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On October 28, 2011, in the wake of the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) denying class certification to plaintiffs seeking to represent a group of over 1.5 million women in a gender discrimination action against Wal-Mart, Stephanie Odle and six other named plaintiffs filed another action in the United States District Court for the Northern District of Texas on behalf of themselves and all others similarly situated.  Odle v. Wal-Mart, No. 3:11-cv-2954-O.  Plaintiffs, who were part of the class in the Dukes action, alleged that Wal-Mart discriminated against them by “1) denying equal opportunities for promotion to management track positions and 2) denying equal pay for both hourly retail store positions and for salaried management positions.”

In contrast to a decision by the United States District Court for the Northern District of California (see our blog from September 27, 2012), on October 15, 2012, the Texas federal court dismissed the Odle case as a class case on statute of limitations grounds.

Wal-Mart moved to dismiss the Odle action on several grounds, including, among other things, that plaintiffs’ class allegations were barred by the statute of limitations.  Plaintiffs contended that their class claims were protected by the equitable tolling rule set forth in American Pipe &amp; Construction Co. v. Utah, 414 U.S. 538 (1974) and Crown, Cork &amp; Seal Co. v. Parker, 462 U.S. 345 (1983), and that the Dukes class action tolled the statute of limitations.

In American Pipe, the Supreme Court held that “the commencement of the original class suit tolls the running of the statute 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.”  The Crown Court extended tolling to include former class members who filed individual claims in another forum.  Wal-Mart argued that neither case protected a subsequent class action lawsuit like plaintiffs’ action.

The Fifth Circuit in Salazar-Calderon v. Presidio Valley Farmers Ass’n, 765 F.2d 1334 (5th Cir. 1985), ruled that American Pipe and Crown did not apply to a previous class member’s subsequent class action lawsuit and that the class plaintiffs had no “authority for their contention that putative class members may piggyback one class action onto another and thus toll the statute of limitations indefinitely.”  The Fifth Circuit in Salazar-Calderon reasoned, citing the Supreme Court’s warning in American Pipe, that “the tolling rule [in class actions] is a generous one, inviting abuse.”  Since the decision, other district courts and circuit courts, including the Second Circuit, have relied on Salazar-Calderon to find subsequent classes time-barred.  Korwek v. Hunt, 827 F.2d 874 (2d Cir. 1987).  The Texas district court held that it was bound by the Fifth Circuit’s decision in Salazar-Calderon regarding the “no piggyback rule.”

Plaintiffs further argued that two subsequent Supreme Court cases, Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 130 S. Ct. 1431 (2010) and Smith v. Bayer Corp., 131 S. Ct. 2368 (2011) (see our blog posts from January 21, 2012 and January 22, 2012, respectively), somehow stood for the proposition that palintiffs could pursue  subsequent class actions.   The court found Shady Grove and Smith distinguishable on their facts.

This case is in sharp contrast to the decision by the Northern District of California, which held that “plaintiffs are permitted to amend a complaint to address deficiencies that precluded an initial attempt at certification.”  Defendants can use the well-reasoned opinion of the Northern District of Texas as they attempt to limit tolling for subsequent class actions.

Can Subsequent Wal-Mart Class Actions Survive? Texas Federal Court Says “No”