Statutes of Repose Unaffected by CERCLA Requirement that State Law Incorporate Discovery Rule in Statutes of Limitation

by Davis Wright Tremaine LLP
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On June 9, in CTS Corp. v. Waldburger, et al., No. 13-339, the U.S. Supreme Court held 7-2, that the Fourth Circuit erred in holding that CERCLA Section 9658 applied to the application of the North Carolina statute of repose, and held that the statute of repose barred state law nuisance claims. The majority included the four conservative members of the Court, Justice Kennedy, who wrote for the majority, and both Justice Kagan and Sotomayor, the latter three adding an argument to the majority that the conservative bloc would not adopt. Specifically, while all seven members of the majority accepted the argument based on “ordinary principles of statutory construction,” only Justices Kennedy, Kagan and Sotomayor added that the statutory construction arguments were buttressed by the principle that preemption provisions must be construed narrowly. Arguing for the conservative bloc, Justice Scalia added that the proper rule for construction of express preemption provisions is that given to provisions in general: “Their language should be given its ordinary meaning.”

CTS Corporation had stored hazardous chemicals at its electronics plant in North Carolina. Twenty-four years after it had ceased operations at that facility and sold the property, subsequent owners and adjacent landowners filed a state law nuisance action against the company in federal district court. The district court dismissed the action, relying on the State’s statute of repose, which required that any tort action be brought within 10 years of the last culpable act or omission. The Fourth Circuit Court of Appeals reversed, holding that CERCLA Section 9658 required that States apply a discovery rule to state law personal injury and property damage claims. While the wording and title of Section 9658 refer only to statutes of limitation, with no reference to statues of repose, the appellate court did not find that determinative. Finding the language ambiguous, the Fourth Circuit relied on the principle that remedial statutes should be read in a liberal manner.

In the Supreme Court, the majority accepted that the text of the statute itself was not determinative, notwithstanding the four references and heading that refer only to statutes of limitation and the absence of any reference at all to statutes of repose. However, they found contextual support for the position that Congress did not intend the provision to extend to statutes of repose. The majority noted that the provisions of Section 9658 were adopted in 1986 to implement recommendations to Congress on provisions of CERCLA, including changing state laws imposing restrictive statutes of limitation and statutes of repose, discussing them as distinct categories. Despite that, the section as adopted contained no reference at all to statutes of repose, suggesting that Congress understood there were two distinct types of limitations, and intended Section 9658 to apply to only the one it mentioned.

The majority also noted that the provisions of Section 9658 refer to the period within which a civil action under state law “may be brought.” Referring to the distinction between a limitation period which begins with discovery of an injury, and the statute of repose, which commences with the last culpable act, the majority noted that a statute of repose applies even where it would not have been possible to bring a cause of action due to the absence of knowledge of an injury. The majority also pointed out that Section 9658 allows equitable tolling, which traditionally applies only to statutes of limitation, and does not apply to statutes of repose.

In response, the dissenters, per Justice Ginsburg, asked, “What is a repose period, in essence, other than a limitations period unattended by a discovery rule?” and argued simply that the majority’s interpretation thwarts Congress’s clear intent to address state laws that prevent recovery for injuries with latency periods running for decades.

The practical effect of this decision is somewhat limited, at least at this point. Only a few states (including Oregon) have statutes of repose. And it is not the first time that the Supreme Court has taken Congress at its word(s) in interpreting the badly draft Superfund statute, rejecting practical interpretations by lower courts, e.g., on contribution litigation. However, the Court’s acceptance of this argument might encourage other state legislatures to consider adoption of such provisions to cut off litigation over decades-old environmental contamination. And Congress, in response, might be moved to revise this and other examples of in-artful, if not bad, legislative drafting in CERCLA.

 

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