SCOTUS Wary of Equitable Tolling for Class Action Mistake

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By Patrick Gregory

Dec. 1 — The justices seemed skeptical about applying equitable tolling to the claims of an American Indian tribe that mistakenly believed it would get class action tolling during oral argument at the U.S. Supreme Court Dec. 1.

The dispute centers on whether the Menominee Indian Tribe of Wisconsin reasonably believed it didn't need to file its own claims because of its failed attempt to be part of a putative class action that could have resolved those claims.

The outcome of the case could affect whether plaintiffs file parallel claims to meet filing deadlines even if they would be duplicative with class claims.

Justice Sonia Sotomayor asked how the tribe could “reasonably rely” on only one lower court decision holding the tribe didn't need to exhaust its administrative remedies by filing its claims to participate in a class action.

“Minimal research” would have shown that every other court required exhaustion to be a part of a class action and thereby benefit from class action tolling, she said.

Justice Ruth Bader Ginsburg similarly questioned whether the tribe had been diligent enough to warrant equitable tolling.

The tribe is pursuing claims against the federal government under the Indian Self-Determination Act for contract support costs under the Contract Disputes Act.

The claims involve overhead costs for the tribe's provision of health-care services to members under a self-determination contract with the federal government.

But the tribe missed a six-year statutory deadline for filing its individual claims after a putative class action involving those claims failed to receive class certification.

The tribe argued it reasonably relied on legal advice from class counsel that it would benefit from class action tolling without filing its individual claims.

But Justice Antonin Scalia said bad advice isn't an “extraordinary circumstance” that would justify equitable tolling.

However, Sotomayor and Justice Samuel A. Alito Jr. questioned whether some such circumstance couldn't exist.

Equitable Tolling Test 

The question presented involves how to apply the test for whether to grant equitable tolling of a filing deadline set forth in Holland v. Florida, 560 U.S. 631 (2010).

Holland allows for equitable tolling if a party shows that it has diligently pursued its rights and that “some extraordinary circumstance” prevented timely filing.

The tribe argued below that it missed the deadline in part because it believed it would be part of the putative class action in Cherokee Nation of Okla. v. Thompson, 311 F.3d 1054 (10th Cir. 2002), and would therefore benefit from equitable tolling if the class failed to be certified.

The tribe said it believed this based on advice from class counsel and the tribe's experience in Ramah Navajo Chapter v. Lujan, D.N.M., No. CIV 90-0957 LH/RWM (order issued Oct. 1, 1993).

In Ramah, a federal district court granted certification to a class that included the tribe on similar claims, even to members that hadn't exhausted administrative remedies under the Contract Disputes Act.

But the U.S. Court of Appeals for the Tenth Circuit denied class certification in Cherokee Nation, finding that the class lacked commonality and typicality.

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, in Menominee Indian Tribe of Wis. v. United States, 764 F.3d 51 (D.C. Cir. 2014).

The tribe's brief to the high court argued that Holland doesn't require showing an “external obstacle.”

Rather, Holland's “diligence and extraordinary circumstances prongs” must be “considered together as part of a complete analysis of all the relevant factors and circumstances,” the brief argued.

Those factors include the government's awareness of the tribe's claims (and consequent lack of prejudice to the government from the missed filing) and the “special relationship” between the federal government and Indian tribes, the brief said.

Ramah Reliance Reckless?

The dispute involves “very complex” facts with a straightforward legal question, Geoffrey D. Strommer of Hobbs, Straus, Dean & Walker LLP, Portland, Ore.—arguing for the tribe—said.

That question is whether a party “that reasonably relies on class-action tolling can, if tolling is found to be ineffective at a later date, then rely on the same facts to argue that equitable tolling under Holland should apply,” Strommer said.

The tribe was entitled to equitable tolling here because it diligently “relied on a preexisting class action which dealt with almost identical substantive claims against the United States” in Ramah, Strommer argued.

But Ginsburg undercut that argument, saying Ramah was an “unpublished decision by a district court” that “never went any further.”

Strommer pointed out that Ramah nonetheless involved a certified class.

The tribe “not only is a member of that class but has, to date, received a portion of several settlements that were entered into in that class action and, in fact, is poised to receive another large payment” in a settlement with the federal government, Strommer said.

