NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 17–432
_________________
CHINA AGRITECH, INC., PETITIONER
v. MICHAEL H. RESH, et al.
on writ of certiorari to the united states court of appeals for the ninth circuit
[June 11, 2018]
Justice Ginsburg delivered the opinion of the Court.
This case concerns the tolling rule first stated in
American Pipe & Constr. Co. v.
Utah,
414 U. S. 538 (1974). The Court held in
American Pipe that the timely filing of a class action tolls the applicable statute of limitations for all persons encompassed by the class complaint. Where class-action status has been denied, the Court further ruled, members of the failed class could timely intervene as individual plaintiffs in the still-pending action, shorn of its class character. See
id., at 544, 552–553. Later, in
Crown, Cork & Seal Co. v.
Parker,
462 U. S. 345 (1983), the Court clarified
American Pipe’s tolling rule: The rule is not dependent on intervening in or joining an existing suit; it applies as well to putative class members who, after denial of class certification, “prefer to bring an individual suit rather than intervene . . . once the economies of a class action [are] no longer available.” 462 U. S., at 350, 353–354; see
California Public Employees’ Retirement System v.
ANZ Securities, Inc., 582 U. S. ___, ___ (2017) (slip op., at 13) (
American Pipe “permitt[ed] a class action to splinter into individual suits”);
Smith v.
Bayer Corp.,
564 U. S. 299, 313–314, n. 10 (2011) (under
American Pipe tolling rule, “a putative member of an uncertified class may wait until after the court rules on the certification motion to file an individual claim or move to intervene in the [existing] suit”).
The question presented in the case now before us: Upon denial of class certification, may a putative class member, in lieu of promptly joining an existing suit or promptly filing an individual action, commence a class action anew beyond the time allowed by the applicable statute of limitations? Our answer is no.
American Pipe tolls the statute of limitations during the pendency of a putative class action, allowing unnamed class members to join the action individually or file individual claims if the class fails. But
American Pipe does not permit the maintenance of a follow-on class action past expiration of the statute of limitations.
I
The instant suit is the third class action brought on behalf of purchasers of petitioner China Agritech’s common stock, alleging violations of the Securities Exchange Act of 1934,
48Stat.
881, as amended,
15 U. S. C. §78a
et seq. In short, the successive complaints each make materially identical allegations that China Agritech engaged in fraud and misleading business practices, causing the company’s stock price to plummet when several reports brought the misconduct to light. See App. 60–100 (
Resh complaint), 205–235 (
Smyth complaint), 133–156 (
Dean complaint). The Exchange Act has a two-year statute of limitations that begins to run upon discovery of the facts constituting the violation.
28 U. S. C. §1658(b). The Act also has a five-year statute of repose.
Ibid.[
1] The parties agree that the accrual date for purposes of the two-year limitation period is February 3, 2011, and for the five-year repose period, November 12, 2009. Brief for Respondents 8, n. 3.
Theodore Dean, a China Agritech shareholder, filed the first class-action complaint on February 11, 2011, at the start of the two-year limitation period. As required by the Private Securities Litigation Reform Act of 1995 (PSLRA),
109Stat.
737, Dean’s counsel posted notice of the action in two “widely circulated national business-oriented publication[s],”
15 U. S. C. §78u–4(a)(3)(A)(i), and invited any member of the purported class to move to serve as lead plaintiff. App. 274–280. Six shareholders responded to the notice, seeking to be named lead plaintiffs; other shareholders who had filed their own class complaints dismissed them in view of the
Dean action. On May 3, 2012, after several months of discovery and deferral of a lead-plaintiff ruling, the District Court denied class certification. The plaintiffs, the District Court determined, had failed to establish that China Agritech stock traded on an efficient market—a necessity for proving reliance on a classwide basis. App. 192. Dean’s counsel then published a notice informing shareholders of the certification denial and advising: “You must act yourself to protect your rights. You may protect your rights by joining in the current Action as a plaintiff or by filing your own action against China Agritech.”
Id., at 281–282. The
Dean action settled in September 2012, occasioning dismissal of the suit. See 857 F. 3d 994, 998 (CA9 2017).
