On June 9, 2014, the U.S. Supreme Court handed a significant victory to companies facing potential tort liability from historic environmental contamination. In its 7-2 decision in CTS Corp. v. Waldburger, the Court held that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which expressly preempts state statutes of limitations in certain circumstances, does not likewise preempt state statutes of repose. In reaching its decision, the Court looked to the plain language of the statute, which repeatedly uses the phrase “statutes of limitations” but does not mention “statutes of repose.” It also placed particular emphasis on a 1982 report commissioned by Congress that refers to “statutes of repose as a distinct category” and urged Congress to preempt statutes of repose as well. The Court concluded that Congress’s failure to make that distinction in the statute’s text indicates that Congress did not intend for CERCLA to also preempt statutes of repose. Waldburger’s immediate impact is that state law tort claims arising from environmental contamination will be subject to dismissal if they fall outside the time period set forth in a state’s applicable statute of repose.

Waldburger

CTS Corporation operated an electronics plant in Asheville, North Carolina from 1959 to 1985. During this period, CTS stored various chemicals onsite, including trichloroethylene. CTS sold the property in 1987, and portions of the property were subsequently sold to individuals who, along with adjacent landowners, filed a state law nuisance action against CTS in 2011, alleging damage from contaminants on the land. CTS moved to dismiss the claim, arguing that North Carolina’s statute of repose, which prevents suits brought more than 10 years after a defendant’s last culpable act, barred the plaintiffs’ claim. The District Court agreed, concluding that CTS’s last act occurred in 1987 when it sold the electronics plant, more than 20 years before the plaintiffs filed suit.

The Fourth Circuit Court of Appeals reversed, holding that Section 9658 of CERCLA, a provision that preempts statutes of limitation that apply to certain state law tort actions, also preempted North Carolina’s statute of repose. The Fourth Circuit found that while Section 9658 was ambiguous regarding its applicability to statutes of repose, an interpretation in favor of preemption was preferable given CERCLA’s broad remedial purpose.

On appeal, the Supreme Court reversed, holding that Section 9658 preempts only state statutes of limitations and not state statutes of repose. While acknowledging that there is “considerable common ground” between statutes of limitations and statutes of repose in that both are mechanisms to bar a suit based on timing, the Court explained that their starting points and objectives differ. A statute of limitations creates a time limit for bringing suit in a civil case based on when the injury occurred or was discovered. By contrast, a statute of repose puts an outer limit on the right to bring a civil action (even if the period ends before the plaintiff suffered an injury), which is measured from the date of the last culpable act or omission of the defendant. While statutes of limitations are designed to encourage plaintiffs to pursue claims diligently, statutes of repose effect a legislative judgment that a defendant should be free from liability after a set amount of time.

The Court observed that Section 9658 contains the term “statute of limitations” four times but does not contain the term “statute of repose,” which it reasoned was significant because a 1982 report commissioned by Congress in connection with Section 9658’s passage referred to “statutes of repose as a distinct category” and urged Congress to preempt statutes of repose as well. Congress chose not to make that distinction when it drafted Section 9658; therefore, the Court concluded, it did not intend for CERCLA to also preempt statutes of repose.

Future Implications

In deciding that CERCLA’s preemption of statutes of limitations in state law toxic tort actions does not extend to statutes of repose, the Supreme Court cut off a potentially significant source of litigation against companies associated with historic contamination. For companies with legacy sites in states with statutes of repose, the Court’s holding provides a welcome limitation on CERCLA’s broad liability scheme and may serve as a caution against further extension of CERCLA’s reach through expansive judicial interpretation.

The full text of the opinion can be found on the Supreme Court’s website.