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Fred Meyer v. Adams (8/21/98), 963 P 2d 1025
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
FRED MEYER OF ALASKA, INC., )
d/b/a FRED MEYER, ) Supreme Court No. S-7836
)
Appellant, )
) Superior Court No.
v. ) 3AN-90-10286 CI
)
RONALD ADAMS, as class ) O P I N I O N
representative, )
)
Appellees. ) [No. 5027 - August 21, 1998]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Brian C. Shortell, Judge.
Appearances: James R. Dickens, Miller, Nash,
Wiener, Hager & Carlsen, LLP, Seattle, and David C. Stewart,
Gruenstein, Hickey & Stewart, Anchorage, for Appellant. John E.
Casperson and Michael M. Holmes, Faulkner, Banfield, Doogan &
Holmes, Seattle, for Appellees.
Before: Matthews, Chief Justice, Compton,
Eastaugh, and Bryner, Justices. [Fabe, Justice, not participating.]
MATTHEWS, Chief Justice.
I. INTRODUCTION
Ronald Adams brought a class action suit against Fred
Meyer of Alaska, Inc., alleging violations of the Alaska Wage and
Hour Act. The superior court denied Adams' initial motion to
certify the classes. After conducting additional discovery, Adams
again moved to certify the classes. The superior court granted
certification, ruling that the classes included persons employed
two years prior to the date of the class complaint and extending to
the date of trial. Because we hold that the limitations period
remained tolled from the date of the class complaint, we affirm the
judgment of the superior court.
II. FACTS AND PROCEEDINGS
On December 14, 1990, Ronald Adams filed a complaint
against Fred Meyer, seeking overtime compensation. On January 23,
1991, Adams amended the complaint, adding Fred Thum as an
additional plaintiff. Adams then filed a second amended complaint
on March 11, 1991, adding a third plaintiff, Norman Ward. The
second amended complaint alleged violations of the Alaska Wage and
Hour Act (AWHA) [Fn. 1] on behalf of Adams and three classes of
individuals. Class A included all past and present employees who
were not paid overtime; Class B included past and present employees
who were not paid for hours worked "off the clock"; Class C
included past employees who were not paid all compensation due
within three days of termination.
Adams filed a motion to certify Classes A, B, and C on
July 21, 1992. On October 1, 1992, Adams sought the court's
permission to file a third amended complaint. Judge Karl S.
Johnstone denied the motion to certify the classes, finding that
Adams failed to establish sufficient common questions of fact under
Civil Rule 23(a)(2) [Fn. 2] and failed to comply with the
requirements of Civil Rule 23(b)(1)(B). [Fn. 3] Judge Johnstone
granted Adams' motion to file a third amended complaint but
prohibited Adams from relying on any of the allegations in the
second amended complaint if he sought recertification. Adams moved
for reconsideration. The next day, the action was transferred from
Judge Johnstone to Judge Brian C. Shortell. Judge Johnstone,
however, subsequently granted Adams' motion for reconsideration.
On February 12, 1993, Judge Shortell also denied the
motion to certify but allowed Adams to reassert any allegations if
Adams later renewed his motion to certify the classes. He stated:
Having reviewed plaintiffs' "Motion for
Certification of Classes A, B, & C"and all matters filed in
support of and in opposition to that motion, the motion for
certification is denied. However, because further discovery may
reveal additional facts and issues supportive of class
certification, plaintiffs' motion for certification is denied
without prejudice.
. . . Furthermore in light of the possi-
bility that further discovery may indicate
that class certification is appropriate, plaintiffs may reassert in
any third amended complaint those certification reasons previously
alleged in the second amended complaint.
In July 1994 Adams moved for certification of three
reformulated classes, A, B, and D. [Fn. 4] In addition to a
memorandum of law, Adams filed depositions and affidavits to
support the motion. Judge Shortell granted certification of Classes
A and B but denied certification of Class D on December 6, 1994.
Fred Meyer then requested Judge Shortell to limit Classes A and B
to persons employed between December 6, 1992, and the date of
trial. Judge Shortell instead ordered that the classes included
individuals employed from March 11, 1989, to the date of trial.