On October 4, 2012—within the two-year statute of limitations—Dean’s counsel filed a new complaint (
Smyth) with a new set of plaintiffs and new efficient-market evidence. Eight shareholders responded to the PSLRA notice, seeking lead-plaintiff appointment. The District Court again denied class certification, this time on typicality and adequacy grounds. See App. 254. Thereafter, the
Smyth plaintiffs settled their individual claims with the defendants and voluntarily dismissed their suit. Because the
Smyth litigation was timely commenced, putative class members who promptly initiated
individual suits in the wake of the class-action denial would have encountered no statute of limitations bar.
Respondent Michael Resh, who had not sought lead-plaintiff status in either the
Dean or
Smyth proceedings and was represented by counsel who had not appeared in the earlier actions, filed the present suit on June 30, 2014, styling it a class action—a year and a half after the statute of limitations expired. The other respondents moved to intervene, seeking designation as lead plaintiffs; together with Resh, they filed an amended complaint. The District Court dismissed the class complaint as untimely, holding that the
Dean and
Smyth actions did not toll the time to initiate class claims. App. to Pet. for Cert. 36a.
The Court of Appeals for the Ninth Circuit reversed: “[P]ermitting future class action named plaintiffs, who were unnamed class members in previously uncertified classes, to avail themselves of
American Pipe tolling,” the court reasoned, “would advance the policy objectives that led the Supreme Court to permit tolling in the first place.” 857 F. 3d, at 1004. Applying
American Pipe tolling to successive class actions, the Ninth Circuit added, would cause no unfair surprise to defendants and would promote economy of litigation by reducing incentives for filing protective class suits during the pendency of an initial certification motion. 857 F. 3d, at 1004.
We granted certiorari, 583 U. S. ___ (2017), in view of a division of authority among the Courts of Appeals over whether otherwise-untimely successive class claims may be salvaged by
American Pipe tolling. Compare the instant case and
Phipps v.
Wal-Mart Stores, Inc., 792 F. 3d 637, 652–653 (CA6 2015) (applying
American Pipe tolling to successive class action), with,
e.g., Basch v.
Ground Round, Inc., 139 F. 3d 6, 11 (CA1 1998) (“Plaintiffs may not stack one class action on top of another and continue to toll the statute of limitations indefinitely.”);
Griffin v.
Singletary, 17 F. 3d 356, 359 (CA11 1994) (similar);
Korwek v.
Hunt, 827 F. 2d 874, 879 (CA2 1987) (
American Pipe does not apply to successive class suits);
Salazar-Calderon v.
Presidio Valley Farmers Assn., 765 F. 2d 1334, 1351 (CA5 1985) (“Plaintiffs have no authority for their contention that putative class members may piggyback one class action onto another and thus toll the statute of limitations indefinitely, nor have we found any.”). See also
Yang v.
Odom, 392 F. 3d 97, 112 (CA3 2004) (
American Pipe tolling does not apply to successive class actions where certification was previously denied due to a class defect, but does apply when certification was denied based on the putative representative’s deficiencies).
II
A
American Pipe established that “the commencement of the original class suit tolls the running of the statute [of limitations] for all purported members of the class who make timely motions to intervene after the court has found the suit inappropriate for class action status.” 414 U. S., at 553. “A contrary rule,” the Court reasoned in
American Pipe, “would deprive [Federal Rule of Civil Procedure] 23 class actions of the efficiency and economy of litigation which is a principal purpose of the procedure.”
Ibid. This is so, the Court explained, because without tolling, “[p]otential class members would be induced to file protective motions to intervene or to join in the event that a class was later found unsuitable.”
Ibid. In
Crown, Cork, the Court further elaborated: Failure to extend the
American Pipe rule “to class members filing separate actions,” in addition to those who move to intervene, would result in “a needless multiplicity of actions” filed by class members preserving their individual claims—“precisely the situation that Federal Rule of Civil Procedure 23 and the tolling rule of
American Pipe were designed to avoid.” 462 U. S., at 351.
