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NO. 17-432 In the Supreme Court of the United States CHINA AGRITECH, INC., Petitioner, v. MICHAEL H. RESH, et al., Respondents. On Petition for Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit BRIEF IN OPPOSITION BETSY C. MANIFOLD MATTHEW M. GUINEY WOLF HALDENSTEIN ADLER Counsel of Record FREEMAN & HERZ LLP WOLF HALDENSTEIN ADLER 750 B Street, Suite 2770 FREEMAN & HERZ LLP San Diego, California 92101 270 Madison Avenue 619.239.4590 New York, New York 10016 212.545.4600 DAVID A.P. BROWER [email protected] BROWER PIVEN A Professional Corporation 475 Park Avenue South, 33rd Floor New York, New York 10016 212.501.9000 Attorneys for Respondents William Schoenke, Heroca Holding, B.V., and Ninella Beheer, B.V. Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001 i COUNTER-STATEMENT OF THE QUESTION PRESENTED In American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), this Court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” (Emphasis added). The question presented is: Whether plaintiffs whose individual claims are timely as a result of American Pipe tolling may also bring those claims in a subsequent class action on behalf of all class members whose claims are also timely as a result of American Pipe tolling. ii TABLE OF CONTENTS COUNTER-STATEMENT OF THE QUESTION PRESENTED ................. i TABLE OF AUTHORITIES.................. iv INTRODUCTION........................... 1 STATEMENT OF THE CASE ................. 3 A.Factual Background ................. 3 B.Initial Class Actions ................. 5 C. Respondents’ Action and District Court Ruling ............................ 6 D.Ninth Circuit Reversal............... 7 REASONS FOR DENYING THE PETITION ..... 9 I. There Is No Conflict Among the Courts of Appeals.............................. 9 A. Shady Grove and Smith v. Bayer ....... 9 B. Unanimous Application of Shady Grove and Smith v. Bayer ................. 11 C. Numerous Courts of Appeals Opinions Predating Shady Grove and Smith v. Bayer Also Permit Tolling ............ 13 II. The Decision Below Does Not Permit “Endless Relitigation” of Class Certification Determinations....................... 15 A. Principles of Comity and Stare Decisis Prevent Endless Relitigation of Class Certification Determinations......... 15 iii B. This Court’s ANZ Securities Decision Likely Also Forecloses Endless Relitigation of Class Certification Determinations.................... 18 III. The Decision Below Is Correct and Fully Consistent with American Pipe and Crown Cork ................................ 21 CONCLUSION ............................ 23 iv TABLE OF AUTHORITIES CASES American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974) .................. passim Basch v. Ground Round, Inc., 139 F.3d 6 (1st Cir. 1998) ................. 15 Brown v. Plata, 563 U.S. 493 (2011) ...................... 23 California Public Employees’ Retirement System v. ANZ Securities Inc., 137 S. Ct. 2042 (2017) ................ passim Catholic Social Services, Inc. v. INS, 232 F.3d 1139 (9th Cir. 2000) (en banc) .... 8, 14 Crown, Cork & Seal Co., Inc. v. Parker, 462 U.S. 345 (1983) .................. passim CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014) .................... 20 Dean v. China Agritech, Inc., Case No. 2:11-cv-1331-RGK (C.D. Cal.) .......................... passim Ewing Industries Corp. v. Bob Wines Nursery, Inc., 795 F.3d 1324 (11th Cir. 2015) ............. 16 Great Plains Trust Co. v. Union Pac. R. Co., 492 F.3d 986 (8th Cir. 2007) ............... 14 Griffin v. Singletary, 17 F.3d 356 (11th Cir. 1994) ............ 15, 16 v Korwek v. Hunt, 827 F.2d 874 (2d Cir. 1987) ................ 15 Leyse v. Bank of Am., Nat’l Assoc., 538 Fed. App’x 156 (3rd Cir. 2013) .......... 14 Love v. Wal-Mart Stores, Inc., No. 12-61959-CIV-SCOLA, 2013 U.S. Dist. LEXIS 143234 (S.D. Fla. Sep. 23, 2013) ...... 16 Love v. Wal-Mart Stores, Inc., 865 F.3d 1322 (11th Cir. 2017) ............. 16 Moreno v. City of Sacramento, 534 F.3d 1106 (9th Cir. 2008) .............. 18 Murray v. Sears, Roebuck & Co., No. C09-5744CW, 2014 U.S. Dist. LEXIS 18082 (N.D. Cal. Feb. 12, 2014) ............... 17, 18 North Sound Capital LLC v. Merck & Co., No. 16-1364, 2017 U.S. App. LEXIS 14170 (3d Cir. Aug. 2, 2017) ..................... 21 Odle v. Flores, 683 F. App’x 288 (5th Cir. 2017) ............ 13 Ott v. Mortgage Inv. Corp., 65 F. Supp. 3d 1046 (D. Or. 2014) ........... 17 Phipps v. Wal-Mart Stores, Inc., 792 F.3d 637 (6th Cir. 2015) ............ 11, 12 Salazar-Calderon v. Presidio Valley Farmers Ass’n, 765 F.2d 1334 (5th Cir. 1985) .............. 15 Sawyer v. Atlas Heating and Sheet Metal Works, Inc., 642 F.3d 560 (7th Cir. 2011) ......... 11, 12, 14 vi Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 559 U.S. 393 (2010) .................. passim Smith v. Bayer Corp., 564 U.S. 299 (2011) .................. passim Smyth v. Chang, Case No. 2:13-cv-3008-RGK (C.D. Cal.) .......................... passim Smyth v. China Agritech, Inc., No. CV 13-03008-RGK (PJWx), 2013 U.S. Dist. LEXIS 195196 (C.D. Cal. Sept. 26, 2013) ..... 