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US Supreme Court to Decide Whether CERCLA Limitations Provisions Preempt State Law Statutes of Repose

On January 10, 2014, the United States Supreme Court granted certiorari in CTS Corporation v. Waldburger, a case involving an issue which has divided courts as to the effect on state statutes of repose of CERCLA’s preemptive federal provision setting the earliest permissible commencement date for the running of the state “limitations period” for certain state-law causes of action. The Fourth Circuit, agreeing with the Ninth Circuit’s position, held that state limitations statutes and statutes of repose are equally preempted by the federal provision. However, the Fifth Circuit and South Dakota Supreme Court have previously held to the contrary, deciding that the language of the federal statute, which does not mention “repose” periods at any point, according to its plain language preempts only state “limitations” periods. The dispute revolves around 42 U.S.C § 9658, a unique federal provision which imposes a federal criteria for the commencement of the limitations period governing state-law causes of action. This statute provides that, in any state action for “personal injury, or property damage” arising from a “hazardous substance, or pollutant or contaminant, released into the environment from a facility” (as those terms are defined elsewhere in CERCLA), if the applicable limitations period for such action (as specified in the State statute of limitations or under common law) provides a commencement date which is earlier than the federally required commencement date, such period shall commence at the federally required commencement date in lieu of the date specified in such State statute. 42 U.S.C. § 9658(a)(1). The phrase “applicable limitations period” is in turn defined as the “period specified in a statute of limitations during which” the relevant state claims must be brought. 42 U.S.C. § 9658(b)(2). This federal commencement date operates as an “enhanced discovery rule,” delaying the beginning of the limitations period until “the plaintiff knew (or reasonably should have known) that the personal injury or property damages . . . were caused or contributed to by the hazardous substance or pollutant or contaminant concerned.” 42 U.S.C. § 9658(b)(4)(A). In other words, the state statute of limitations is not triggered until the plaintiff knows, or reasonably should know, of both the injury itself and its causal connection to the hazardous substance at issue. In this particular case, CTS Corporation operated an electronic component manufacturing plant in Asheville, North Carolina for a period of years. The manufacturing process required the use and storage of various toxic substances on-site. After selling the plant and surrounding unimproved property in 1987, the unimproved portion was developed into a residential area overlooking the former plant site. The purchasers of several of these homes contend that the soil and groundwater on their land is contaminated by chemicals left there by CTS, bringing a one-count complaint alleging violation of North Carolina’s nuisance law. CTS in turn moved to dismiss the complaint on the ground that North Carolina’s 10 year statute of repose eliminated their cause of action long before they filed their complaint. The district court agreed with CTS, holding that the statute of repose applied, and that the above-cited CERCLA provision applies only to statutes of limitation, and not to statutes of repose. The court noted that “[t]he clear language of the statute . . . is limited to a state’s statute of limitations,” and makes no reference to statutes of repose. The substantive differences between these two categories of statutes were also noted – whereas a “statute of repose is a substantive limitation, and is a condition precedent to a party’s right to maintain a lawsuit,” a statute of limitations is a “procedural device that operates as a defense to limit the remedy available from an existing cause of action.” The Fourth Circuit, in a divided decision, reversed, holding that “the discovery rule articulated in § 9658 . . . preempts North Carolina’s ten year” statute of repose. The court acknowledged that CERCLA is a “remedial statute” designed to facilitate the cleanup of hazardous waste sites and attribute the costs thereof to responsible parties. In this vein, the court described how after CERCLA’s enactment, Congress “established a study group to examine the adequacy of existing common law and statutory remedies in providing legal redress for harm . . . caused by the release of hazardous substances into the environment.” That study group concluded that the long latency periods common to such environmental claims were poorly suited to limitations statutes running from the time of the defendant’s last act or from the plaintiff’s initial exposure to harm. Accordingly, the group recommended that states “adopt the rule that an action accrues when the plaintiff discovers or should have discovered the injury or disease and its cause,” and “repeal . . . statutes of repose which, in a number of states have the same effect as some statutes of limitation in barring [a] plaintiff’s claim before he knows that he has one.” Congress intervened in 1986 by passing § 9658 rather than wait for the states to amend their own laws. Examining the statute’s language, the Fourth Circuit acknowledged that the district court could reasonably view § 9658 not to reach statutes of repose because it mentions limitations statutes five times but does not mention statutes of repose at all. However, the majority concluded that the provision was ambiguous in this sense, especially