Choice of Law/Statute of Limitations Thwarts Class


Differences among putative class members are frequently the heart of the employer’s defense to a class action lawsuit. Such differences implicate the elements of commonality and typicality and possibly even adequacy of representation under Rule 23(a) and also erode or destroy the predominance and superiority requirements of Rule 23(b)(3). These differences usually spring from the employee’s own work situations, backgrounds, specific managers, and experiences at work. Differences among putative class members may also spring from choice of law issues - as a recent unreported Ninth Circuit case demonstrates.

In Lee v. ITT Corp., Case No. 12-35372 (9th Cir. July 24, 2013), the plaintiffs contended that they were not paid overtime while working as contractors on a project in Kuwait. The case presented basic issues as to whether the claims were governed by the law of the state of Washington, where they were brought, or of Kuwait, where the work was performed. Washington had a six-year statute of limitations, while that of Kuwait was but one year. The district court held that the six-year statute applied, because the one-year Kuwaiti statute was too short to vindicate the employees’ rights, and certified the plaintiffs’ claims.

The opinion does not disclose the basis for the Court of Appeals taking the case, but it likely was under Rule 23(f). In a somewhat unusual outcome, the court reversed the decision to certify the class. Citing similar limitations periods from states within the United States, the Ninth Circuit found that the Kuwaiti statute was not unreasonably short. It also found no impediment that would have prevented the plaintiffs from asserting their claims within a year of their return to this country. Although the named plaintiffs did timely file their claims, the record was unclear as to how many others had done so, and the court reversed and remanded the case.

Although unreported, the Lee case demonstrates that even choice of law issues may result in a class being decertified. Lee is also an interesting case in that the Ninth Circuit actually reversed a district court’s decision to certify a class, something that would have been all but unheard of just a few years ago.

The Bottom Line: The statute of limitations and choice of law may be sources of conflict that render a case unsuitable for class action treatment.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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