United Airlines, Inc. v. McDonald

Mr. Justice Powell,

with whom The Chief Justice and Mr. Justice White join, dissenting.

The Court’s opinion shifts confusingly between the two distinct questions of timeliness raised by respondent McDonald’s attempt to intervene in this action against petitioner United Airlines, Inc.1 The first question involves the effect of the *397statute of limitations on respondent’s rights against petitioner. This question is directly relevant to the motion to intervene because a prerequisite of intervention for any purpose is that the intervenor have an interest in the litigation. Petitioner has consistently contended that respondent’s interest in this litigation was barred by the statute of limitations at the time she sought to intervene. Assuming that respondent’s interest was not time barred, the second question involves the broader and more discretionary concept of the timeliness of her motion to intervene under Fed. Rule Civ. Proc. 24. This was apparently the basis on which the District Court denied respondent’s motion.

In American Pipe & Construction Co. v. Utah, 414 U. S. 538 (1974), the Court held that the filing of a class action complaint “suspended the running of the limitation period only during the pendency of the motion to strip the suit of its class action character.” Id., at 561 (emphasis added). . Time again commenced to run under the limitations period when the District Court denied class status, and members of the putative class were allowed to intervene in the nonclass action only if their motions were filed before the expiration of the remaining time.

A straightforward reading of American Pipe leads to the conclusion that the filing of the class action complaint in Romasanta v. United Airlines tolled the statute of limitations for respondent, but “only during the pendency of the motion to strip the suit of its class action character.” Under the American Pipe rule, the statute of limitations had run *398against respondent by the time she attempted to intervene. Thus, the Court’s holding must reflect a decision to supplement the American Pipe rule with a novel tolling rule applicable only to intervention for the purpose of appealing the denial of class status. Under this new rule, the statute apparently is tolled from the filing of the class action complaint until such time after final judgment as the interven or can determine that “the interests of the unnamed class members [will] no longer be protected by the named class representatives.” Ante, at 394. I find no justification for this extension, either in precedent or policy.

Today’s opinion also represents a marked departure from established law on the question of timeliness under Rule 24. The Court apparently has ruled that a motion to intervene for the purpose of appealing the denial of class status is timely under Rule 24 as a matter of law, so long as it is filed “within the time period in which the named plaintiffs could have taken an appeal.” Ante, at 396. The discretionary judgment of the District Court emphasized in NAACP v. New York, 413 U. S. 345, 365-366 (1973), is thus eliminated.

The Court purports to distinguish American Pipe on the ground that respondent’s purpose in intervening was not “to join the named plaintiffs in litigating her individual claim” but rather “to obtain appellate review of the District Court’s order denying class action status.” Ante, at 392. The relevance of this undisputed factual distinction is not explained, but two major themes can be identified in the Court’s opinion: First, that respondent was justified in relying on the named plaintiffs to protect her interest by taking an appeal, and second, that petitioner was not prejudiced by respondent’s intervention at the end of the litigation. These themes have a common analytical weakness, namely, the Court’s unwillingness to accept the consequences of the District Court’s denial of class status. In the words of the Advisory Committee that drafted the 1966 amendment to Rule 23, the action was *399thereby “stripped of its character as a class action.” 28 U. S. C. App., p. 7767. After the denial of class status, the action proceeded as an ordinary nonclass action by the individual plaintiffs against petitioner.2

Under the Court’s analysis, the “critical fact” in this case is that “once the entry of final judgment made the adverse class determination appealable,” respondent moved to intervene “as soon as it became clear [to her] that the interests of the unnamed class members would no longer be protected by the named class representatives.” Ante, at 394. Pervading the Court’s opinion is the assumption that the class action somehow continued after the District Court denied class status. But that assumption is supported neither by the text nor by the history of Rule 23. To the contrary, those sources as well as this Court’s decision in American Pipe support the view that the denial of class status converts the litigation to an ordinary nonclass action. Reliance by respondent on the former class representatives was therefore misplaced. After the denial of class status, they were simply individual plaintiffs with no obligation to the members of the class. Pearson v. Ecological Science Corp., 522 P. 2d 171 (CA5 1975). In the words of Judge Pell, dissenting below, the denial of class status is “a critical point which puts putative class members on notice that they must act to protect their rights.” Romasanta v. United Airlines, Inc., 537 P. 2d 915, 922 (CA7 1976).

