Full text of the Ohio Supreme Court decision

On February 21, 2008, the Ohio Supreme Court issued a significant decision -- upholding, on its face, the statute of repose applicable to product liability actions enacted in S.B. 80. Groch v. General Motors Corporation, Slip. Opinion No. 2008-Ohio-546, syllabus paragraph 2. The Court also held that, as applied to the facts before it, the statute was unconstitutionally retroactive due to the unreasonably short period of time (34 days) between the date of Plaintiff's injury and the effective date of the new statute of repose. In addition to addressing the statute of repose for products liability actions, the Court addressed Ohio's workers' compensation subrogation statutes. The Court held that R.C. 4123.93 and R.C. 4123.931 do not violate the takings clause, the due process and right to remedy clauses, or the equal protection clause of the Ohio Constitution.

The 55-page majority decision was authored by Justice O'Connor, with Justice Pfeifer dissenting. Justice Lanzinger concurred in the answers to the certified questions, and wrote a separate concurring opinion. Justice O'Donnell concurred in the answers to the certified questions only.

The Statute of Repose at Issue

The statute at issue -- R.C. 2305.10 -- provides a ten-year statute repose for products liability claims as follows:

[N]o cause of action based on a product liability claim shall accrue against the manufacturer or supplier of a product later than ten years from the date that the product was delivered to its first purchaser . . . who was not engaged in a business in which the product was used as a component in the production, construction, assembly, or rebuilding of another product.

This statute of repose, which includes exceptions for fraud, warranties that exceed ten years, and other matters, became effective on April 7, 2005, as part of S.B. 80, a tort reform bill

Facts and Background

Groch was injured on March 3, 2005, in the course and scope of his employment with General Motors, when a trim press manufactured by Kard Corporation and Racine Federated, Inc. came down on his arm. After April 7, 2005, Groch filed an intentional tort action against General Motors and a product liability action against Kard and Racine. Kard and Racine asserted that they are immune from liability based on the statute of repose for products liability claims. Groch raised numerous constitutional challenges to the statute of repose.

Groch came to the Ohio Supreme Court on nine certified questions from the Northern District of Ohio. Five of the certified questions involved constitutional challenges to the statute of repose for products liability claims, three involved constitutional challenges to workers' compensation subrogation provisions, and one was a single-subject challenge to S.B. 80.

Summary of the Majority Opinion

1. Constitutionality of the Statute of Repose

Groch's arguments largely were based on past decisions of the Court finding other statutes of repose unconstitutional. The Court made clear at the outset that its decisions relating to other statutes of repose did not necessarily mean that the statute of repose at issue would meet the same fate. Id. at ¶100. Citing to its recent decision in Arbino v. Johnson & Johnson, ___ Ohio St.3d ___, 2007-Ohio-6948, the Court reiterated "key points" pertinent to its analysis in Arbino and Groch:

  • The legislative branch of government is the ultimate arbiter of public policy, and in fulfilling that role, the legislature continually refines Ohio's tort law to meet the needs of its citizens. Arbino, at ¶21.
  • "[E]ven considering the numerous opinions by this court on this issue, the basic constitutionality of tort reform statutes is hardly settled law. . . . We have not dismissed all tort reform as an unconstitutional concept."
  • "We will not apply stare decisis to strike down legislation enacted by the General Assembly merely because it is similar to previous enactments that have been deemed unconstitutional." 

Groch, at ¶¶102-104.

Much of the Court's analysis focused on its previous decisions in Sedar v. Knowlton Constr. Co. (1990), 49 Ohio St.3d 193, and Brennaman v. R.M.I. Co. (1994), 70 Ohio St.3d 460. The Sedar Court upheld the constitutionality of a former statute of repose applicable to construction contractors and others involved with improvements to real property. Four years later, this same statute was held unconstitutional in Brennaman.

With respect to the open courts/right to remedy challenge, the Court first criticized its previous decision in Brennaman and rejected the argument that all statutes of repose are unconstitutional under Brennaman. Groch, at ¶139 ("The constitutionality of the statute at issue here certainly is not governed by the broad but hollow Brennaman analysis.") As a result, the statute at issue warranted a "fresh review" of its individual merits. Groch, at ¶147. The Court adopted the rationale of Sedar which recognized that foreclosing claims against certain defendants does not mean that a right to remedy is extinguished. The Court recognized that although R.C. 2305.10(C) may prevent suits against product manufacturers, in many situations an injured party will be able to seek recovery against other parties, such as those who control and maintain the product. Groch, at ¶152. The Court held that the statute of repose, on its face, does not violate the Ohio Constitution's open courts and right to remedy provisions.

In connection with the due process and equal protection challenges, the Court applied a rational basis test because neither a fundamental right nor suspect class is involved. The Court found that the legislative findings, set forth Section 3(C) of S.B. 80, "adequately demonstrate that the statutes bear a real and substantial relation to the public health, safety, morals, or general welfare of the public and are not unreasonable or arbitrary." Groch, at ¶¶ 162-172. The Court concluded that the statute of repose, on its face, does not violate the principles of due process or equal protection.

The Court rejected the argument that R.C. 2305.10 deprives a person of property under the takings clause as follows:

[T]he statute of repose at issue in this case involves a cause of action that never accrues and thus is prevented from vesting once the ten-year repose period has passed. Because there is no property right, there can be no taking.

Groch, at ¶177.

