Daily Blast July 7, 2014

the California Supreme Court issued an opinion in City of Los Angeles v. County of Kern (July 7, 2014, S210150) __ Cal.4th __, analyzing the split among the courts regarding whether 28 U.S.C. section 1367(d) (supplemental jurisdiction statute) affords parties a grace period, allowing a party to refile its state law claims within 30 days of their dismissal from a federal action, or whether the limitations period is suspended during the pendency of the claims in federal court and for 30 days after their dismissal. The Supreme Court held that “Congress enacted section 1367(d) to provide a grace period for claims that would otherwise be lost, not to categorically suspend statutes of limitations and thereby potentially extend filing periods for years following federal dismissal.” (Slip opn., p. 2.)

In this case, plaintiff sued defendant in federal court for violations of federal and state law. The district court granted summary adjudication on plaintiff’s claims and entered judgment in favor of plaintiff. The Ninth Circuit reversed holding that plaintiff lacked standing on the federal claim. The Ninth Circuit vacated the judgment and remanded to permit the district court to exercise discretion whether to retain jurisdiction over the state claim. The district court declined to exercise supplemental jurisdiction over plaintiff’s state claim and dismissed the case. Seventy-eight days after dismissal, plaintiff refiled suit in state court alleging both the federal and state claims. The trial court rejected defendant’s argument that the lawsuit was time barred under section 1367(d). (Slip opn., pp. 2-3.) The Court of Appeal affirmed reasoning that section 1367(d) suspended the running of the statute of limitations for the entire time suit was pending in federal court, plus 30 days.(Id. at p. 4.)

On review, the California Supreme Court reversed the Court of Appeal’s decision. The court determined that state claims must be refiled within 30 days of their dismissal from a federal action. (Slip opn., p. 2.) According to the court, “the grace period construction cleaves closest to the goal of avoiding the loss of claims that otherwise would be barred, while impinging least on state sovereign prerogatives to establish statutes of limitations.” (Id. at p. 19.) In other words, the grace period view “gives universal effect to section 1367(d): in every case, the statute serves the salutary function of eliminating the disincentives to proceed in federal court by offering a guarantee that state limitations will be without effect.” (Id. at p. 17.) Accordingly, the Supreme Court disapproved of Bonifield v. County of Nevada (2001) 94 Cal.App.4th 298, to the extent it is inconsistent with this opinion. (Id. at p. 19.)

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