The Court’s casual treatment of the prejudice to petitioner also reflects its assumption that the class action persisted despite the denial of class status. Petitioner was fully justi-*400fled in attempting to resolve the dispute as a nonclass action. Having achieved a settlement of the case, petitioner was prejudiced by respondent’s attempt to reopen the case. It is true that the possibility of an appeal of the denial of class status existed, but the Court’s treatment of that possibility misconceives both petitioner’s position and the law. It is suggested that petitioner concedes that “[t]he District Court’s refusal to certify was subject to appellate review after final judgment at the behest of the named plaintiffs ....’’ Ante, at 393. But petitioner concedes only that the named plaintiffs could have appealed the denial of class status if they had chosen to litigate the case to a final judgment rather than to settle it. It argues with great force that, as a result of the settlement of their individual claims, the named plaintiffs “could no longer appeal the denial of class” status that had occurred years earlier. Brief for Petitioner 15. Although this question has not been decided by this Court,3 the answer on principle is clear. The settlement of an individual claim typically moots any issues associated with it. 13 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3533, p. 271 (1975). This case is sharply distinguishable from cases such as Sosna v. Iowa, 419 U. S. 393 (1975), and Franks v. Bowman Transp. Co., 424 U. S. 747 (1976), where we allowed named plaintiffs whose individual claims were moot to continue to represent their classes. In those cases, the District Courts previously had certified the classes, thus giving them “a legal status separate from the interest [s] asserted by [the named plaintiffs].” Sosna v. Iowa, supra, at 399. This case presents precisely the opposite situation: The prior denial of class status had extinguished any representative capacity.

Considerations of policy militate strongly against the result reached by the Court. Our cases reflect a long tradition of respect for statutes of limitations and the values they serve. *401These legislative enactments “are vital to the welfare of society and are favored in the law,” because they “promote repose by giving security and stability to human affairs” and “stimulate to activity and punish negligence.” Wood v. Carpenter, 101 U. S. 135, 139 (1879). When a “plaintiff has slept on his rights,” an otherwise meritorious claim is barred, both to ensure “fairness to defendants” and to reheve “the burden [on the courts] of trying stale claims.” Burnett v. New York Central R. Co., 380 U. S. 424, 428 (1965). Statutes of limitations thus “make an end to the possibility of litigation after the lapse of a reasonable time.” Guaranty Trust Co. v. United States, 304 U. S. 126, 136 (1938). The Court nevertheless has reached a decision that rewards those who delay asserting their rights. I view the result as an injustice to petitioner and as a precedent that ill serves the need for repose.

The Court also ignores the important “principle that ‘ [settlement agreements are highly favored in the law and will be upheld whenever possible because they are a means of amicably resolving doubts . . . and preventing lawsuits.’ ” Pearson v. Ecological Science Corp., supra, at 176, quoting D. H. Overmyer Co. v. Loflin, 440 F. 2d 1213, 1215 (CA5 1971). Settlements particularly serve the public interest “within the confines of Title VII where There is great emphasis ... on private settlement and the elimination of unfair practices without litigation.’ ” Air Lines Stewards v. American Airlines, Inc., 455 F. 2d 101, 109 (CA7 1972), quoting Oatis v. Crown Zellerbach Corp., 398 F. 2d 496, 498 (CA5 1968). Today’s decision will deter settlements because of the additional uncertainty as to whether the agreements will be nullified by the action of persons who enter the litigation only after final judgment.4

