On June 3, 2014, the First Circuit affirmed the dismissal of a putative class action filed by a group of former workers in a French luggage factory against Bain Capital, LLC in the District of Massachusetts. The case exemplifies the court’s approach to a named plaintiff’s assertion of the doctrines of fraudulent concealment and equitable estoppel in an effort to toll a statute of limitations.
Plaintiff Murielle Abdallah sought to represent workers in a French luggage factory owned by Samsonite. She alleged that an investment group led by Bain, which owned a controlling stake in Samsonite, wanted to close the unprofitable factory. Allegedly to avoid making mandatory severance payments to employees who would be laid off by the closure, Samsonite formed a wholly owned subsidiary, NewCo, to which it transferred the factory. In 2005, Samsonite sold NewCo for one euro to a third party, HB Group, which was controlled by Jean-Jacques Aurel. On February 15, 2007, a French court ordered liquidation of the factory, which resulted in Abdallah’s and her coworkers’ terminations.
After HB Group was unable to pay workers mandatory post-termination benefits, Abdallah and her coworkers filed a lawsuit in French civil court against Samsonite and its shareholders, including Bain. Bain asserted that it was a “stranger to the contracts and all the acts that pertained to the litigation,” and on that basis the French court declared Bain “exterior to the annulment procedure.” A French labor court ruled that Samsonite never ceased being their employer, but held that it had no jurisdiction over Bain due to the civil court’s findings.
In 2011, Mr. Aurel provided an affidavit to Abdallah asserting that a Bain representative was present at meetings concerning the alleged factory transfer scheme, and that Samsonite’s representative sought the assent of Bain’s representative to key elements of the plan. Abdallah claimed that she first learned that Bain orchestrated the transfer of the factory through this affidavit.
Unsatisfied with the remedies obtained in French courts, Abdallah sued Bain in the District of Massachusetts in November 2011. The district court dismissed the complaint, as well as a second complaint she filed in 2012, as time-barred. Abdallah appealed the dismissal of the second complaint.
The following facts were undisputed: (1) Abdallah’s claim accrued on February 15, 2007, the date of the court-ordered factory liquidation and the date that her job loss became certain; (2) Abdallah’s claims were subject to a three-year statute of limitations, (3) the suit against Bain from which the appeal was taken commenced on October 20, 2012. On these facts, the court recognized that the lawsuit must be dismissed unless a basis for tolling the statute of limitations applied. The court then rejected both bases Abdallah presented for tolling the limitations period: fraudulent concealment and equitable tolling.
The court explained that fraudulent concealment may toll the statute of limitations if, by an affirmative act perpetrated with the intent to deceive, the wrongdoer concealed the existence of a cause of action. However, it will not toll the statute if the plaintiff had actual knowledge of the facts giving rise to a claim. Similarly, equitable tolling provides no relief if a plaintiff knows of facts sufficient to bring the cause action; it applies only if the plaintiff could not have discovered information essential to the lawsuit using reasonable diligence.
Applying these principles, the court determined that Abdallah knew before 2009 what Samsonite had done, as evidenced by the rulings she obtained against Samsonite in the French courts in 2008. As for what she knew about Bain’s actions before 2009, the court held that “[i]t took no imagination—or implausible allegation—to suggest that Samsonite’s owners must have authorized such a major and highly visible financial transaction by the company they had just acquired.” In any event, the court observed, Abdallah had sued Bain in French civil court, and had argued in both French courts that Bain had a hand in the challenged transactions.
After rejecting a procedural argument that it found Abdallah had waived, the court addressed her argument that she was unable to file suit against Bain in the United States before 2011 because she had not discovered facts necessary to bring suit until she had obtained Mr. Aurel’s affidavit. The court held that any new details she learned through the affidavit were not essential to bringing suit, and that the running of the limitations period does not await a plaintiff learning all facts relevant to a claim. “That is what discovery under the Federal Rules of Civil Procedure is for. Equitable tolling does not apply when a plaintiff has facts essential for the commencement of a suit (nor does it always apply when a plaintiff does not have such facts).” Also, although the court expressly did not decide whether Abdallah would have a claim absent the running of the statute of limitations, it nevertheless observed that “allegations that a parent directs or controls particular actions by a subsidiary are generally not enough to render the parent liable for all torts related to those actions.”
Finally, the court addressed Abdallah’s argument that Bain should be estopped from arguing she had knowledge of her claims before 2011 because it had represented to a French court that it was “a stranger to the contracts and to all the acts that pertained to the litigation.” The court rejected this argument too, because Abdallah did not rely on that denial, but persisted with her claims in spite of it. The court noted that even if she had relied on Bain’s denial and Bain had known that she would do so, no authority supports tolling the limitations period where the plaintiff suspects a lie advanced in defense of a suit but continues with the lawsuit anyway. “The better recourse, upon discovering such a lie, is to return to the original forum and seek to have the case reopened.” The court concluded: “In any event, we need only hold here that Bain’s general assertion that it was a ‘stranger to’ the Samsonite transaction, which assertion neither contested the specific facts known by Abdallah, nor persuaded her to drop her suit against Bain, provides no basis for tolling the statute of limitations.”