Lastly the Court addressed Petitioner's argument that the statute is unconstitutionally retroactive as applied to him. The Court noted that the statute applies to all actions brought on or after its effective date (April 7, 2005) and that Petitioner's injury occurred on March 3, 2005. The Court applied the two-part test used to determine whether a statute is unconstitutionally retroactive. Van Fossen v. Babcock & Wilcox Co. (1988), 36 Ohio St.3d 100. The Court first found that the General Assembly expressed its clear intent to apply the statute of repose retrospectively and went on to determine whether the statute is substantive or remedial.

The Court stated that "whether a statute is remedial depends upon its operation and not upon a label placed upon it by the General Assembly." Groch, at ¶187. Here, the statute operated as a very short statute of limitations that cut off Petitioner's right to bring suit 34 days after he was injured, on a cause of action that had accrued. Groch, at ¶189. Based on other provisions of R.C. 2305.10, the Court concluded that a reasonable period of time to commence suit would have been within two years of the date the cause of action accrued (as two years is generally the statute of limitations applicable to bodily injury claims). Groch, at ¶198. The Court held that, as applied to Petitioner, the statute of repose was unconstitutionally retroactive.

The Ohio Supreme Court's holding that the statute of repose for products liability actions is facially constitutional is a significant step toward ensuring that manufacturers are not subjected to never-ending liability.

Even though the statute of repose will not apply to all actions filed on or after April 7, 2005 (in light of the Court's retroactivity analysis), it should apply to the overwhelming majority of those filed after April 7, 2007. Generally, a plaintiff will not be able to successfully argue that the statute of repose is unconstitutionally retroactive in any case that was not filed on or before April 7, 2007.

2. Constitutionality of Workers' Compensation Subrogation Statutes

The Ohio Workers' Compensation Subrogation Statutes became effective in April, 2003, after the Supreme Court in the case of Holeton v. Krauss Cartage Co. (2001), 92 Ohio St. 3rd 115, 748 N.E. 1111, struck down the previous Ohio Workers' Compensation Subrogation Statutes in 2001. After much negotiation and compromise, the Ohio legislature enacted Senate Bill 227, which was an attempt to follow the Court's ruling in Holeton so that the statute would meet constitutional muster. The Court in Groch has written in great detail a decision which demonstrates that the rewritten Ohio Workers' Compensation Subrogation Statutes meet constitutional muster.

The questions certified to the Ohio Supreme Court concerning the Subrogation Statutes were whether they violated the takings clause (Section 19, Article I), the due process and remedies clauses (Section 16, Article I), or the equal protection clause (Section 1, Article I), of the Ohio Constitution. The Court responded in each instance that the statutes were facially constitutional.

In the Holeton case, the Ohio Supreme Court determined that there was an unconstitutional taking of an injured worker's property or denial of remedy by due course of law in that the former subrogation statutes allowed for reimbursement to the statutory subrogee from proceeds that did not constitute a double recovery. In addition, the Court determined that the subrogee could receive proceeds that would exceed what the injured worker might expect to receive.

The Court also found that in Holeton an injured worker who settled his claim was in a different position that one who received a verdict based upon interrogatories to the jury. In other words, the full amount of the settlement could be applied to subrogation whereas, interrogatories to the jury in a trial could distinguish between amounts claimed under subrogation versus amounts in the verdict that applied to pain and suffering.

The new statutes developed a formula which the Court found to be constitutional and therefore did not violate the takings clause nor the due process and remedies clauses unconstitutional. Plus, injured worker has the option of establishing a trust to avoid the consequences of overestimating future benefit values. Under the former statute, the statutory subrogee could retain any overpayment, whereas the current trust option ensures the return to the claimant of all funds remaining after the final reimbursement of the subrogee. The Petitioners argued that the subrogee still may take a portion of the non-duplicative damages so that the current statutes remain unconstitutional. In order to refute that assertion, the Court used examples to demonstrate that the subrogee does not recoup any portion of the claimant's attorneys fees, costs, expenses or punitive damages, as the formula referred to above excludes those amounts from the amount recovered by the claimant.

The Court went on to demonstrate that the procedure described above is facially constitutional and does not constitute an impermissible taking or violation of due process in as much as the claimant then and subrogee share in the pro-rata division of the net amount received. The Court stated that the compromise between the claimant and the subrogee constitutes a sharing of the burden equally between the two.

In determining that the equal protection section of the Ohio Constitution is not violated, the Court reviewed the statutes under the "rational-basis" test. In Holeton, the Court found that the former subrogation statute violated the equal protection clause by distinguishing between claimants who received a verdict after trial and those who settled. The Court stated at page 20 of its decision that "such disparate treatment of claimants who settle their tort claims is irrational and arbitrary . . . " That disparity was remedied by the legislature when it developed in the new statutes a formula to determine the division of the net amount recovered. Moreover, the claimant and the employer or the Bureau of Workers' Compensation, as a subrogee, can enter into an agreement to divide the amount available on a fair and reasonable basis. In addition, there could be a conference with the Bureau of Workers' Compensation administration to mediate the division of an award or settlement. Finally, the parties could submit the issue to an alternate dispute resolution process. In the new statute, the formula for dividing the net amount recovered, applies to both claimants who settle their claims and those who recover after trial. Therefore, the Court determined that the rational-basis test was met.

Interestingly, the Court, referring to the brief of the State of Ohio, pointed out that the current legislation represents a compromise between business interests and plaintiff's interests. It also indicates that there was input from the Bureau of Workers' Compensation and many other interested parties prior to the final drafting of the legislation. Thus, it demonstrates that the Court understood the effort expended by al stake holders to ensure that the most recent statutes met the standards established by the Court in Holeton.