explained that the district court’s invitation to file a complaint in a separate individual suit does not render non-appealable the district court’s dismissal of the class action complaint. The panel also wrote that appellate jurisdiction is proper, notwithstanding that the plaintiffs did RESH V. CHINA AGRITECH 3 not wait for the district court to set forth its judgment in a separate document, because the district court’s order was a full adjudication of the issues that clearly evidenced its intention that the order be final. The panel held that the plaintiffs’ would-be class action is not time barred, where (1) the plaintiffs were unnamed plaintiffs in two earlier would-be class actions against many of the same defendants based on the same underlying events; (2) class action certification was denied in both cases; (3) the earlier actions were timely; and (4) under American Pipe & Construction Co v. Utah, 414 U.S. 538 (1974), and Crown, Cork & Seal Co. v. Parker, 462 U.S. 345 (1983), the statute of limitations for the individual claims of would-be class members in the earlier actions was tolled during the pendency of those actions. The panel wrote that permitting future class-action named plaintiffs, who were unnamed members in previously uncertified classes, to avail themselves of American Pipe tolling would advance the policy objectives that led the Supreme Court to permit tolling in the first place. The panel wrote that to the degree that the panel’s conclusion may be thought likely to lead to abusive filing of repetitive class actions, the current legal system – including Fed. R. Civ. P. 23 and principles of preclusion and comity -- is adequate to respond to such a concern. 4 RESH V. CHINA AGRITECH
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