On Wednesday, the Supreme Court will conclude its penultimate week of oral argument for the October Term 2013 by hearing an environmental case which poses a question of statutory interpretation that may not be as simple as it first appears.  When Congress specified in Section 309 of CERCLA (the Comprehensive Environmental Response, Compensation, and Liability Act) that state “statutes of limitations” cannot bar toxic tort suits before plaintiffs discover that they have been harmed, did it also intend to preempt what have come to be known as “statutes of repose”?  John J. Korzen, director of the Appellate Advocacy Clinic at the Wake Forest University School of Law, will make his Supreme Court debut in CTS Corp. v. Waldburger, arguing on behalf of a group of two dozen homeowners who discovered that their well water was contaminated by toxic chemicals decades after an industrial facility ceased operations.  Because North Carolina law specifies that no lawsuits can be brought more than ten years after the defendant’s last action, a trial court dismissed the homeowners’ action.  However, a team of clinic students convinced a divided panel of the Fourth Circuit to reinstate the lawsuit by arguing that Section 309’s preemption extends to the North Carolina law.  Opposing the clinic are petitioner CTS Corporation, the alleged source of the contamination, and the federal government, which seeks to use the North Carolina law in another case to avoid liability to families of military personnel exposed to contaminated drinking water at Camp Lejeune.

Background

This case arose in 2009, when homeowners who live on property formerly used by petitioner CTS Corporation to manufacture electronics discovered high levels of toxic contamination in their well water.  The contaminants included the toxic solvent trichloroethylene (TCE).  CTS stopped operating the facility in 1985 and sold it in 1987, promising that no environmental problems existed on the property.  In 2011 the homeowners filed a nuisance suit against CTS in U.S. District Court for the Western District of North Carolina.  The court dismissed the case based on a North Carolina law which states that, for real property, “no cause of action shall accrue more than 10 years from the last act or omission of the defendant giving rise to the cause of action.”

The homeowners argued that the application of the state statute was preempted by Section 309 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. § 9658.  [Although the briefs refer to this provision as Section 9658 of CERCLA, it is actually is Section 309 of CERCLA.]  This provision expressly tolls the running of state “statutes of limitations” until “the date plaintiff knew (or reasonably should have known)” that his damages “were caused or contributed to by the hazardous substance or pollutant or contaminant concerned.”  The trial court held that Section 309 did not toll North Carolina’s statute because it was not a “statute of limitation,” but rather a “statute of repose.”  Black’s Law Dictionary now distinguishes between a statute of limitation, which it defines as “a time limit for suing in a civil case, based on the date when the claim accrued (as when the injury occurred or was discovered),” and a statute of repose, which bars “any suit that is brought after a specified time since the defendant acted (such as by designing a product or manufacturing a product), even if this period ends before the plaintiff has suffered a resulting injury.”

Students from Wake Forest University’s Appellate Advocacy Clinic then took over the homeowners’ appeal to the U.S. Court of Appeals for the Fourth Circuit.  A third-year law student argued the case before the Fourth Circuit, which reversed.  A divided panel of the court held that when Congress adopted Section 309 it intended to preempt the North Carolina statute. While acknowledging that “a simple review of [Section 309’s] language could reasonably lead to a conclusion that its application is limited only to statutes of limitations,” defined as time limits based on when the claim accrued, the court concluded that the statute was ambiguous because it was not common practice in 1986 to distinguish between statutes of limitations and statutes of repose.  While noting that North Carolina’s ten-year time bar “is located with the statute of limitations” in the North Carolina code and is not described in the statute as a statute of repose, the court found that the trial court had properly categorized it as a statute of repose.  The court noted that both scholars and courts often have used the terms statutes of limitation and statutes of repose “interchangeably.”  Noting CERCLA’s broad remedial purposes, the court concluded that “refusing to apply [Section 309] to statutes of repose allows states to obliterate legitimate causes of action before they exist. Because this is precisely the barrier that Congress intended Section 309 to address, we will not read the statute in a manner that makes it inapplicable in such a circumstance. Doing so cannot be termed an honest attempt to ‘effectuate Congress’s intent.’”

The court majority noted that it joined the Ninth Circuit in such a holding, while the Fifth Circuit had articulated an opposing view.  Writing in dissent, Judge Thacker argued that “the plain and unambiguous language of [Section 309] indicates only statutes of limitations were intended to be preempted” and that, even if the statute were ambiguous, the presumption against preemption should preclude preemption of the North Carolina statute.  The Supreme Court granted cert., presumably to resolve the circuit conflict over the meaning of Section 309.

Legislative history of CERCLA and Section 309

Congress enacted the far-reaching Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in December 1980 to create a comprehensive program to clean up toxic waste sites in the wake of the Love Canal disaster. It created a “Superfund” to help fund the clean-up of contaminated sites, and it imposed strict, joint and several liability for remediation costs on owners and operators of contaminated sites, former owners at the time of disposal, and those who sent hazardous substances to the sites.

Congress considered establishing a program to provide administrative compensation to victims of exposure to hazardous substances. That is why the second “C” in CERCLA’s title stands for “Compensation.”  However, the administrative compensation scheme was removed from the legislation at the last minute in favor of creating a blue-ribbon group of experts to study “the adequacy of existing common law and statutory remedies in providing legal redress for harm to man and the environment caused by release of hazardous substances into the environment.”  This group, known as the Superfund Section 301(e) Study Group, reported back to Congress in July 1982.