American Pipe and
Crown, Cork addressed only putative class members who wish to sue individually after a class-certification denial. See,
e.g., American Pipe, 414 U. S., at 552 (addressing “privilege of intervening in an individual suit”);
Crown, Cork, 462 U. S., at 349 (applying
American Pipe to those who “file individual actions”); 462 U. S., at 352 (tolling benefits “class members who choose to file separate suits”).
What about a putative class representative, like Resh, who brings his claims as a new class action after the statute of limitations has expired? Neither decision so much as hints that tolling extends to otherwise time-barred class claims. We hold that
American Pipe does not permit a plaintiff who waits out the statute of limitations to piggyback on an earlier, timely filed class action. The “efficiency and economy of litigation” that support tolling of individual claims,
American Pipe, 414 U. S., at 553, do not support maintenance of untimely successive class actions; any additional
class filings should be made early on, soon after the commencement of the first action seeking class certification.
American Pipe tolls the limitation period for individual claims because economy of litigation favors delaying those claims until after a class-certification denial. If certification is granted, the claims will proceed as a class and there would be no need for the assertion of any claim individually. If certification is denied, only then would it be necessary to pursue claims individually.
With class claims, on the other hand, efficiency favors early assertion of competing class representative claims. If class treatment is appropriate, and all would-be representatives have come forward, the district court can select the best plaintiff with knowledge of the full array of po- tential class representatives and class counsel. And if the class mechanism is not a viable option for the claims, the decision denying certification will be made at the outset of the case, litigated once for all would-be class representatives.[
2]
Rule 23 evinces a preference for preclusion of untimely successive class actions by instructing that class certification should be resolved early on. See Fed. Rule Civ. Proc. 23(c)(1)(A). Indeed, Rule 23(c) was amended in 2003 to permit district courts to take account of multiple class-representative filings. Before the amendment, Rule 23(c) encouraged district courts to issue certification rulings “as soon as practicable.” The amendment changed the recommended timing target to “an early practicable time.” The alteration was made to allow greater leeway, more time for class discovery, and additional time to “explore designation of class counsel” and consider “additional [class counsel] applications rather than deny class certification,” thus “afford[ing] the best possible representation for the class.” Advisory Committee’s 2003 Note on subds. (c)(1)(A) and (g)(2)(A) of Fed. Rule Civ. Proc. 23, 28 U. S. C. App., pp. 815, 818; see Willging & Lee, From Class Actions to Multidistrict Consolidations: Aggregate Mass-Tort Litigation after
Ortiz, 58 U. Kan. L. Rev. 775, 785 (2010) (2003 amendments “raised the standard for certifying a class from an early, conditional ruling to a later, relatively final decision” and “expand[ed] the opportunity for parties to engage in discovery prior to moving for class certification”).
The PSLRA, which governs this litigation, evinces a similar preference, this time embodied in legislation, for grouping class-representative filings at the outset of litigation. See
supra, at 3. When the
Dean and
Smyth timely commenced actions were first filed, counsel put any shareholder who might wish to serve as lead plaintiff on notice of the action. Several heeded the call—six in
Dean and eight in
Smyth. See 857 F. 3d, at 997–998. The PSLRA, by requiring notice of the commencement of a class action, aims to draw all potential lead plaintiffs into the suit so that the district court will have the full roster of contenders before deciding which contender to appoint.[
3] See Brief for Securities Industry and Financial Markets Association as
Amicus Curiae 12–13 (PSLRA “seeks to achieve Congress[’] goal of curbing duplicative . . . litigation by encouraging all interested parties to apply to serve as lead plaintiff at the early stages of the case [and] providing for the consolidation of similar class actions”). With notice and the opportunity to participate in the first (and second) round of class litigation, there is little reason to allow plaintiffs who passed up those opportunities to enter the fray several years after class proceedings first commenced.
Ordinarily, to benefit from equitable tolling, plaintiffs must demonstrate that they have been diligent in pursuit of their claims. See,
e.g., McQuiggin v.
Perkins,
569 U. S. 383, 391 (2013);
Menominee Tribe of Wis. v.
