U.S. Supreme Court “Lays to Rest” Private Party Superfund Tort Suit – The Statute of Repose Awakens (at least in the Old North State)

By: John R. Embick, Esq.

Chair, Environmental Law Section

6/13/2014

The U.S. Supreme Court recently issued an interesting ruling which addressed whether state statute of limitations and state statutes of repose are pre-empted by the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”, or more popularly known as “Superfund”), 42 U.S.C. § 9601, et seq.

The case is captioned CTS Corp. v. Waldburger, et al., No. 13-339 (Decided June 9, 2014), and the main opinion was written by Justice Kennedy (joined in full, or in part, by Roberts, Scalia, Thomas, Alito, Kagan and Sotomayor).  A dissent was penned by Justice Ginsburg (joined by Breyer).

CTS Corp. (“CTS”), a publicly traded company on the New York Stock Exchange, is a manufacturer of electronic components and sensors.  CTS and a predecessor company operated a manufacturing plant near Asheville, NC (also known as the “Old North State”, or the “Tar Heel State”).  The facility was sold in 1987.  Residents in the area alleged that the groundwater in the vicinity was contaminated by plant operations, and that they suffered damages and injuries as a result.  The residents claim the damage was first discovered in 2009, over twenty years after the sale.

The residents brought various claims against CTS, including claims under Superfund, seeking compensation for the damages and injuries caused by the groundwater contamination.  CTS claimed, among other things, that a Tar Heel State Statute of Repose barred the claims after 10 years.  Since CTS sold the plant in 1987, the claims arguably expired in 1997.

Superfund contains a provision which partly pre-empts statute law statutes of limitations in certain tort actions involving personal injury or property damage arising from the release of hazardous substances into the environment.  42 U.S.C. § 9658.

CTS claimed that the Old North State Statute of Repose was not pre-empted by § 9658, and that the claims were barred.  The federal trial court agreed, but the Fourth Circuit reversed, finding that the provisions of § 9658 were ambiguous and that the remedial purposes of Superfund favored pre-emption.

The High Court reversed, finding that the provisions of § 9658 did not preempt the NC Statute of Repose.

At the core of Justice Kennedy’s opinion is a discussion of statutory interpretation and the pre-emption doctrine.  Justice Kennedy opined that the outcome turned on whether    § 9658 distinguished between statutes of limitation and statutes of repose.  Justice Kennedy explained that the two doctrines, while sharing similarities, have different purposes and objectives.   Statutes of limitation seek to balance the rights and duties of litigants by encouraging the pursuit of claims in a “reasonable” amount of time, and begin to run when a claim accrues.  Statutes of Repose, on the other hand, reflect a legislative judgment that for certain acts, a defendant should be free of liability after a certain period of time passes, regardless of when a claim accrues or is discovered (and the length of time involved in most statutes of repose is much longer, e.g., 10+ years).

Justice Kennedy further indicated that the doctrine of equitable tolling of the statute of limitations helped discern the subtle differences between the two doctrines.  He explained that the purpose of encouraging diligent prosecution of claims under the statute of limitations is not furthered when the plaintiff is prevented from discovering when the claim arises.  Further, claims involving exposure to contaminants frequently are affected by very lengthy latency periods.   Statutes of repose are not informed by this consideration, so that the equitable tolling doctrine does not apply.

Having distinguished between the two concepts involving limitations periods, Justice  Kennedy then turned to the actual language of § 9658.  He found that the section mentioned statute of limitations multiple times, and did not mention statute of repose at all.  He also concluded that the two doctrines were widely recognized as separate and distinct.  Because Congress seemingly did not address the distinct doctrine of the statute of repose, he concluded that Congress did not intent to pre-empt those state statutory provisions.

Justice Ginsburg, in dissent, noted that she disagreed with the effort of the majority to distinguish the two limitations period doctrines.  She also reasoned that because latency periods for the appearance of effects of exposure to contamination often are substantially longer that the periods set forth in statutes of repose, that the purpose for which § 9658 was enacted would be frustrated by the interpretation of the majority justices.

What is the likely effect of the decision with respect to Pennsylvania’s Statute of Repose?  The Commonwealth’s version of the statue of repose is found at 42 Pa. C.S.A § 5536, and seems  to be limited to claims against builders, contractors, engineers and architects relating to the design, planning, supervision, or observation of construction of improvements to real property within 12 yeas after completion of the construction or improvement.

As drafted, therefore, it appears that the Pa Statute of Repose would not have prevented the claims raised by the Tar Heel State plaintiffs, had the site been located in the Keystone State.

 Hercules and Hydra, Hofburg, Vienna, Austria, 2014

Hercules and Hydra, Hofburg, Vienna, Austria, 2014