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Posted on Friday, January 26, 2018

Supreme Court Decides Tolling Provision “Stops the Clock”

In Artis v. District of Columbia, the U.S. Supreme Court issued a 5-4 decision with a significant impact on both employers and employees when it held that any statute of limitations on an employee’s state law claims are suspended during the pendency of a federal law suit in which the state law claims are included.

What Happened?

Stephanie Artis was terminated from the District of Columbia Department of Health. Over a year later, she filed a federal law suit alleging gender discrimination in violation of a federal statute, coupled with three state law claims. The District Court ruled in favor of the employer on her federal claim, and refused to exercise supplemental jurisdiction over her state law claims. As a result, she re-filed her state law claims in the Superior Court of the District of Columbia 59 days later.

In the state trial court, the employer filed a motion to dismiss arguing that Artis’ state law claims were time-barred under 28 U.S.C. §1367(d). Section 1367(d) provides that the “period of limitations for” refiling in state court a state claim so dismissed “shall be tolled while the claim is pending [in federal court] and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.”

The employer wanted the court to apply the “grace-period approach,” which meant the statute of limitations continued to run while Artis pursued her federal claim, with the statute merely giving her a 30-day grace period to refile in state court. Under this approach, Artis’s claims would have been time barred given that the statute of limitations on her state law claims had passed and she did not re-file within the 30-day grace period. Artis wanted the trial court to apply the “stop-the-clock approach,” which would suspend the statute of limitations on the state law claims while they were pending in federal court, and give her the time remaining on the state law claims plus an additional 30 days once a federal court chooses not to exercise supplemental jurisdiction on the state law claims. Under this approach, Artis’s state law claims would have been timely filed.

The trial court interpreted the text of Section 1367(d) to come to the conclusion that the employer’s grace period approach should be adopted. Artis appealed, and the District of Columbia Court of Appeals affirming the lower court decision.

SCOTUS’s Decision

The Supreme Court disagreed with the lower courts and adopted the stop-the-clock approach. In Justice Ginsburg’s decision, she explains that the stop-the-clock approach met the primary purpose of the statute, which was to prevent surprise to defendants and bar plaintiffs who slept on their rights. Furthermore, she explains that the ordinary meaning of the word “toll” is to suspend, which are two terms used interchangeably in the court’s prior decisions regarding federal statutes at large. As a result, the Supreme Court held that  §1367(d) suspends the statute of limitations for a claim that was first filed in federal court and re-filed in state court, which gives plaintiffs the time remaining on their state law claims plus 30 days once a federal court chooses not to exercise supplemental jurisdiction.

Implications on Employers and Employees

By adopting the approach that extended the time Artis had to pursue her state law claims, the court essentially held that all employees now have more time to pursue their claims when they file first in federal court and therefore have a second chance to sue their former employers. Such a decision shifts the bargaining power in the employees hands due to the high costs employers are vulnerable to when faced with re-litigation of the same claims that were raised in federal courts. Furthermore, widening the statute of limitations in such a manner could pose evidentiary integrity issues down the road for both employers and employees due to the increased time frame that issues may be litigated. In conclusion, the Artis decision is a big win for employees and plaintiffs at large, but its impact on the employer-employee relationship is to be determined.

Artis v. District of Columbia, U.S. No. 16-460

Stephanie Wilson is a Partner at Berenzweig Leonard, LLP, a business and employment law firm in the Washington, D.C. area. Stephanie can be reached at swilson@berenzweiglaw.com.

Law clerk Nicole Chammas is a 2L at the Antonin Scalia Law School, George Mason University School of Law.