Supreme Court Halts Follow-On Class Action Lawsuits

China Agritech decision limits reach of tolling exceptions under the court's precedent in American Pipe

The U.S. Supreme Court’s flurry of major end-of-session decisions included one that gives companies some relief should they face a class action.

On June 11, the U.S. Supreme Court unanimously ruled to disallow a practice defendants sometimes call “class action stacking.” In China Agritech v. Resh, the court held that its precedent doesn’t allow tolling of statutes of limitation in successive class actions. The decision resolves a circuit split that enabled plaintiffs to file new class actions in certain situations where the statute of limitations had expired.

While the case concerns a securities-related complaint, the China Agritech ruling will have an impact on class action defense across a range of statutes, and companies can be more certain they won’t see additional class actions after an attempt at one fails.

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