On June 9, the U.S. Supreme Court held in CTS Corp. v. Waldburger et al.1 that CERCLA Section 9658 does not pre-empt state statutes of repose. This holding provides an important defense for entities facing state law toxic tort claims in states with relevant statutes of repose and signals a clear path for state legislatures on how to limit CERCLA’s pre-emptive effect.
The lawsuit in CTS Corp. v. Waldburger arose from CTS Corp.’s (“CTS”) operation of an electronics plant in North Carolina from 1959 to 1985. CTS sold the land in 1987 and adjacent landowners and subsequent purchasers discovered contamination of their well water in 2011. They sued CTS for nuisance under North Carolina state law alleging that CTS’s operation of the electronics plant caused the contamination.
CTS argued that the suit was barred by North Carolina’s statute of repose,2 which prevents bringing personal injury or property damage suits more than 10 years after the defendant’s last culpable act. The plaintiffs responded that CERCLA Section 9658 adopts a discovery rule pre-empting state statutes of limitation and statutes of repose for toxic torts that conflict with Section 9658’s terms. Since the plaintiffs only discovered the contamination in 2011, they argued that Section 9658’s discovery rule pre-empted North Carolina’s statute of repose and allowed the plaintiffs to sue CTS.
The Western District of North Carolina disagreed with the plaintiffs and instead accepted CTS’s argument that Section 9658 does not pre-empt state statutes of repose because it only refers to pre-emption of state “statutes of limitation.” Since CTS’s last culpable act was its representation regarding the 1987 sale of the property, the District Court ruled that North Carolina’s 10-year statute of repose had expired and barred the plaintiffs’ nuisance claim. On appeal, the 4th U.S. Circuit Court of Appeals reversed and ruled that interpreting Section 9658 as pre-empting both statutes of limitation and statutes of repose was preferable because it better aided CERCLA’s remedial purpose.
In a 7-2 opinion, the U.S. Supreme Court reversed the 4th Circuit, ruling that Section 9658’s pre-emption of state “statutes of limitation” did not extend to state “statutes of repose.” In reaching its decision, the Supreme Court rejected the plaintiffs’ argument that statutes of limitation and statutes of repose are interchangeable terms and instead articulated the following reasons for why Section 9658 only pre-empts statutes of limitation:
- Statutes of limitation and statutes of repose (a) serve different purposes and objectives, (b) are measured from different points in time, and (c) are affected differently by the doctrine of equitable tolling.
- Statutes of limitation are designed to require plaintiffs to diligently prosecute known claims, whereas statutes of repose reflect a legislative judgment that a defendant should be free from any liability after the legislatively determined period of time.
- Equitable tolling excuses a plaintiff’s failure to diligently prosecute their claim within the statute of limitations when extraordinary circumstances prevent him from doing so, whereas equitable tolling does not affect the limitation imposed by a legislature pursuant to a statute of repose. Congress’ inclusion of an equitable tolling provision in Section 9658(b)(4)(B) indicates it only intended Section 9658 to pre-empt statutes of limitation.
- Statutes of limitation create a time limit for suing in a civil case based on the date when the injury occurred or was discovered, whereas statutes of repose create a time limit for suing in a civil case based on the date of the last culpable act or omission of the defendant.
- The distinction between statutes of limitation and statutes of repose was known at the time Section 9658 was enacted in 1986, as demonstrated by a 1982 Senate Committee CERCLA Study Group Report.
- Section 9658’s language, definitions and repeated references to “statute of limitations” without any references to “statute of repose” indicate Congress only intended pre-emption of statutes of limitation.
- The case for federal pre-emption is weakened for laws, such as CERCLA, where Congress has indicated its awareness and acceptance of the operation of certain state laws.
- Clear and manifest evidence of Congress’ intent is required before the Supreme Court will find that federal law supersedes states’ police powers.
The Supreme Court’s holding in CTS Corp. could have a significant impact on two areas. First, it provides a potentially complete defense for entities facing state law toxic tort claims in states with relevant statutes of repose. And, second, it provides guidance to state legislatures on how they may limit CERCLA’s pre-emptive effect by enacting statutes of repose.
It remains to be seen how courts will determine which state statutes of repose are “relevant” to state law toxic tort claims. The North Carolina statute of repose at issue in CTS Corp. applied to actions for “personal injury or physical damage to [a] claimant’s property,” without regard to whether such injury or damage was caused by toxic exposure. The broad scope of North Carolina’s statute of repose may provide support for defendants in states with statutes of repose that at first blush would not be applicable to toxic tort claims. For instance, many states have statutes of repose for claims arising from construction defects.4 Under the Supreme Court’s holding in CTS Corp., a defendant facing state law toxic tort claims for toxic exposure caused by the defendant’s construction activities could argue that a state statute of repose for construction defects applies and bars the plaintiff’s suit.