United States, 577 U. S. ___, ___ (2016) (slip op., at 5). Even
American Pipe, which did not analyze “criteria of the formal doctrine of equitable tolling in any direct manner,”
ANZ, 582 U. S., at ___–___ (slip op., at 10–11), observed that tolling was permissible in the circumstances because plaintiffs who later intervened to pursue individual claims had not slept on their rights,
American Pipe, 414 U. S., at 554–555. Those plaintiffs reasonably relied on the class representative, who sued timely, to protect their interests in their individual claims. See
Crown, Cork, 462 U. S., at 350. A would-be class representative who commences suit after expiration of the limitation period, however, can hardly qualify as diligent in asserting claims and pursuing relief. Her interest in representing the class as lead plaintiff, therefore, would not be preserved by the prior plaintiff’s timely filed class suit.
Respondents’ proposed reading would allow the statute of limitations to be extended time and again; as each class is denied certification, a new named plaintiff could file a class complaint that resuscitates the litigation. See
Yang, 392 F. 3d, at 113 (Alito, J., concurring in part and dissenting in part) (tolling for successive class actions could allow “lawyers seeking to represent a plaintiff class [to] extend the statute of limitations almost indefinitely until they find a district court judge who is willing to certify the class”);
Ewing Industries Corp. v.
Bob Wines Nursery, Inc., 795 F. 3d 1324, 1326 (CA11 2015) (tolling for successive class actions allows plaintiffs “limitless bites at the apple”).[
4] This prospect points up a further distinction between the individual-claim tolling established by
American Pipe and tolling for successive class actions. The time to file individual actions once a class action ends is finite, extended only by the time the class suit was pending; the time for filing successive class suits, if tolling were allowed, could be limitless. Respondents’ claims happen to be governed by
28 U. S. C. §1658(b)(2)’s five-year statute of repose, so the time to file complaints has a finite end. Statutes of repose, however, are not ubiquitous. See
Dekalb County Pension Fund v.
Transocean Ltd., 817 F. 3d 393, 397 (CA2 2016). Most statutory schemes provide for a single limitation period without any outer limit to safeguard against serial relitigation. Endless tolling of a statute of limitations is not a result envisioned by
American Pipe.[
5]
B
Respondents emphasize that in
Shady Grove Orthopedic Associates, P. A. v.
Allstate Ins. Co.,
559 U. S. 393 (2010), we said that “a class action may be maintained,”
id., at 398 (internal quotation marks omitted), if the requirements of Rule 23(a) and (b) are satisfied, and “Rule 23
automatically applies in all civil actions and proceedings in the United States district courts,”
id., at 400 (internal quotation marks omitted). See Brief for Respondents 21–23. If Resh’s suit meets the requirements of Rule 23(a) and (b), respondents assert, there is no reason why Resh’s suit cannot proceed as a class action.
Shady Grove does not call for that outcome. In
Shady Grove, the Court held that a federal diversity action could proceed under Rule 23 despite a state law prohibiting class treatment of suits seeking damages of the kind asserted in the
Shady Grove complaint. 559 U. S., at 396, 416. Our opinion in
Shady Grove addressed a case in which a Rule 23 class action could have been maintained absent a contrary state-law command.
Id., at 396. Resh’s case presents the reverse situation: The class action would be untimely unless saved by
American Pipe’s equitable-tolling exception to statutes of limitations. Rule 23 itself does not address timeliness of claims or tolling and nothing in the Rule calls for the revival of class claims if individual claims are tolled. In fact, as already explained, Rule 23 prescribes the opposite result. See
supra, at 6–8.
Today’s clarification of
American Pipe’s reach does not run afoul of the Rules Enabling Act by causing a plaintiff’s attempted recourse to Rule 23 to abridge or modify a substantive right. See Brief for Respondents 23–26 (citing
Tyson Foods, Inc. v.
Bouaphakeo, 577 U. S. ___ (2016)). Plaintiffs have no substantive right to bring their claims outside the statute of limitations. That they may do so, in limited circumstances, is due to a judicially crafted tolling rule that itself does not abridge, enlarge, or modify any substantive right.
