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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.
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