Statute of Repose: A New Weapon in Environmental Defense Counsel’s Arsenal
Author: Barbara Hopkinson Kelly
The June 9, 2014, Supreme Court ruling in CTS Corp v. Waldburger represents a victory for companies and landowners with legacy environmental liabilities in states with a statute of repose applicable to tort claims. Moreover, this decision may spawn tort reform in those states currently lacking a relevant statute of repose as state legislatures recognize the importance of giving companies a fresh start by extinguishing claims emanating from decades-old contamination.
The CTS ruling confirms that provisions of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, also known as the Superfund), which preempt state statutes of limitations, do not apply to statutes of repose enacted by the states. Importantly, the high court emphasized in its ruling that states are “independent sovereigns” and “in our federal system, there is no question that States possess the traditional authority to provide tort remedies to their citizens as they see fit.” Wos v E.M.A. 568 U.S. (2013) (slip op. at 11.). Thus, absent a specific intent by Congress to preempt statutes of repose, state legislative decisions to provide repose to companies that would otherwise be subject to perpetual environmental liability will be upheld.
This case arises from a state-law nuisance action in which CTS Corporation had run a plant where quantities of chemicals had been stored. CTS Corporation sold the facility in 1987, and the landowners subsequently purchased portions of the land. In 2009, the landowners allegedly learned that their well water was contaminated by carcinogenic solvents. The landowners brought suit in 2011, 24 years after CTS sold the property, alleging injury and damage from the contamination. Citing to North Carolina’s statute of repose, CTS moved to dismiss the claim, as the statute relieves a defendant of liability from a tort suit brought more than 10 years after the last culpable act of the defendant. The Fourth Circuit held that the discovery rule under CERCLA, 42 U.S.C.S. § 9658 preempted the 10-year limitations period under North Carolina’s statute of repose. The Court of Appeals reasoned that although § 9658 did not mention statutes of repose, it applied to repose limitations such as North Carolina's. The Court further reasoned that given the inconsistent manner in which "statute of limitations" had been used, and because the section was ambiguous and remedial in nature, it was probable that Congress intended § 9658 to apply to the type of limitation found in its statute of repose, and a finding of preemption was warranted.
On review before the Supreme Court, Justice Kennedy began his opinion with a reading of CERCLA, which indeed contains a provision that by its terms preempts statutes of limitations applicable to state law tort actions in certain circumstances. Therefore, he reasoned it is undoubted that this statute preempts state statutes of limitations that are in conflict with the statute. At issue here, however, was whether 42 U.S.C.S. § 9658 also preempted state statutes of repose, given that the language and intent of the statute was not so obvious.
CERCLA was established and enacted by Congress in order to identify and clean up sites that were contaminated with hazardous materials and threatening to the environment. Discussing this in his opinion, Justice Kennedy wrote that the purpose of CERCLA was “to promote the timely clean up of hazardous waste sites and to ensure that costs of such clean up efforts were borne by those responsible for contamination.”
As Justice Kenney eloquently opined:
“While both [the statutes of limitations and statutes of repose] are similar in their general purpose of limiting the duration of liability for tortuous acts, the statutes seek to attain different purposes and objectives. The Statute of Limitation allows a claim to accrue in a personal injury or property damage action when the injury occurred or was discovered; a statute of repose, on the other hand, puts an outer limit on the right to bring a civil action. That limit is from the date of the last culpable act or omission of the defendant, and not from the date on which the claim accrues. Here, the injury need not have occurred, much less have been discovered. The statutes of repose effect a legislative judgment that defendant should be free from liability after the legislative determined time period. One central distinction between the statutes is that the statutes of limitations are subject to equitable tolling, which can pause the running of the statute of limitations when a litigant has pursued his rights diligently but some extraordinary circumstance prevents him from bringing a timely action. The statutes of repose generally may not be tolled, even in cases of extraordinary circumstances beyond a plaintiff’s control.”
Evidently, the statute of repose weighs heavily in the favor of the defendant, giving fewer opportunities to a plaintiff when seeking damages after a certain time period.
Supreme Court Review
Justice Kennedy turned to the issue of whether CERCLA 42 U.S.C.S. § 9658 made a distinction between state-enacted statutes of limitations and statutes of repose. In reading the text of 42 U.S.C.S. § 9658, Justice Kennedy reasoned that state law is not preempted unless it fits into the precise terms of the exception. He noted that 42 U.S.C.S. § 9658 uses “statute of limitations” four times, but not the term “statutes of repose.” He further reasoned that while the terms statutes of limitations and statutes of repose may have been used interchangeably in the past, the concept that the statutes are distinct was established in the 1982 Study Group Report commissioned by Congress. The Report acknowledged that the statutes of repose were not equivalent to statutes of limitations and that recommendation to preempt the latter did not necessarily include the former. Coupled with § 9658’s inclusion of the “applicable limitations period” as well as providing for “equitable tolling” strongly “suggests that the § 9658’s preemptive reach is limited to statutes of limitations” and not to the statute of repose.
As a result, CTS Corporation was able to dismiss the claim brought by the injured landowners, as North Carolina’s statute of repose barred the landowners’ claim if being pursued more than 10 years from the last act or omission of the defendant giving rise to the cause of action.
State Sovereignty and More Deference to States
This is a significant victory not only for defendant toxic tortfeasors but also for states as separate and sovereign entities. As Justice Kennedy stated, “Because the States are independent sovereigns in our federal system, the Court assumes that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” This reaffirms the rights of states to protect their defendants and not only reestablishes their authority to enact statutes that may help them nurture more business-friendly environments but also disposes of the fear that their state-enacted statutes that support their sovereignty will later be preempted by federal law. With this recent decision on their side, states that do not currently have statutes of repose in place may be prompted to enact statutes of repose and further engage in tort reform.
Consequences for the Injured Plaintiffs
Since CERCLA was promulgated in 1980, and many contaminated sites were remediated more than a decade ago, states that have already enacted statutes of repose will leave plaintiffs without a remedy as claims they file thereby will be barred. Even in states that do not currently have statutes of repose, plaintiffs may feel more pressure to evaluate and file claims in a more timely fashion due to cautionary concerns that state legislatures may enact such statutes or other tort reform measures in the future.
Assurance to Businesses and Defendants
The assurance to defendants and businesses that there is a possible end to these environmental liabilities is both refreshing and essential, especially when considering the devastating financial impact that perceptually unlimited asbestos litigation has wreaked on businesses large and small, a significant number of which have long succumbed to Chapter 7 and 11 bankruptcies. CTS Corp. v. Waldburger may enable businesses in states having relevant statutes of repose to plan and more freely engage in business transactions and to generally focus on the business of business, while eschewing the business of risk and costly litigation.