Wednesday, November 14, 2012

Let the Good Times Not Toll: Louisiana Rejects Cross-Jurisdictional Class Action Tolling


If you make a habit of checking our Cross-Jurisdictional Class Action Tolling scorecard on a daily basis, then you already know that the Louisiana Supreme Court recently skewered cross-jurisdictional tolling.  They beat it with a red stick.  But let’s assume for a moment that you have a life.  So blenderize a Hurricane, fry up some bacon-wrapped oysters, twirl a Who Dat parasol, and enjoy the Cajun masterpiece that is Quinn v. Louisiana Citizens Property Ins. Corp., 2012 La. NEXIS 2995 (La. Nov. 2, 2012).

 

For us, discussing  Louisiana case law is like trying a new hot sauce – tasty and terrifying.  Louisiana law is really different.  Redhibition, anyone?  It turns out that the peculiarity of Louisiana law is what makes it easy for the Louisiana Supreme Court to hold in the Quinn case that the Louisiana legislature did not intend to permit cross-jurisdictional class action tolling.

 

Quinn is not a drug or device case.  It is not even a product liability case.  Instead, the case involved insureds who brought a state court action against their homeowner’s insurer to recover for alleged underpayment of compensation for wind and water damage resulting from Hurricanes Katrina and Rita.  The case would have been barred by the statute of limitations, unless the plaintiffs could benefit from tolling (in Louisiana talk, a “suspension of prescription”) by virtue of an earlier class action that had been filed, and recently dismissed, in Louisiana federal court.   

 

Before going through the Quinn analysis, let’s review the bidding on cross-jurisdictional class action tolling:

 

·         Cross-jurisdiction tolling is a rule whereby a court in one jurisdiction tolls the applicable statute of limitations based on the filing of a class action in another jurisdiction.

·         We hate it.  The law should not reward the filing of meritless class actions, and lawyers should not be able to game statutes of limitations in other jurisdictions.

·         We hate it.

 

The plain words of the Louisiana tolling statute contain “no express language limiting its effect to class actions filed only in Louisiana state courts, ordinarily an indication that such a limitation was not intended.”  Quinn, 2012 La. LEXIS 2995 at *19.  Okay, we admit it – that scared us.  But we held our voodoo doll tight and took another bite out of a beignet.  Surely this would turn out alright, right? 
 
 
Right.  The Louisiana tolling statute refers to notice requirements that are “unique to Louisiana.”  Id. at *21.  Thus, “[b]y tying the operative provisions of La. C.C.P. art. 596 to unique aspects of Louisiana class action procedure, the legislature has expressed an intent that suspension of prescription under La. C.C.P. art. 596 can apply only to putative class actions filed in Louisiana state courts.”  Id. at * 23.    The Louisiana Supreme Court was not merely standing on ceremony.  Because the Louisiana tolling statute triggered and stopped tolling periods based on unique requirements of Louisiana law, application of cross-jurisdictional tolling would effectively permit indefinite tolling.  Id. at *25.  That result would be, of course, unfair, capricious, and insane – sort of like a Bourbon Street bouncer at 2 a.m. 

 

The plaintiffs argued that federal courts sitting in diversity should apply Louisiana state law on limitations and tolling.  But that rule would be “absurd and patently unfair.”  Id. at *23 n. 12.  It would also contravene something every first year law student learns – that the Erie doctrine requires federal courts sitting in diversity to apply state substantive law and federal procedural law.  Id.

 

Finally, the Quinn court canvasses what other courts have said about cross-jurisdictional tolling.  The courts that have accepted cross-jurisdictional tolling did not involve anything like Louisiana’s unique tolling provisions.  Moreover, the Quinn court agreed with the rationale of the anti-cross-jurisdictional tolling courts, especially the concern about forum-shopping, where opportunistic plaintiffs would file class actions in states with the most generous tolling rules.   Id. at *31. 

 

Add Louisiana to the win column for cross-jurisdictional tolling.   The opinion goes down smooth and easy, like a sazerac.   

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