But Sotomayor also seemed skeptical of Strommer's reliance on Ramah.

Ramah addressed whether administrative exhaustion “was required at all” to participate in a putative class, Sotomayor said.

“Minimal research” would have shown that exhaustion is required by other courts, Sotomayor said.

“So how could you reasonably rely on a lower court decision that hasn't gone through the crucible of appellate review without having done any research on whether its premises were subject to dispute?” Sotomayor asked.

Just One Court

Justice Elena Kagan also questioned the tribe's reliance on Ramah.

“I mean, you're saying that that single district court should have had such power in the Tribe's mind” that it didn't present its claim to the federal government as required for exhaustion, Kagan said.

“That seems an extraordinary thing,” Kagan said.

The Ramah court was “just a single district court,” she said.

“A single district court has no controlling authority over anyone or anything other than that particular decision,” Kagan said.

Diligence Questioned

Ginsburg said the tribe had two years to present its claims to the federal government after certification was denied in Cherokee, “and you would have been home free.”

“You would not have encountered a time bar,” Ginsburg said.

But the tribe “didn't present until four years” later, Ginsburg said.

“So how was that due diligence?” Ginsburg asked Strommer.

“You know you're on your own” when class certification was denied, “and yet you let two years go by,” Ginsburg said.

“I don't understand that,” Ginsburg said.

Strommer responded that in “a class action environment, a party is not encouraged to do anything” during the period that class certification is pending.

A party is then “automatically allowed” tolling, Strommer said.

Sotomayor jumped in, saying that statement is “not quite true.”

“There's a circuit split,” with only some circuits holding that the filing deadline's “clock” stops while the class action is pending, Sotomayor said, referring to the split that includes Bright v. United States, 603 F.3d 1273 (Fed. Cir. 2010) (78 U.S.L.W. 1734, 5/18/10).

But other circuits have “looked to diligence throughout” the class action period, meaning that a party can't simply wait and do nothing in that period, Sotomayor said.

‘Bad Legal Advice.'

Scalia said Strommer was “really arguing a remarkable proposition, that if you get bad legal advice, that justifies equitable tolling.”

“Do you have a single case in which legal advice has qualified for equitable tolling?” Scalia asked.

Strommer acknowledged that the tribe “can't cite a single case for that.”

Equitable tolling requires showing “extraordinary circumstances that stood in the way and prevented timely filing,” Scalia said.

But “I would not qualify erroneous legal advice as preventing timely filing,” Scalia said.

“I don't care how reasonable it was—it didn't prevent it,” Scalia said.

Alito asked whether there were “any circumstances in which reliance on legal advice could constitute the extraordinary circumstance required for equitable tolling?”

Ilana H. Eisenstein of the Department of Justice, Washington, arguing for the federal government, said the high court had never recognized any circumstance “as such.”

Sotomayor pressed Eisenstein with a hypothetical in which “13 circuits” have “all ruled one way.”

“You don't think it's reasonable to give advice based on that ruling, that that might be an exceptional circumstance?” Sotomayor asked.

Prejudice, Hyperbole

Ginsburg questioned the D.C. Circuit's statement that the tribe could have presented its claim with “little more than an envelope and a stamp.”

Even if the tribe had presented its claim to the federal government's contracting officer, they couldn't simply “leave it at that,” Ginsburg said.

The tribe would still “have to take an administrative appeal within 90 days, or they'd have to appeal to the Federal Circuit within a year,” Ginsburg said.

Eisenstein said the “envelope and a stamp” statement “may have been a bit of hyperbole.”

But Strommer said it “was more than hyperbole—it's just flat wrong.”

“There's costs incurred by the Tribe to calculate the amount of claims,” Strommer said.

Further, there are “costs in pulling together the letter that then goes into the envelope that is the claim itself,” Strommer said.

But “there are so many people who don't have resources to pursue” litigation, Sotomayor said.

“How do we articulate an equitable tolling principle that won't open a floodgate to make a statute of limitations basically a nullity?” she asked. 

To contact the reporter on this story: Patrick L. Gregory in Washington at pgregory@bna.com

To contact the editor responsible for this story: Jeffrey D. Koelemay at jkoelemay@bna.com

A transcript is available at http://src.bna.com/bjW.