Prior to trial, the parties unconditionally settled all
individual and class claims except those of class members involving
work performed before December 7, 1994. The remaining claims were
settled, subject to Fred Meyer's right to appeal the statute of
limitations issues. [Fn. 5]
III. DISCUSSION [Fn. 6]
The statute of limitations for claims brought under the
Alaska Wage and Hour Act is two years. [Fn. 7] Limitations periods
are subject to tolling under the rule announced in American Pipe
and Construction Co. v. Utah, 414 U.S. 538 (1974). American Pipe
held that the filing of a class action under Civil Rule 23 tolls
the statute of limitations for all members of the putative class
until the superior court determines that the suit is inappropriate
for class action status. Id. at 552-53. After such a
determination, class members may intervene in the pending action to
preserve their rights. Id. In Crown, Cork & Seal Co. v. Parker,
462 U.S. 345, 353-54 (1983), the Court expanded the American Pipe
doctrine, holding that after the class action is found to be
inappropriate, class members may choose to either intervene or file
individual lawsuits. We adopted the American Pipe rule "in light
of the identity between our Civil Rule 23 and the corresponding
federal rule." Nolan v. Sea Airmotive, Inc., 627 P.2d 1035, 1041
(Alaska 1981). [Fn. 8]
The American Pipe tolling rule represents a compromise
between the competing goals of class actions and statutes of
limitations. A class action is a "truly representative suit
designed to avoid, rather than encourage, unnecessary filing of
repetitious papers and motions." American Pipe, 414 U.S. at 550;
see also Nolan, 627 P.2d at 1042. Class actions promote
"efficiency and economy of litigation"and encourage members of the
putative class to rely on the class representative to press their
claims. American Pipe, 414 U.S. at 553; Crown, Cork, 462 U.S. at
352-53. In the absence of tolling, these purposes would be
frustrated because all class members would be required to intervene
or file individual actions concurrently with the class action to
preserve their rights. This would engender a "needless multipli-
city of actions -- precisely the situation that Federal Rule of
Civil Procedure 23 and the tolling rule of American Pipe were
designed to avoid." Crown, Cork, 462 U.S. at 351.
Statutes of limitations, on the other hand, "encourage
promptness in the prosecution of actions and thus avoid the
injustice which may result from prosecution of stale claims."
Byrne v. Ogle, 488 P.2d 716, 718 (Alaska 1971). Limitations
periods not only provide defendants with notice of the nature of
adverse claims brought against them within a reasonable time, but
also bar plaintiffs who have slept on their rights. See Burnett v.
New York Cent. R.R. Co., 380 U.S. 424, 428 (1965).
Tolling the limitations period during the pendency of a
class action suit satisfies both the objectives of Rule 23 and
statutes of limitations.
[D]efendants [are notified] not only of the
substantive claims being brought against them, but also of the
number and generic identities of the potential plaintiffs who may
participate in the judgment. Within the period set by the statute
of limitations, the defendants have the essential information
necessary to determine both the subject matter and size of the
prospective litigation . . . .
American Pipe, 414 U.S. at 555. Thus, the rule preserves essential
fairness, promotes judicial economy, and minimizes potential
prejudice to the defendant.
Fred Meyer concedes that the statute of limitations
remained tolled during the pendency of the initial motion to
certify the classes but argues that the tolling stopped after the
superior court denied certification on February 12, 1993. Thus, in
Fred Meyer's view, the superior court should have limited Classes
A and B to persons employed from December 6, 1992 (two years prior
to the date that the superior court granted certification), to the
date of trial. Fred Meyer relies on cases holding that a plaintiff
may not "piggyback"a subsequent class action onto a prior class
action to avoid the bar of the statute of limitations.
Federal courts have uniformly held that plaintiffs may
not take advantage of American Pipe tolling after certification has
been denied by simply filing a new class action. The Second
Circuit explained the rule against piggybacking in Korwek v. Hunt,
827 F.2d 874 (2d Cir. 1987). In Korwek, the district court
certified a narrower class than the plaintiffs requested and denied
a second motion to certify a larger class on the grounds of
unmanageability. Id. at 875-76. Unsuccessful intervenors in the
first action promptly filed a new class action comprised of
essentially identical claims and class members as the class in the
original action. Id. at 876. The Second Circuit refused to
countenance the plaintiffs' attempt to "reargue the question of
class certification by filing new but repetitive complaints." Id.
at 879. Since the district court had definitively determined that
a larger class would be inappropriate, Korwek held that tolling
would be "inimical to the purposes behind statutes of limitations
and the class action procedure." Id. Other courts have also
reached the same result. [Fn. 9]
Fred Meyer further argues that a second lawsuit and a
second attempt to certify the same class in the original lawsuit
are indistinguishable for purposes of tolling, relying on Fleck v.
Cablevision VII, Inc., 807 F. Supp. 824 (D.D.C. 1992). The Fleck
court denied the initial motion for class certification because the
plaintiffs' claims were not typical of the class claims. Id. at
825. The plaintiffs then amended the complaint to add a new
representative plaintiff and brought another motion to certify the
class. Id. By this time, the limitations period had run. Id.