American Pipe, 414 U. S., at 558. Without
American Pipe, respondents would have no peg to seek tolling here; as we have explained, however,
American Pipe does not provide for the extension of the statute of limitations sought by Resh for institution of an untimely third class suit.
Respondents urge that
American Pipe’s logic in fact supports their position because declining to toll the limitation period for successive class suits will lead to a “needless multiplicity” of protective class-action filings. Brief for Respondents 32–34. See also
post, at 6–7 (expressing concern about duplicative and dueling class actions). But there is little reason to think that protective class filings will substantially increase. Several Courts of Appeals have already declined to read
American Pipe to permit a successive class action filed outside the limitation period. See
supra, at 5; 3 W. Rubenstein, Newberg on Class Actions §9:64, n. 5 (5th ed. 2012). These courts include the Second and Fifth Circuits (no strangers to class-action practice); both courts declined to entertain out-of-time class actions in the 1980’s. See
Korwek, 827 F. 2d 874 (CA2 1987);
Salazar-Calderon, 765 F. 2d 1334 (CA5 1985). Respondents and their
amici make no showing that these Circuits have experienced a disproportionate number of duplicative, protective class-action filings.
Amicus National Conference on Public Employee Retirement Systems cites examples of protective filings responding to courts’ disallowance of
American Pipe tolling for statutes of repose, but those examples in fact suggest that protective class filings are uncommon. See Brief of the National Conference on Public Employee Retirement Systems as
Amicus Curiae 7–8. Between dozens and hundreds of class plaintiffs filed protective
individual claims while class-certification motions were pending in securities cases and the statute of repose was about to run out, placing a permanent bar against their claims.
Ibid. But none of the plaintiffs appears to have filed a protective
class action—even though, if the statute of repose expired and the pending class-certification motions were denied, there would be no further opportunity to assert class claims.[
6]
Nor do the incentives of class-action practice suggest that many more plaintiffs will file protective class claims as a result of our holding. Any plaintiff whose individual claim is worth litigating on its own rests secure in the knowledge that she can avail herself of
American Pipe tolling if certification is denied to a first putative class. The plaintiff who seeks to preserve the ability to lead the class—whether because her claim is too small to make an individual suit worthwhile or because of an attendant financial benefit[
7]—has every reason to file a class action early, and little reason to wait in the wings, giving another plaintiff first shot at representation.
In any event, as previously explained, see
supra, at 6–8, a multiplicity of class-action filings is not necessarily “needless.” Indeed, multiple filings may aid a district court in determining, early on, whether class treatment is warranted, and if so, which of the contenders would be the best representative. And sooner rather than later filings are just what Rule 23 encourages. See
ibid. Multiple timely filings might not line up neatly; they could be filed in different districts, at different times—perhaps when briefing on class certification has already begun—or on behalf of only partially overlapping classes. See Wasserman, Dueling Class Actions, 80 B. U. L. Rev. 461, 464–465 (2000) (describing variety of “dueling” class filings). But district courts have ample tools at their disposal to manage the suits, including the ability to stay, consolidate, or transfer proceedings. District courts are increasingly familiar with overseeing such complex cases, given the surge in multidistrict litigation. See Cabraser & Issacharoff, The Participatory Class Action, 92 N. Y. U. L. Rev. 846, 850–851 (2017) (multidistrict litigation frequently combines individual suits and multiple putative class actions). The Federal Rules provide a range of mechanisms to aid courts in this endeavor. What the Rules do not offer is a reason to permit plaintiffs to exhume failed class actions by filing new, untimely class claims.
* * *
The watchwords of
American Pipe are efficiency and economy of litigation, a principal purpose of Rule 23 as well. Extending
American Pipe tolling to successive class actions does not serve that purpose. The contrary rule, allowing no tolling for out-of-time class actions, will propel putative class representatives to file suit well within the limitation period and seek certification promptly. For all the above-stated reasons, it is the rule we adopt today: Time to file a class action falls outside the bounds of
American Pipe.
Accordingly, the judgment of the Court of Appeals for the Ninth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.