17 Williams v. Winco Foods, No. CV13-00146 CRB, 2013 U.S. Dist. LEXIS 108928 (N.D. Cal. Aug. 1, 2013) ............ 18 Wyser-Pratte Mgt. Co. v. Telxon Corp., 413 F.3d 553 (6th Cir. 2005) ............... 22 Yang v. Odom, 392 F.3d 97 (3d Cir. 2004) ................. 14 STATUTES 15 U.S.C. § 78u-4............................ 5 28 U.S.C. § 1658(b) ......................... 20 28 U.S.C. § 2072(a) ......................... 23 1 Respondents William Schoenke, Heroca Holding, B.V., and Ninella Beheer, B.V. (hereinafter “Respondents”), respectfully submit this opposition to the petition for a writ of certiorari filed by China Agritech, Inc. (“China Agritech” or “Petitioner”).1 INTRODUCTION Respondents filed a class action alleging that China Agritech and its managers and directors violated the Securities Exchange Act of 1934 (“Exchange Act”). Respondents were unnamed plaintiffs in two earlier- filed class actions against many of the same defendants based on the same underlying events. The district court denied class certification in both of the prior actions only because of defects specific to the named plaintiffs in those actions. Under American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), and Crown, Cork & Seal Co., Inc. v. Parker, 462 U.S. 345 (1983), the statute of limitations was tolled during the pendency of both of the earlier actions for Respondents’ claims as well as the claims of all asserted members of the class. As the Petitioner conceded and the district court held, there was no time bar preventing Respondents from bringing the present action on an individual basis. Rather, the Petitioner argued that the undoubtedly timely-filed claims could not be pursued as a class action under Rule 23, but could only be pursued in a multiplicity of individual actions. The United States Court of Appeals for the Ninth Circuit 1 Michael Resh, one of the plaintiffs in the action, recently passed away. A statement of fact of death was filed in the district court on October 4, 2017. Consequently, Mr. Resh is not included as a Respondent herein. 2 rejected that argument and ruled that Respondents’ class action complaint was timely filed. The Ninth Circuit held that because Respondents’ individual claims were tolled under American Pipe and Crown, Cork & Seal during the pendency of the prior actions (as were the claims of all putative class members), the Respondents were entitled to bring their timely individual claims as named plaintiffs in a would-be class action. The petition for a writ of certiorari should be denied for three reasons. First, the Ninth Circuit’s decision that timely-filed claims under American Pipe may be pursued as a class action presents no conflict among the circuits requiring resolution by this Court. Every Court of Appeals to consider this issue in light of this Court’s opinions in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 559 U.S. 393 (2010) and Smith v. Bayer Corp., 564 U.S. 299 (2011), has held that a plaintiff is entitled to assert timely claims on behalf of all asserted members of a class (who also have timely claims) and that denial of certification in an earlier case cannot bar a plaintiff with timely claims from seeking class certification in a later case. The Sixth, Seventh and Ninth Circuits have now held that denying a plaintiff the right to pursue timely claims on behalf of a putative class of all those similarly situated would be inconsistent with: (i) this Court’s ruling in Shady Grove that Rule 23 permits any plaintiff whose claims meet its criteria to pursue those claims on behalf of a class; and (ii) this Court’s ruling in Smith v. Bayer that denials of class certification are not binding on absent class members in subsequent cases. 3 Second, those Courts of Appeals that considered whether plaintiffs with timely claims could also bring those claims in a subsequent class action prior to this Court’s Shady Grove and Smith v. Bayer opinions were each animated by a concern that allowing plaintiffs with timely claims to seek class certification in later cases would lead to the “indefinite” and “endless” relitigation of class certification determinations. Those concerns are without merit based on this Court’s decision in Smith v. Bayer directing district courts to simply “apply principles of comity to each other’s class certification decisions when addressing a common dispute.” Id. at 317. Those concerns should be further mitigated if not rendered moot by this Court’s recent opinion in California Public Employees’ Retirement System v. ANZ Securities Inc., 137 S. Ct. 2042 (2017), whereby the Court held that American Pipe tolling cannot apply to override the fixed time limit of the statute of repose in securities class actions.