Supreme Court Ruling May Result in More State-Law Claims Against Employers

Pro-plaintiff ruling will expand the time many employees have to file suit

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Employees may have more time to file state-law claims against their employer if a federal court dismisses their lawsuit, according to a recent U.S. Supreme Court ruling.

Employees can file a single lawsuit in federal court that asserts both federal and state-law claims against their employer. If the judge dismisses the federal claims, he or she can decline to hear the remaining state-law claims. The employee then has a certain amount of time to refile the state-law claims in state court. Lower courts, however, have disagreed about just how much time employees have to refile.

Federal law provides that state-law claims will be "tolled" or paused while the claims are pending in federal court and for a period of 30 days after they are dismissed—unless state law provides for a longer tolling period.

In Artis v. District of Columbia, No. 16-460, the relevant state-law limitations period had already passed by the time the employee's claims were dismissed by the federal judge. The employer therefore argued that the worker only had a 30-day grace period to file her claims in state court.

However, the employee argued that the tolling period stopped the clock from running on her state-law claims and that she still had whatever time remained under the state statute of limitations when the claims were first filed in federal court plus 30 additional days.

Siding with the employee in a 5-4 ruling on June 22, the Supreme Court held that the employee had 30 days plus whatever time had remained under the state statute of limitations when the federal lawsuit was initially filed.

"While on the surface Artis v. District of Columbia appears to be a simple case about the meaning of a federal rule regarding jurisdiction, it is notable in several ways," said Richard Reice, an attorney with Hoguet Newman Regal & Kenney in New York City. "Chief Justice [John] Roberts [Jr.] voted with the liberal wing of the court to expand the time limit afforded to most plaintiffs to bring certain state-law claims," he noted, adding that the ruling is a pro-plaintiff decision that in general will protect and expand the time most plaintiffs will have to file suit.

This could affect how long an employer's litigation hold is kept in place to preserve evidence when an employee has a right to sue but waits for several years to bring the claims, noted David Morrison, an attorney with Goldberg Kohn in Chicago. "Given that memories start to fade, it also could impact an employer's ability to defend against that potential lawsuit." 

Morrison added that the ruling makes it difficult for businesses to budget for potential related expenses, since employers may not know if and when the employee will refile.

Stop Clock vs. Grace Period

In Artis, a worker who was fired from the Washington, D.C., Department of Health brought a discrimination claim under Title VII of the Civil Rights Act of 1964, as well as whistle-blower and wrongful termination claims under Washington, D.C., law (which is considered state law). The federal court dismissed her Title VII claim and declined to decide the state-law issues.

[SHRM members-only toolkit: Managing Equal Employment Opportunity]

Fifty-nine days later, the worker filed her remaining claims in the Superior Court of the District of Columbia. Her former employer asked the superior court to dismiss her claims, arguing that she missed the 30-day grace period to file her new complaint.

The employee saw the tolling period as a "stop-clock" provision rather than a grace period. There were almost two years remaining under the statute of limitations for her Washington, D.C., claims when she filed the lawsuit in federal court. Therefore, she argued that the statute of limitations clock had paused until the federal case was dismissed and she still had those two years plus 30 days to file her claims in state court.

The superior court sided with the employer and dismissed the lawsuit. The appellate court affirmed the ruling.

Reversing the lower court rulings, the Supreme Court held that the tolling provision under the relevant federal statute stopped the clock on the state-law limitations period while the case proceeded in federal court.

The additional 30-day period gives plaintiffs some breathing room when they file close to the end of the limitations period, Justice Ruth Bader Ginsburg wrote for the majority. "Adding a brief span of days to the tolling period is not unusual in stop-the-clock statutes."

Joining Ginsburg and Roberts in the majority were Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan. Justice Neil Gorsuch filed a dissenting opinion joined by Justices Samuel Alito Jr., Anthony Kennedy and Clarence Thomas.

 

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