*402In support of its decision, the Court suggests that adherence to the American Pipe rule' might result in precautionary interventions to guard against the possibility that the named plaintiffs would fail to appeal the denial of class status, thus producing the very “ 'multiplicity of activity which Rule 23 was designed to avoid.’ ” Ante, at 394 n. 15, quoting American Pipe, 414 U. S., at 553. But, as I have shown, Rule 23 was not designed to eliminate any multiplicity of activity after class status is denied.5

In my view, the proper analysis of these questions is as follows: Under American Pipe, the filing of a class action complaint tolls the statute of limitations until the District Court makes a decision regarding class status. If class status is denied in whole or in part, the statute of limitations begins to run again as to class members excluded from the class. In order to protect their rights, such individuals must seek to intervene in the individual action (or possibly file an action of their own) before the time remaining in the limitations period expires. Assuming that intervention is sought within the limitations period, the district court’s decision whether *403to allow intervention is made according to the discretionary timeliness concept of Rule 24, as interpreted in NAACP v. New York, 413 U. S. 345 (1973). This decision is made in light of all of the circumstances in the case and is entitled to substantial deference on appeal. But delay in seeking intervention should militate against allowing intervention. Under this approach, a premium is placed on attempting to intervene as soon as possible after the denial of class status. When combined with the requirement of Rule 23 (c)(1) that the decision as to class status be made “[a]s soon as practicable after the commencement of an action brought as a class action,” this approach would ensure that the contours of the nonclass action would be defined early in the litigation. This would enable the major decisions concerning the case to be made expeditiously, thus speeding its ultimate resolution. The Court’s decision today encourages the opposite result.

Respondent had been terminated by petitioner in September 1968, under its then-existing “no marriage” rule for stewardesses. The class action complaint in Romasanta v. United Airlines was filed in May 1970. The District Court denied class status in December 1972, and a number of the members of the putative class intervened in the individual action. Discovery and settlement discussion followed, and the initial and intervening plaintiffs were able to settle their claims. On October 3, *3971975 — almost three years after class status was denied — a final order dismissing the suit with prejudice was entered, all “matters in controversy . . . having been settled and resolved.” App. 90-92. On October 21, 1975, respondent moved to intervene for purposes of appealing the denial of class status. Before this point, she had filed no grievance under the collective-bargaining agreement, no charge with any state or federal agency, and had taken no part in the preceding litigation — although she was fully aware of the entire situation.

The Court quotes from Philadelphia Electric Co. v. Anaconda American Brass Co., 43 F. R. D. 452, 461 (ED Pa. 1968), for the proposition that a case need not “‘be treated as if there never was an action brought on behalf of absent class members.’ ” Ante, at 393. Philadelphia Electric involved the same issue ultimately resolved by this Court in American Pipe and is otherwise irrelevant to the question now before us.

None of the cases cited by the Court, ante, at 393 n. 14, involves this situation.

As Judge Pell noted, respondent’s delay in seeking intervention was especially costly in this case:

“It is important to note that had she sought intervention immediately *402after the denial of class status, and her intervention had been denied, the intervention issue would have been before this court three years ago. Furthermore, assuming that her intervention had been denied because of petitioner’s failure to protest the no-marriage rule — the requirement which was the basis of the court’s holding that this action lacked the requisite numerosity to proceed as a class action — then that issue would have been before this court and decided three years ago. Instead, petitioner chose to sit back and allow others to assume the costs and risks in prosecuting their individual actions, and now she attempts to revive her dead claim through another suit which after years of legal argument and negotiation was finally settled to the satisfaction of all parties.” 537 F. 2d, at 922 (dissenting opinion).

Moreover, precautionary intervention is likely even under the Court’s decision. As in American Pipe itself, individuals concerned about their claims will frequently move to intervene as plaintiffs in the nonclass action rather than placing all of their hopes on the possibility that the denial of class status will be reversed on appeal.