There is nothing clients and defense counsel love more than a chance to assert the statute of limitations, and for good reason. While many defenses are fact-specific or offer so many exceptions that summary dismissal can seem hopelessly unlikely, statute of limitations defenses are typically cut and dried – either the time has run to bring the claim, or it has not. To be sure, there can be nuances, such as when the cause of action began to accrue or potential application of the discovery rule, but generally speaking no defense allows for as easy and early an exit as the statute of limitations.

           Unfortunately, the Washington Supreme Court has potentially muddied the waters in this area through two recent decisions on equitable tolling of which all civil defense counsel should be aware. Through the doctrine of equitable tolling, the courts may allow an action to proceed even where the statute of limitations has lapsed. Broadly speaking, the doctrine applies “when justice requires.”[1] Historically, however, Washington courts have placed significant strictures on when and how the doctrine may apply, recognizing that an overly lenient application of the doctrine could undermine statutes of limitations and their underlying principles.

           The fundamental purpose of the statute of limitations is to ensure that any potential claims are brought forward and dealt with within a reasonable period of time. This helps to guard against the bringing of stale claims, including where evidence and witness testimony may have faded or been lost entirely. The statute of limitations requires plaintiffs to maintain some degree of diligence in bringing claims. For businesses, this allows relative certainty that most potential claims are gone forever following a certain period of time from the transaction or occurrence at issue. In this way, businesses are able to plan and account for potential liability and extinguishment thereof.

           To honor these policies, Washington courts have typically required a showing of bad faith, deception, or false assurances by the defendant coupled with a showing of diligence by the plaintiff.[2] Recognizing that statutes of limitations are legislative enactments entitled to deference and respect by the courts, Washington courts have also at times required a showing that application of the doctrine in a particular case would effectuate the policies underlying any statute on which the claims are based, and the purposes underlying the applicable statute of limitations.[3]

           In 2022, in Fowler v. Guerin,[4] the Washington Supreme Court was confronted with the opportunity to adopt a less restrictive test on equitable tolling. Fowler involved a class action originating in federal district court, where a class of approximately 25,000 public school teachers sought to bring a Fifth Amendment takings claim based on alleged underfunding of their Washington Teachers’ Retirement System (TRS) accounts. The takings action was litigated to the Ninth Circuit Court of Appeals which found that the class had established a per se takings claim. On remand to the district court, the defendant amended their answer to assert a statute of limitations defense for the first time. The district court concluded that the only viable theory to defeat the statute of limitations defense was the doctrine of equitable tolling. Unsure of what test to apply under Washington state law, the district court certified the question to the Washington Supreme Court.

           In its unanimous decision, the Washington Supreme Court characterized the doctrine as “an extraordinary form of relief” because statutes of limitations “generally reflect the public policy of the state as enacted by the legislature.”[5] As the Court stated, “[a] statutory time bar is a legislative declaration of public policy which the courts can do no less than respect, with rare equitable exceptions.”[6] In case the message was not clear, the Court further cautioned against applying the doctrine of equitable tolling “in a manner that would substitute for a positive rule established by the legislature a variable rule of decision based upon individual ideas of justice.”[7]

           With that framework in mind, the Court set forth a strict four-part test from prior Washington case law on the issue. Under the Fowler formulation of the doctrine, equitable tolling may apply only where:
           Unsurprisingly, the plaintiffs in Fowler were unable to meet such a strict test, primarily because they could not establish bad faith by the defendant that interfered with their timely filing the lawsuit. Specific to the element of bad faith, the Court recognized that “a defendant should lose the benefits of finality provided by the statute of limitations only when that defendant has engaged in conduct that justifies making an exception.”[9]

            With Fowler in the books, it appeared that the door was mostly closed on equitable tolling as a general answer to a statute of limitations defense. However, just two years later, in the 2024 decision of Campeau v. Yakima HMA, LLC,[10] the Washington Supreme Court seemingly reversed course and held that a finding of bad faith by the defendant is not always required for the doctrine to apply.

            In Campeau, a nurse’s union brought suit under associational standing, claiming that the defendant had wrongfully withheld wages from them. The trial court found for the nurses and found that the defendant had failed to pay nearly $1.5 million in wages. The defendant appealed on the issue of standing and the Washington State Supreme Court eventually found that the union did not have standing to bring the claims. One of the nurses who had “actively participated” in the associational standing case then brought a class action as lead plaintiff based on the same claims. However, the statute of limitations had long since run during litigation on the original claim and the issue of associational standing. The trial court applied equitable tolling and allowed the class action claims to proceed. The defendant appealed and, while the appeal was pending, the state Supreme Court issued its decision in Fowler v. Guerin. The court of appeals then reversed the trial court because the Campeau plaintiffs conceded that they could not show bad faith by the defendant, as required by Fowler.

            The state Supreme Court accepted review and reversed the court of appeals. The Campeau Court acknowledged that Fowler had “set out the general standards for equitable tolling in civil cases under Washington law” yet also declared that Fowler was “necessarily limited to the issues before it.”[11] The Court found that bad faith does not have to be shown where a case based on associational standing fails and an association member promptly files a follow-on class action.[12] The Court found that the other elements had been met, including the legislative purpose behind the state’s labor laws and the purpose behind allowing class action claims, especially when individual claims may not be substantial enough to incentivize pursuing cases of withheld pay. Only Justice Madsen dissented in the Campeau decision, noting that the Court had just held that bad faith was an essential requirement for equitable tolling in its Fowler decision.

            The state of the law appears murky following the Fowler and Campeau decisions. Read together, it seems that not only will the application of the test for equitable tolling vary from case to case, but the very formulation of the test to be used may vary as well. Campeau could and probably should be read very narrowly, applying only in instances where associational standing of wage and hour act claims fails on appeal years after the applicable statute of limitations would have run, and after a finding of liability and damages establishing the validity of the claims, with one of the same plaintiffs who “actively participated” in the associational standing claim then bringing a follow-on class action as lead plaintiff. In other cases, Fowler should be the general rule. Nonetheless, the Washington Supreme Court has introduced substantial uncertainty into the equation—at least for now—by holding that in some circumstances, but not others, a plaintiff may be able to dispose of at least the requirement of showing bad faith by the defendant. This ad hoc dispensing of essential elements threatens to overrule legislative prerogatives and create the same “variable rule of decision based upon individual ideas of justice” that the Court strongly, and appropriately, warned against in Fowler.
 
Timothy J. Nault is Of Counsel at Paine Hamblen, P.S., in Spokane. He has practiced in civil litigation for the past ten years after clerking in the United States District Court for the Eastern District of Washington. He practices in state and federal trial and appellate courts across eastern Washington and in the Ninth Circuit Court of Appeals. You can reach out to him at tjn@painehamblen.com or (509) 455-6024