The Study Group found that there were substantial barriers to victims of hazardous substance releases using the common law to recover for their harm.  These included: (1) the difficulty of proving causation, (2) statutes of limitations that may operate to bar suits before damage is discovered, and (3) the difficulty of apportioning damages among multiple tortfeasors.  The group recommended that a federal administrative compensation scheme be developed to provide a remedy for persons harmed by exposure to toxic substances.  However, Congress, concerned about the difficulty of determining who should receive administrative compensation, rejected this proposal by a single vote when it amended CERCLA in 1986.  Instead, it sought to ease barriers to compensation in private litigation by adopting Section 309.

Merits briefs

In its opening brief, CTS Corporation argues that the plain text of the statute resolves the case because it preempts only “statutes of limitations.”  It argues that this clearly establishes that Congress did not intend to preempt the North Carolina law because it is a “statute of repose.”  CTS also points to language tolling the “commencement date” of a state law limitations period, which it argues can only apply to a statute of limitations and not a statute of repose, because the latter do not have commencement dates within the meaning of Section 309.  CTS argues that by 1986 “dictionaries, treatises, and cases routinely distinguished statutes of limitations and statutes of repose” and the Section 301(e) study group expressly referred to the North Carolina law as a “statute of repose.”  While conceding that statutes of limitations often were called “statutes of repose,” CTS maintains that the converse was not true.  As a fallback position, CTS maintains that if Section 309 is viewed as ambiguous, federalism principles and the well-settled presumption against preemption dictate that the statute should be read narrowly not to preempt the North Carolina statute.

The U.S. as an amicus supports CTS’s reading of the statute because of ongoing litigation against the federal government over contaminated drinking water at the Camp Lejeune Marine Corps Base in North Carolina.  Because the Federal Tort Claims Act (FTCA) limits the liability of the federal government to circumstances in which a private person would be liable under state law, the North Carolina statute applies to claims against the U.S. under the FTCA.  Thus, if the Court holds that Section 309 does not preempt North Carolina’s statute, that law can be used to require the dismissal of claims by the families of Marines who allege exposure to toxins in their drinking water.  After making statutory interpretation arguments that mirror those of CTS, the U.S. argues that the broad, remedial focus of CERCLA on which the Fourth Circuit relied focuses on clean-up and does not extend to damages recoverable by private tort plaintiffs under state law.

The homeowners’ brief argues that Section 309 both expressly and impliedly preempts North Carolina’s statute.  They note that when Section 309 was enacted, courts – including the Supreme Court itself – often referred to statutes of repose as statutes of limitations.  In an argument not vetted in the courts below, they maintain that the North Carolina statute is impliedly preempted because it serves as an obstacle to accomplishing the congressional purpose articulated in Section 309. Respondents note that only five states have statutes like North Carolina’s.

In an amicus brief, the Natural Resources Defense Council notes that many toxic substances cause harm with considerable latency periods.  Unless Section 309 applies to statutes like North Carolina’s, many victims of toxic exposure will have no legal remedy for harm caused by such toxins. Even though few states have laws like North Carolina’s, the American Chemistry Council and other industry groups maintain in their amicus brief that if the Fourth Circuit’s decision is upheld, it will open up the floodgates to future products liability litigation that will deter innovation far into the future.  And an amicus brief by a select group of environmental law professors supports the homeowners by maintaining that Congress often refers to statutes of repose as statutes of limitations.

Analysis

Several factors suggest that the homeowners will have an uphill battle to preserve their Fourth Circuit victory.  First, because it is now much more common to distinguish between “statutes of limitations” and “statutes of repose,” those who focus only on the text of Section 309 could find it easy to conclude that it does not preempt the North Carolina law because it does not mention “statutes of repose.”  Second, respect for state sovereignty and the presumption against preemption provide another convenient rationale to read Section 309 narrowly.  Third, in recent years the Supreme Court has been virtually the only court in the land to interpret CERCLA narrowly, cutting back on its liability scheme in a series of casesFourth, the federal government’s narrow reading of CERCLA, though founded on strictly parochial concerns to defeat the Camp Lejeune litigation, may undermine concern over the policy consequences of ruling for CTS.

But don’t count out the homeowners.  The notion that Congress’s purpose was to enable those exposed to hazardous substances to have a day in court to seek compensation from companies responsible for toxic releases, even if their harm was not discovered until decades later, comports with the compromise Congress reached in the 1986.  Congress recognized the immense obstacles to proving causal injury from toxic exposure, but it narrowly rejected an effort to create the administrative compensation program that led to the word “Compensation” being in CERCLA’S title.  Instead Congress enacted Section 309 to remove obstacles that would preclude lawsuits even before harm was discovered.  When understood in this context, the Fourth Circuit’s conclusion that Congress intended to apply Section 309’s preemption provision to all state time limitations that would extinguish a lawsuit over toxic contamination before it is discovered, whether or not characterized as a statute of “repose,” does not seem far-fetched.  However, when the Court last interpreted CERCLA five years ago in Burlington Northern & Santa Fe Railway Co. v. United States, Justice Ginsburg was the lone Justice disinclined to read the statute narrowly.  Oral argument may reveal whether she has acquired any allies in the intervening five years.

Posted in CTS Corp. v. Waldburger, Featured, Merits Cases

Recommended Citation: Robert Percival, Argument preview: Law school clinic seeks to preserve day in court for victims of polluted well water, SCOTUSblog (Apr. 22, 2014, 1:11 PM), http://www.scotusblog.com/2014/04/argument-preview-law-school-clinic-seeks-to-preserve-day-in-court-for-victims-of-polluted-well-water/