Observing that "[t]he potential for abuse remains the same
whichever procedure is used to renew the motion for class
certification through the use of a new class representative,"Fleck
found any distinction between the piggybacking cases merely
"formalistic." Id. at 827.
Adams distinguishes Fleck, arguing that the plaintiffs in
Fleck changed class representatives simply to get around the bar of
the statute of limitations after certification was definitively
denied. He points out that here, the superior court "expressly
reserved the employees' right to move for certification again after
further discovery. It did not foreclose the possibility of
proceeding as a class, as did the courts in the cases Fred Meyer
cites." We agree.
This case fits squarely within the broad tolling doctrine
enunciated in American Pipe. This is not an action where the
superior court definitively denied certification as in Korwek and
Fleck. Instead, Judge Shortell stated that "because further
discovery may reveal additional facts and issues supportive of
class certification, plaintiffs' motion for certification is denied
without prejudice." This language conveys Judge Shortell's intent
to allow further attempts to certify the classes. Moreover, Adams'
second motion sought recertification of the classes based solely on
the original class complaint. No subsequent class action complaint
was filed in this case, as in Korwek. Rather, the class action
proceedings were ongoing.
Tolling in this case furthers the objectives of American
Pipe. The touchstones of the American Pipe doctrine are flexibil-
ity, efficiency, and notice. Korwek, 827 F.2d at 879. We agree
with Adams that refusing to toll the limitations period in this
case would "undermine the efficiency and economy of Rule 23." Had
the limitations period restarted after the initial denial of
certification, each class member would have been required to
intervene or file separate actions after the initial denial of
certification. This result is untenable where the order
anticipates further discovery by the plaintiff in support of a
renewed motion to certify. The class members were justified in
relying on the class complaint since the class action had not been
dismissed and the proceedings were ongoing. And because the
superior court ultimately granted certification, it is clear that
a class action suit was the most appropriate and efficient
mechanism for resolution of the AWHA claims.
Further, it is undeniable that Fred Meyer had prior
notice of the nature of the claims brought against it and the
numbers and identities of potential claimants. In view of the
superior court's order, it was also aware that the court might
grant certification at a later date. Both parties conducted
additional discovery regarding the class claims between February
1993 and July 1994. Motions were submitted, depositions were
taken, and discovery requests were traded. Consistent with his
initial order tentatively denying certification, Judge Shortell
eventually granted a subsequent motion to certify the classes.
Adams supported the second motion with additional evidence obtained
through ongoing discovery proceedings. In his order granting
certification, Judge Shortell explained:
The first time that class certification
was requested in this case there was only a single plaintiff,
Ronald Adams, and the only evidence that he presented in support of
class certification was his own affidavit. Now, however,
plaintiffs present the deposition testimony of Carl Wojciechowski,
Fred Meyer's corporate director of employee relations; the
deposition testimony of Ron Ellison, an employee of Fred Meyer for
17 years; the deposition testimony of Nancy Ellis, a manager at
Fred Meyer; the statement of Robert Johnson, a human resources and
management consultant; and the affidavits of seven Fred Meyer
employees, which Mr. Johnson relied upon in forming his opinions
regarding Fred Meyer.
Fred Meyer cannot complain that it lacked notice of the continuing
nature of the class proceedings or that it was prejudiced by the
later motion. If Fred Meyer was concerned with the length of the
proceedings, its remedy was to move for dismissal of the class
action.
Fred Meyer asserts that tolling the limitations period
from the date of the class complaint would "defeat the essential
purposes of the statute of limitation[s]: the foreclosure of
claims based on stale evidence and ensuring the reasonable repose
of defendants (i.e., the notion that, at some time, claims should
be laid to rest)." Although we do not dismiss this concern
lightly, class action tolling represents a compromise that strikes
a balance between competing interests. In light of the unambiguous
notice to Fred Meyer from both the superior court's order and the
ongoing discovery proceedings, we find tolling appropriate in this
case. [Fn. 10]
IV. CONCLUSION
In view of the principles enunciated in American Pipe, we
hold that the statute of limitations remained tolled from the date
of the second amended complaint. Thus, we AFFIRM the judgment of
the superior court.
FOOTNOTES
Footnote 1:
The AWHA is located at AS 23.10.050-.150. AS 23.10.110(b)
states in part:
(b) An action to recover from the
employer the wages and damages for which the employer is liable may
be maintained in a competent court by an employee personally and
for other employees similarly situated, or an employee may
individually designate in writing an agent or representative to
maintain an action for the employee.
