Statute of Limitations Explained: What You Need to Know
by Erin Shaak
Last Updated on January 27, 2023
If you’ve read through our blog or newswire, you’ve probably noticed that some lawsuits look to cover those who suffered a particular harm “within the applicable statute of limitations.”
So, what are statutes of limitations? How do they affect you? And what statute of limitations applies to the class action you’re reading about? We’re here to explain all this and more so you can be better prepared to take action and protect your rights.
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Many state and federal laws have what’s known as a statute of limitations, which essentially places a time limit on filing a lawsuit.
For example, the statute of limitations for minimum wage violations under the Fair Labor Standards Act is generally two years from when the employer failed to pay the minimum wage (or three years if the violation is determined to be willful), so a worker looking to sue over unpaid wages must do so within this time frame.
Knowing about the statute of limitations is important because if it runs out, you’ll lose out on being able to litigate your claim.
Why Is There a Time Limit?
One reason many laws have statutes of limitations is because it’s much more difficult—and perhaps impossible, in some cases—to adequately defend a lawsuit after too much time has passed.
In other words, the time limit aims to protect our constitutional due process rights by preserving evidence, both physical and testimonial, from being lost or watered down over time and guarding against a limitless possibility of litigation.
This is particularly meaningful for consumers when it comes to debt collection. Many consumers are unaware that creditors are often barred by state regulations from filing lawsuits to collect on a time-barred debt, i.e., one whose statute of limitations has expired. But just because debt collectors aren’t allowed to file lawsuits over time-barred debts doesn’t mean they won’t. It’s up to the debtor to know about the statute of limitations and prove to the court that the obligation is time barred.
When Does the Statute of Limitations Begin?
In short, it depends on where the allegedly illegal action occurred and the type of claim being pursued. Generally, the statute of limitations begins to run from the date the injury occurred. “Injuries” include not only physical injuries to a person’s body but could be, for instance, a loss of money, property damage, emotional distress or a deprivation of a person’s rights, to name a few.
In some situations, however, the injured party may not be able to discover the injury when it first occurs. In cases like this, the statute of limitations may be tolled, or delayed, until when the injury was discovered, or when it would have been discovered with reasonable effort. This is known as the “discovery rule.”
For instance, if you developed cancer that you believe was linked to a prescription medication you took, the statute of limitations would likely start running on the date you were diagnosed, not when you started taking the medication or when the cancer began developing. The discovery rule is most often used in cases where the effects of an action or product are latent and do not become apparent for many months or years.
In other situations, a plaintiff may argue that the defendant took certain steps to conceal the alleged injury and that the statute of limitations should therefore be tolled. For example, an investor suing J.P. Morgan for allegedly manipulating the price of U.S. Treasury futures contracts argued that although the defendants’ conduct had apparently been going on for 10 years, the plaintiff had no way of knowing anything was amiss until J.P. Morgan disclosed it was under criminal investigation by the U.S. Department of Justice in 2019. Because J.P. Morgan had attempted to conceal its allegedly unlawful activities, the plaintiff could not have discovered the injury with reasonable efforts, the complaint claimed.
“For these reasons,” the lawsuit stated, “all applicable statutes of limitation have been tolled based on the discovery rule and Defendants’ fraudulent concealment and Defendants are estopped from relying on any statutes of limitation in defense of this action.”
All told, statutes of limitations can be complex and there are many reasons why one might be tolled, which makes it difficult to speak in general terms about when a statute of limitations may begin or end. That’s why it’s a good idea to seek legal counsel if you’re unsure whether the time limit on your claim has run out.
How Long Is the Statute of Limitations for My Injury?
Again, it depends. The statute of limitations varies based on the law, the state and the circumstances.
To get an idea, however, you can check out this state-by-state guide on statutes of limitations. Just keep in mind that statutes of limitations can be complicated and there are several factors that could change how they apply to your injury.
