Sawyer v. Heating

• Decision Date: 26 May 2011
• Docket Number: No. 10–3672.,10–3672.
• Citation: 642 F.3d 560
• Parties: Isaac SAWYER, doing business as A–1 Security Locksmiths, Plaintiff–Appellee,v.ATLAS HEATING AND SHEET METAL WORKS, INCORPORATED, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

642 F.3d 560

Isaac SAWYER, doing business as A–1 Security Locksmiths, Plaintiff–Appellee,

v.ATLAS HEATING AND SHEET METAL WORKS, INCORPORATED, Defendant–Appellant.

No. 10–3672.

United States Court of Appeals, Seventh Circuit.

Argued May 4, 2011.Decided May 26, 2011.

Charles H. Barr, Attorney, Croen & Barr, Milwaukee, WI, Phillip A. Bock (argued), Attorney, Bock & Hatch, Chicago, IL, for Plaintiff–Appellee.

Henry E. Koltz (argued), Schmidt, Darling & Erwin, Milwaukee, WI, for Defendant–Appellant.Before EASTERBROOK, Chief Judge, and FLAUM and SYKES, Circuit Judges.EASTERBROOK, Chief Judge.

On December 9, 2005, Atlas Heating and Sheet Metal Works faxed unsolicited advertisements to Isaac Sawyer and many other persons, violating the Telephone Consumer Protection Act, 47 U.S.C. § 227. (So the complaint says, and we must accept its allegations at this stage of the litigation.) The statute of limitations is four years. 28 U.S.C. § 1658. On May 18, 2009, with more than six months to go, Park Bank, one of the fax's recipients, sued Atlas Heating in a state court of Wisconsin. It proposed to represent a class of all recipients. See Wis. Stat. § 803.08. But on March 16, 2010, more than four years after the ad had been faxed, and before the state judge had decided whether to certify a class, Park Bank dismissed its complaint. This left other recipients in the lurch. Isaac Sawyer tried to intervene in Park Bank's suit to keep it alive, but the state judge denied his motion. On March 19 Sawyer filed his own complaint, also in state court, seeking to represent the class of persons who had received unsolicited faxes from Atlas Heating on December 9, 2005, or any other time within four years before May 18, 2009, when Park Bank began its suit.

Atlas Heating removed the case under the federal-question jurisdiction. See 28 U.S.C. §§ 1331, 1441. Counsel for Park Bank, and perhaps counsel for Sawyer, may have believed that state courts have exclusive jurisdiction of suits under § 227, but we held otherwise in Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 449–52 (7th Cir.2005). Properly in federal court, Atlas Heating moved to dismiss the complaint as barred by the statute of limitations. The district court denied this motion, 731 F.Supp.2d 850 (E.D.Wis.2010), holding that the limitations period was tolled by Park Bank's suit for as long as it was pending. See American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974); Crown, Cork & Seal Co., Inc. v. Parker, 462 U.S. 345, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983). This meant that more than six months remained in the limitations period when Sawyer filed suit. The district judge also denied Atlas Heating's request to limit the new litigation to Sawyer's personal claim. We accepted an interlocutory appeal following certification under 28 U.S.C. § 1292(b).

American Pipe holds “that the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” 414 U.S. at 554, 94 S.Ct. 756. Crown, Cork & Seal adds that it does not matter whether the member of the putative class intervenes in the original action or files an independent suit. Atlas Heating insists, however, that American Pipe does not come into play when the first suit is dismissed voluntarily. Many decisions in this circuit and elsewhere say that, when a suit is voluntarily dismissed, the statute of limitations is treated as running continually; it is not suspended or tolled. Lee v. Cook County, 635 F.3d 969 (7th Cir.2011), is one recent example. But those cases concern sequential suits filed by the same person, who could have continued the original suit and can't use his own maneuvers or errors to extend a period of limitations; they do not deal with doctrines, such as American Pipe, that specify how a representative's suit affects third persons.