Footnote 2:
Alaska Rule of Civil Procedure 23(a) provides:
(a) Prerequisites to a Class Action. One
or more members of a class may sue or be sued as representative
parties on behalf of all only if (1) the class is so numerous that
joinder of all members is impracticable, (2) there are questions of
law or fact common to the class, (3) the claims or defenses of the
representative parties are typical of the claims or defenses of the
class, and (4) the representative parties will fairly and
adequately protect the interests of the class.
Footnote 3:
Alaska Rule of Civil Procedure 23(b)(1)(B) provides:
(b) Class Actions Maintainable. An
action may be maintained as a class action if the prerequisites of
subdivision (a) are satisfied, and in addition:
(1) The prosecution of separate
actions by or against individual
members of the class would create a risk of
. . . .
(B) Adjudications with respect
to individual members of the class which would as a practical
matter be dispositive of the interests of the other members not
parties to the adjudications or substantially impair or impede
their ability to protect their interests . . . .
Footnote 4:
Class A included all store department managers who were not
paid overtime; Class B included all assistant managers who were not
paid overtime; Class D included all salaried employees who were not
paid overtime.
Footnote 5:
Under the terms of the settlement, Fred Meyer will pay
$1,700,000 regardless of the outcome of this appeal and an
additional $500,000 if it loses.
Footnote 6:
This appeal presents questions of law which we review de novo.
Jenkins v. Daniels, 751 P.2d 19, 21 (Alaska 1988). It is our duty
to adopt the most persuasive rule of law "in light of precedent,
reason, and policy." Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska
1979). We look upon the defense of statute of limitations with
disfavor and will strain neither the law nor the facts in its aid.
Tipton v. ARCO Alaska, Inc., 922 P.2d 910, 912-13 (Alaska 1996);
Lee Houston & Assocs., Ltd. v. Racine, 806 P.2d 848, 854-55 (Alaska
1991).
Footnote 7:
An action for unpaid minimum wages,
unpaid overtime compensation, or liquidated damages under AS
23.10.050 - 23.10.150 is forever barred unless it is started within
two years after the cause of action accrues. For the purposes of
this section an action is considered to be started on the date when
the complaint is filed.
AS 23.10.130.
Footnote 8:
In Nolan, we resolved a conflict between the AWHA and class
action tolling, concluding that in light of American Pipe, the
statute of limitations tolls for all putative members of the class,
whether named or unnamed in the complaint. Id. at 1042.
Footnote 9:
See, e.g., Griffin v. Singletary, 17 F.3d 356, 359 (11th Cir.
1994); Andrews v. Orr, 851 F.2d 146, 149 (6th Cir. 1988); Robbin v.
Fluor Corp., 835 F.2d 213, 214 (9th Cir. 1987); Salazar-Calderon v.
Presidio Valley Farmers Ass'n, 765 F.2d 1334, 1351 (5th Cir. 1985);
Smith v. Flagship Int'l, 609 F. Supp. 58, 64 (N.D. Tex. 1985);
Burns v. Ersek, 591 F. Supp. 837, 840 (D. Minn. 1984).
Footnote 10:
We note that several courts have reached similar conclusions,
allowing tolling from the date of the class complaint where
certification was initially denied but eventually granted. See In
re Quarterdeck Office Sys., Inc. Sec. Litig., Fed. Sec. L. Rep.
(CCH) 98,190, 1994 WL 374452, at *3-*5 (C.D. Cal. 1994); Shields
v. Smith, Fed. Sec. L. Rep. (CCH) 97,001, 1992 WL 295179, at *2-
*3 (N.D. Cal. 1992); Shields v. Washington Bancorporation, Fed.
Sec. L. Rep. (CCH) 97,310, 1992 WL 88004, at *1-*3 (D.D.C. 1992).
These courts noted that tolling under these circumstances fulfills
the goals of American Pipe and Crown, Cork by preventing
superfluous motions and pleadings, ensuring that defendants have
adequate and timely notice of the nature of the action, and
allowing for the resolution of the claims through the most
efficient mechanism. See also Haas v. Pittsburgh Nat'l Bank, 526
F.2d 1083, 1097 (3d Cir. 1975) (allowing American Pipe tolling
where new plaintiff added after limitations period but defendant
had "notice within the statutory period of the substantial nature
of the claims against which they would be required to defend and
also 'the number and generic identities of the potential
plaintiffs'"); cf. Korwek, 827 P.2d at 879 (noting that it did not
reach whether tolling would be appropriate if plaintiffs
subsequently filed proper subclass); Schur v. Friedman & Shaftan,
P.C., 123 F.R.D. 611, 613 (N.D. Cal. 1988) (allowing prior class
action to toll second where defendant was dismissed from first
action and thus no definitive determination of class certification
was made as to that defendant).