Take this case, for example, where a judge interpreted the statute of limitations differently than the attorneys who filed the lawsuit. While the plaintiffs argued that their claim against Wyndham Vacation Resorts was subject to Florida’s four-year statute of limitations because that’s where their timeshare agreement was signed, the judge found that Delaware’s three-year statute of limitations applied. In the end, the case was dismissed after the judge determined that it had been filed 430 days after the statute of limitations had expired.
If you want to find out how long you have before it’s too late to file a lawsuit, your best bet is to check with an attorney. Attorneys usually offer free initial consultations and should be able to tell you how the law applies to your specific situation. But in the end, it will be up to the judge to decide.
How Does This Apply to Class Actions?
Statutes of limitations are often woven into the proposed definitions of the “classes,” or groups of people that class actions are looking to cover. While some complaints initially specify the covered timeframe—e.g., “Anyone in the U.S. who worked for Restaurant, LLC within the past three years”—others simply state that the lawsuit will cover claims “within the applicable statute of limitations.” In cases like this, the timeframe will eventually be identified and specified if and by the time the lawsuit settles.
If you’re wondering whether your claim will be covered by an existing class action that doesn’t define any applicable time period, there usually isn’t much you can do but stay patient and stay informed. If the lawsuit moves forward and settles, those covered by the proposed deal—and whose claims fall within the specified timeframe—should receive notice of the settlement and then be able to file a claim for their piece of the settlement.
Again, if you have any concerns about whether your claim would be covered by an existing lawsuit, talking to an attorney is your best bet. A good place to start would be the attorneys who filed the lawsuit; their contact information can be found in the complaint, i.e., the legal document embedded at the bottom of each post on our site.
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What If My Statute of Limitations Runs Out While a Lawsuit Is Progressing?
Consider this situation: you were harmed by Big Corporation and you’re thinking about suing but then discover that a class action lawsuit has already been filed over the alleged injustice. You patiently wait as the lawsuit progresses, but it ends up getting dismissed. In the meantime, the statute of limitations on your claim has expired. Do you have any recourse?
In American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), the U.S. Supreme Court addressed this question by ruling that the filing of a class action complaint tolls, or delays, the statute of limitations for individuals who would be covered by the proposed class.
So, if the court refuses to certify the class and the statute of limitations has already run out on your claim, you could still file your own lawsuit or join someone else’s individual action.
In 2018, the Supreme Court clarified in another suit, China Agritech, Inc. v. Resh, 584 U.S. ___ (2018), that the American Pipe tolling doctrine does not, however, apply to subsequent class actions. In other words, if a court does not certify the class in a proposed class action, those covered by the suit cannot bring a second class action after the statutes of limitations on their claims have run out.
Does the Statute of Limitations Apply in Arbitration?
If the statute of limitations has run out for bringing your claim in court, the same may not be true for arbitration.
Arbitration is an alternative method of dispute resolution that takes place outside of court. Because the purpose of arbitration is to mitigate the delay and expense of traditional litigation, the rules are often less formal than they would be in a courtroom.
In general, whether a statute of limitations is enforceable in arbitration is determined by the arbitration agreement between the two parties, unless state law expressly or implicitly states that the applicable statute of limitations applies in arbitration.
So, if your claim is subject to an arbitration agreement, check to see if the arbitration clause either specifies that a particular state’s statute of limitations applies or sets forth its own limitations period. If not, it’s possible that the statute of limitations defense will not hold and the decision on whether it’s too late to arbitrate will be left to the arbitrator.
I Still Have Questions. Where Can I Find More Information?
As previously stated, statutes of limitations can be complicated and are often case specific. If you want to know more about your legal rights and whether or how they’re affected by statutes of limitations, it’s best to speak with an attorney. An attorney should be able to help answer questions specific to your case.
When it comes to finding an attorney, recommendations from friends and family are often the best way to go. But you can also check to see if your state bar organization offers referral services or look into attorney directories such as Martindale, Avvo or LegalZoom.
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