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The U.S. Supreme Court has agreed to hear a case about how long an employee has to file a lawsuit in state court after a federal court declines to rule on the relevant claims.
Disgruntled workers can file a single lawsuit in federal court that asserts both federal and state law claims. For example, an employee might raise wage and hour claims under the federal Fair Labor Standards Act and under the Pennsylvania Wage Payment and Collection Law in one complaint.
"Federal courts may exercise supplemental jurisdiction over state law claims but do not have to do so," explained Guy Brenner, an attorney with Proskauer in Washington, D.C.
Typically, if a federal court dismisses the federal claims, it will decline to retain jurisdiction over the state law claims and will dismiss those as well, he added.
A federal statute provides the employee with a 30-day period to refile state law claims in state court after the federal claims are dismissed. But the meaning of the statute isn't clear.
In Artis v. District of Columbia, No. 16-460, the Supreme Court has been asked to decide whether federal law suspends a state law claim's statute of limitations while the claim is pending in federal court and for 30 days after the claim is dismissed, or whether the provision simply provides the employee with a 30-day grace period to refile in state court.
"At first blush, Artis presents a fairly straightforward procedural issue—namely, when a federal court declines to exercise supplemental jurisdiction over a plaintiff's state law claims, how long does the plaintiff have to refile those claims in state court?" said Christopher Humber, an attorney with Ogletree Deakins in Washington, D.C.
However, the case could have a significant impact on employers seeking to rely on the judicial system to bring an efficient resolution to employment disputes, he noted.
Stephanie Artis filed a lawsuit in federal court after she was fired from the Washington, D.C., Department of Health. She 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.
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The federal court ultimately dismissed her Title VII claim and declined to decide the state law issues. (Washington, D.C., is considered a state under the relevant law). Fifty-nine days later, Artis 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.
But Artis interpreted the limitations period in a different way. 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, but not all jurisdictions agree with this interpretation.
Courts in Maryland and Minnesota have interpreted the applicable law like Artis did—to suspend the statute of limitations during the federal court proceedings and for 30 days thereafter, Humber noted.
He added, however, that courts in California have taken positions similar to the superior court in this case.
Grace Period vs. Suspension Period
Humber illustrated the issue with the following example: Suppose an employee in Washington, D.C., is fired on Jan. 1, 2017, and exactly one year later brings state law claims against his former employer in federal court for breach of contract—which has a three-year statute of limitations—and for discriminatory discharge under Title VII. And on June 1, 2019, the federal district court grants the employer's motion for summary judgment on the Title VII claim and declines to exercise supplemental jurisdiction over the breach of contract claim.
The "grace period" theory would give the employee 30 days to refile his breach of contract claim in superior court (until July 1, 2019), unless the state government elected to extend that period through legislation or equitable tolling. Under the "suspension" theory, the employee would have another two years and 30 days to refile (until July 1, 2021).
In this scenario, Humber said, "the suspension theory would make the hapless employer vulnerable to a newly filed breach of contract claim for up to four and a half years after the termination at issue—and presumably even longer after the events that led to the termination."
Brenner said the question presented for Supreme Court review is narrow and doesn't arise frequently.
"At most, the position advocated by the D.C. government [the employer in this case] will be marginally better for employers as it will provide for a shorter period of time for plaintiffs to refile claims in state court in these rare circumstances," he said.
"Regardless how the Supreme Court decides the issue, however, employers can welcome the fact that its decision will likely bring clarity and uniformity to an uncertain area of the law," Humber noted.
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