Last week, in Abdallah v. Bain Capital LLC, United States District Judge Joseph L. Tauro of the District of Massachusetts dismissed a putative class action lawsuit against Bain Capital LLC because the action was time-barred. As often happens when class action complaints are based on events occurring outside the relevant limitations periods, plaintiffs’ counsel attempted to avoid dismissal by invoking the discovery rule, the fraudulent concealment doctrine, and equitable estoppel. The court’s analysis in rejecting each of plaintiff’s theories on a Rule 12(b)(6) motion demonstrates the potential value of challenging plaintiffs’ tolling arguments at the earliest opportunity where they are not supported by specific factual allegations.
The lawsuit was brought by Murielle Abdallah, who lost her job at a French Samsonite factory when it was liquidated after the factory’s owner, HB Group, declared bankruptcy in 2007. Abdallah accused Bain of implementing a scheme to sell the factory to HB Group in order to avoid simply closing the factory, which would have triggered the obligation under the French Labor Code to create a costly ($75mm, according to the plaintiff) collective redundancy plan designed to assist displaced employees with benefits including training, financial aid, relocation assistance, and psychological support. She asserted claims for fraud, tortious interference and unjust enrichment (subject to a three-year statute of limitations) and violations of Massachusetts’ Consumer Protection Act, Chapter 93A (governed by a four-year limitations period).
Bain moved to dismiss, and in opposition Abdallah argued that the statutes of limitations were tolled. Noting that the discovery rule tolls limitations periods until the plaintiff knew or should have known of the alleged harm and has sufficient notice of its cause, Judge Tauro concluded that the cause of action accrued no later than February 15, 2007, more than four years before the complaint was filed, because that was when a French tribunal ordered the liquidation of the factory, and Abdallah likely was on notice of Bain’s involvement at that time.
Abdallah also relied on Mass. Gen.Laws ch. 260, § 12, Massachusetts’ fraudulent concealment statute. Noting that allegations of fraud are subject to the heightened pleading standard of Fed. R. Civ. P. 9(a), the court held that Abdallah could not rely upon a theory of fraudulent concealment to save her claims because she did not allege specific facts to show that Bain did anything to hide her cause of action.
Judge Tauro also declined to apply the doctrine of equitable tolling, which is appropriate only where the plaintiff “could not have discovered, with reasonable diligence, information that was essential to the cause of action within the statute of limitations.” Although Abdallah argued that certain information regarding Bain’s involvement in the alleged “scheme” was only recently acquired, the court found that she had not provided any evidence to demonstrate that the information could not have been found by diligent inquiry, and she did not contend that that information was essential to her causes of action (i.e. “that without [that] information . . . [she] could not have brought her causes of action in court.”) Emphasizing that equitable tolling applies only “sparingly,” Judge Tauro concluded that on the facts alleged it did not apply.
Finally, Judge Tauro addressed the propriety of ruling on Abdallah’s tolling arguments at the motion to dismiss stage. He concluded that, “[a]lthough determining whether the discovery rule, fraudulent concealment, or equitable tolling should apply in a case is a question of fact to be determined by the finder of fact,” he could grant the motion to dismiss because “Abdallah has not offered any facts that justify invoking” the tolling doctrines. The court dismissed the class action complaint without prejudice, leaving the door open for Abdallah to re-file, presenting specific facts that would justify application of the discovery rule, fraudulent concealment, or equitable tolling.