Every day, complaints are filed in federal court with claims brought under both federal and state law. If the federal court dismisses or grants judgment on those claims that provide a basis for federal jurisdiction, it has discretion to retain or dismiss the state law causes of action.
If, however, the statute of limitations (SOL) for the state law claims expires during the pendency of the federal action, and the court elects not to retain jurisdiction, the plaintiff may be unable to pursue those claims in state court. This otherwise inequitable result is avoided by 28 U.S.C. §1367(d), which provides that:
The period of limitations for any claim asserted under subsection (a), and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.
This subsection thus allows 30 days for the plaintiff to refile his state law claims in state court following dismissal by the federal court. But what happens if a plaintiff waits longer than 30 days?
Plaintiffs finding themselves in this position have argued that the phrase “shall be tolled” in §1367(d) means that the state law SOL is, effectively, suspended while the claim is pending in federal court, and that any time that remained when the federal action was filed can be used after dismissal. Several courts have accepted this argument.
But several other courts have rejected the same argument, concluding that “shall be tolled” means that an expired SOL is extended for 30 days, but no more. This article explores these differing views.
The Chess Clock Camp
Several courts have held that, if there is time remaining on the state law claim’s SOL when a federal action is commenced, that remaining time is added to the refiling period. These courts have reasoned that the SOL is like a chess clock that is stopped when the federal action is filed, and restarted once it is dismissed.
The leading case in this camp is Goodman v. Best Buy, Inc. There, the plaintiff filed his federal action on July 12, 2005, asserting federal and state law claims stemming from his termination in February 2005. The federal court granted the defendant summary judgment on the federal law claim in December 2006, and dismissed the state law claim. But the plaintiff waited more than three months to refile it, which was more than two years after the claim accrued.
Defendant moved to dismiss the state law claim, alleging it was untimely due to a one-year SOL. The trial court agreed. On appeal, however, the intermediate appellate court held that the SOL had been suspended during the federal action and that the plaintiff could use the remaining time, plus 30 days, to refile his claims in state court.
The Minnesota Supreme Court agreed. It determined that the phrase “shall be tolled” in §1367(d) was susceptible to three interpretations. The first one was that all state law statutes of limitation are replaced by a 30-day fixed period. The court rejected this interpretation, finding that it was not supported by the language of §1367(d).
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Source: Federal Bar Association