given that the North Carolina repose statute at issue appears in a section of the North Carolina Code entitled “Limitations, Other than Real Property.” Additionally, the majority noted that “a historical analysis reveals that both scholars and courts have often used the terms interchangeably.” In light of this ambiguity, as well as the recommendations of the study group and the “remedial” intent underlying CERCLA, the court found it probable that Congress intended for “statutes of limitations” to encompass statutes of repose. CTS subsequently petitioned the United States Supreme Court for certiorari. As pointed out in CTS’s petition, the Fourth Circuit’s decision here “deepens a conflict in the state and federal appellate courts,” with the Fourth and Ninth Circuits on one side of the split and the Fifth Circuit and the South Dakota Supreme Court on the other. Additionally, the case presents significant federalism concerns, given states’ traditional authority to dictate the limitations on their own tort causes of action – given the significantly heightened encroachment on this traditional state prerogative established by the Fourth Circuit’s interpretation (which, by triggering both repose and limitations statutes simultaneously, effectively renders state repose statutes impotent in these cases), clarity in the law is critical. But perhaps the more compelling arguments that CTS presents on the merits pertain to an alleged conflict between the Fourth Circuit’s position and prior Supreme Court precedent. First, CTS argues that the holding in this case “conflicts with the cardinal rule of statutory construction that plain statutory terms should carry their plain meaning.” The petitioner points out that “[i]n the absence of a contrary indication, [the Court assume[s] that when a statute uses . . . a term [of art], Congress intended it to have its established meaning,” yet the Fourth Circuit “identified no legal authority indicating that the phrase ‘statute of limitations’ had a legal meaning encompassing a statute of repose when Congress enacted § 9658 in 1986”; rather, these terms were widely distinguished in the cases from that era. Second, CTS argues that after finding an ambiguity which does not in fact exist, the Fourth Circuit improperly resolved that ambiguity by relying on CERCLA’s general remedial purpose. Although the study group on whose recommendations § 9658 was at least in part predicated concluded that limitations and repose statutes should be loosened, this fact does not mean that Congress adopted that particular recommendation wholesale – in fact, Congress declined to adopt most of the group’s recommendations. Accordingly, according to CTS, the Fourth Circuit was wrong to suggest that “whatever furthers [§ 9658’s] primary objective must be the law.” Finally, CTS continues, even if the phrase “statutes of limitations” is determined to be ambiguous, the Fourth Circuit erred by disregarding the presumption against federal preemption when resolving that ambiguity. According to that doctrine, “when the text of a pre-emption clause is susceptible of more than one plausible reading, courts ordinarily accept the reading that disfavors pre-emption.” Under such a presumption, the Fourth Circuit should have construed any ambiguity to avoid preemption, rather than the other way around. Despite the nuanced arguments presented in the petition (and the counterarguments set forth in Waldenburger’s opposition), at its core this case turns on whether statutes of repose are deemed to fall within the ambit of § 9658’s “statute of limitations’ language. If the Court determines that CTS’s “plain language” argument controls, then the statute’s failure to mention statutes of repose would appear to be dispositive of the issue. However, if Waldenburger’s discussion of the potential overlap in definitions between these two categories of statutes takes hold, the deeper analysis that this would require may very well result in the Fourth Circuit’s position being vindicated. by: Andrew Miller, Associate DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis, Lehrer & Flaum, PC is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contact Steven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department. The information contained in this blog is intended solely for informational purposes; it is a advertising publication of DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis, Lehrer & Flaum P.C.This publication is intended to alert recipients of developments in the law and is not intended to provide legal counsel, advice or opinion on any specific facts or circumstances. The contents are intended as general information only. You are urged to consult a member of this firm or your own attorney concerning your particular situation and any specific legal questions you might have.


DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum PC (http://www.dbnjlawblog.com) is a full service law firm in New Jersey which provides a broad range of legal services. For additional information about the matters in this bulletin or in the firm’s Employment Practice, please contact Richard P. Flaum, Esq.

The information contained in this blog is intended solely for informational purposes; it is a advertising publication of DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum P.C.This publication is intended to alert recipients of developments in the law and is not intended to provide legal counsel, advice or opinion on any specific facts or circumstances. The contents are intended as general information only. You are urged to consult a member of this firm or your own attorney concerning your particular situation and any specific legal questions you might have.