Sawyer did not have any way to prevent Park Bank from dismissing the original suit—nor did the state court permit Sawyer to intervene and take over that litigation. (Wisconsin authorizes class actions but unlike Fed.R.Civ.P. 23(e) does not provide for judicial review of voluntary dismissals.) If Atlas Heating is right, the only way Sawyer and the fax's other recipients could have protected their interests would have been to intervene before Park Bank threw in the towel. Yet intervention would undermine the representative quality of a class action. The premise of class litigation is that individual suits and collective actions (large numbers of persons litigating under a single docket number) are inefficient, and perhaps prohibitively expensive in relation to the potential relief per victim. The Supreme Court decided American Pipe as it did in order to eliminate any need for members of the putative class to intervene in order to guard against an adverse outcome in the original case. 414 U.S. at 553–54, 94 S.Ct. 756. The Court's goal of enabling members of a putative class to rely on a pending action to protect their interests can be achieved only if the way in which the first suit ends—denial of class certification by the judge, abandonment by the plaintiff, or any other fashion—is irrelevant. Accord, Robbin v. Fluor Corp., 835 F.2d 213 (9th Cir.1987).

According to Atlas Heating, the tolling doctrine of American Pipe applies only when both suits were filed in federal court. It is true enough that both American Pipe and Crown, Cork & Seal involved sequential federal suits. But it does not follow that any rule or policy prohibits what Atlas Heating calls “cross-jurisdictional tolling.” Not that this sequence itself is cross-jurisdictional: recall that both suits began in state court. A suit's removal does not change the substantive rule of decision—and the statute of limitations, unlike the procedures for certifying class actions, is substantive. Compare Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945) (limitations), with Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., ––– U.S. ––––, 130 S.Ct. 1431, 176 L.Ed.2d 311 (2010) (Rule 23). Let us suppose, however, that Sawyer's suit should be treated as if filed originally in federal court. Still there is no reason to conclude that the Wisconsin litigation should be disregarded. It was a putative class action under a federal law; Sawyer's reliance interests were the same as if the first suit had been filed in federal court.

In re Copper Antitrust Litigation, 436 F.3d 782 (7th Cir.2006), is the principal decision on which Atlas Heating relies for its objection to cross-jurisdictional tolling. We held in Copper Antitrust that a class action filed in state court, under state antitrust law, did not toll the time to file suit in federal court under federal antitrust law. 436 F.3d at 793–97. The point of that decision, however, was not that a change of forum was dispositive; it was that state and federal antitrust laws differ. They create different legal claims. That the period of limitations may be tolled for one claim (state antitrust law) does not imply that it is tolled for another (federal antitrust law). State rather than federal law supplies the rules for assessing the consequences of a state court's decision under state law. Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985). Park Bank's suit, by contrast, was under federal law, and the statute of limitations also comes from federal law. Federal law determines the tolling effect of a suit governed by a federal statute of limitations. American Pipe establishes that federal rule. Chardon v. Fumero Soto, 462 U.S. 650, 103 S.Ct. 2611, 77 L.Ed.2d 74 (1983), drives this point home by holding that, when the statute of limitations depends on state law, then state rules determine the tolling effect of a class suit, even if all litigation occurs in federal court. The source of law, and not the identity of the forum, determines the effect of a failed class action.

And it does not matter, under federal law, whether the first suit's status as a would-be class action ends by choice of the plaintiff (who may abandon the quest to represent a class or, as Park Bank did, bow out altogether) or by choice of the judge. Atlas Heating insists that Park Bank's suit does not count because it was “never a class action.” Yet the first suits in American Pipe and Crown, Cork & Seal also were “never class actions.” If they had been certified as class actions, there would have been no occasion for sequential class litigation. The rationale of American Pipe does not permit a distinction among situations in which the putative class representative gives up before, or after, the judge decides whether the case may proceed on behalf of a class. Tolling lasts from the day a class claim is asserted until the day the suit is conclusively not a class action—which may be because the judge rules adversely to the plaintiff, or because the plaintiff reads the handwriting on the wall and decides not to throw good money after bad. (Or perhaps because the defendant buys off the original plaintiff as soon as the statute of limitations runs, hoping to extinguish the class members' claims. That's a good reason for tolling, not a reason for blocking later suits.)

We arrive at Atlas Heating's final argument, and the reason why the district judge found that the case presents a substantial and difficult question justifying an interlocutory appeal. The judge thought that there is a conflict among the circuits on the question whether a second case may proceed as a class action. In both American Pipe and Crown, Cork & Seal, the second suits were brought as individual litigation, after the judge in the initial suits had determined that the victims were not numerous enough to justify class litigation ( American Pipe ) or that the representative's...