No Tolling for Tribe's Class Action Error, SCOTUS Says

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By Patrick Gregory and Perry Cooper

Jan. 25 — An American Indian tribe that mistakenly relied on a related class action to delay suing the federal government isn't entitled to a pause on the statute of limitations on its claims, the U.S. Supreme Court ruled.

The court, in a unanimous decision Jan. 25 by Justice Samuel A. Alito, ruled that the Menominee Indian Tribe of Wisconsin's litigation mistake didn't justify applying equitable tolling to the tribe's claims under the Indian Self-Determination Act for contract support costs under the Contract Disputes Act.

The ruling “limits the potential for statutes of limitations to be equitably tolled, making compliance with the time limits to present claims and to file suit even more important,” Wendy Gerwick Couture, a professor at University of Idaho Law in Boise who has written about equitable tolling, told Bloomberg BNA in a Jan. 25 e-mail.

Menominee is a reminder that, just because a party's strategic decision was rational at the time it was made does not mean that the Court will intervene in equity if, with the benefit of hindsight, it was the wrong decision,” she said.

“This raises the stakes substantially for parties who are considering whether to opt out of class actions, such as institutional investors considering whether to opt out of securities class actions,” Couture said.

Narrow Ruling

But, at least related to Indian law, a prior assistant secretary for Indian Affairs at the Department of the Interior told Bloomberg BNA in a Jan. 25 e-mail that the specific issue in this case “is narrow and not likely to repeat.”

“Significant new claims related to these kinds of contracts have not continued to develop” after a change in policy under the Obama Administration, Kevin K. Washburn said.

“Similar suits are not likely to arise again, for Menominee or any other tribes,” he said. “Moreover, the tribe retains the majority of their claims, including those that were within the six year statute of limitations when they filed in 2004 and those that arose thereafter.”

Washburn's tenure at Interior ended in December. He is now a professor of Indian Law at the University of New Mexico School of Law in Albuquerque.

Acting on Bad Advice

A separate putative class action involving the tribe's claims failed to receive class certification.

The tribe then missed the six-year statutory deadline for its individual claims which sought to recover overhead costs for the tribe's provision of health-care services to members under a federal contract (16 CLASS 1366, 12/11/15).

The U.S. Court of Appeals for the D.C. Circuit found that the tribe's “legal misunderstandings and tactical mistakes” in not timely filing its claims didn't constitute “external obstacles” that would justify tolling under Holland v. Florida, 560 U.S. 631 (2010). Holland allows for equitable tolling if a party shows that it has 1) diligently pursued its rights, and 2) “some extraordinary circumstance” prevented timely filing.

No ‘Extraordinary Circumstance.'

The tribe called this test “overly rigid.” But the Supreme Court reaffirmed it's holding in Holland that the two requirements are “distinct elements” that both must be satisfied.

The court also reaffirmed that the second prong is met only where the circumstances are beyond the litigant's control.

Bad advice from the tribe's class counsel didn't constitute an “extraordinary circumstance” that would excuse the tribe's failure to meet the deadline, the court said.

The tribe's mistaken reliance on the putative class action “was not an obstacle beyond its control,” the court said.

Geoffrey D. Strommer of Hobbs, Straus, Dean & Walker LLP in Portland, Ore., argued for the tribe.

Ilana H. Eisenstein of the Department of Justice in Washington argued for the federal government.

To contact the reporters on this story: Patrick Gregory in Washington at pgregory@bna.com; Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com