Category: Real Estate

On June 9th, the Supreme Court issued its opinion in CTS Corp. v. Waldburger et al., No.13-339 (June 9, 2014) (slip op.) [link], in which it held that CERCLA section 309, 42 U.S.C. § 9658, does not preempt statutes of repose, reversing the Fourth Circuit.  Section 9658(a) preempts state law statutes of limitation for personal injury and property damage claims related to the release of a hazardous substance.  Justice Kennedy, writing for the majority, reaffirmed the oft-repeated “presumption against preemption” in reasoning that Section 9658 does not preempt state statutes of repose.  Statutes of limitations bar claims after a specified period of time based on when the claim accrued, whereas statutes of repose bar suits brought after a specified time since the defendant acted, regardless of whether the plaintiff has discovered the resulting injury.

CTS Corporation (“CTS”) operated an electronics plant in Asheville, North Carolina from 1959 to 1985.  CTS, which manufactured and disposed of electronics and electronic parts, contaminated its property with chlorinated solvents.  CTS sold the facility in 1987, and portions of the property were sold off.  Owners of those parcels, and adjacent landowners, brought suit against CTS in 2011, alleging that they discovered contamination on their properties in 2009.

The District Court found that N.C. Gen. Stat. § 1-52(16), North Carolina’s statute of repose, barred the suit.  That section prohibits a “cause of action [from] . . . accru[ing] more than 10 years from the last act or omission of the defendant giving rise to the cause of action.”  The Fourth Circuit reversed on the basis of CERCLA preemption, finding that section 9658 was ambiguous because it did not explicitly list “statutes of repose.”

The main issue at oral argument before the Supreme Court was whether the distinction between statutes of repose and statutes of limitation actually existed when Congress enacted Section 9658.  As Justice Scalia said, “. . . I used to consider them when I was in law school and even as late as 1986 [when section 1958 was added by Congress], I would have considered that a statutes of limitations.  Now, you think Congress is smarter.  They know the law better.”  Although other justices seemed to agree—and the distinction had only begun to be made in the 1980s—a 1982 Senate Superfund Study Group Report made that distinction and recommended that the few states that have statutes of repose repeal them.  Despite the overlap between statutes of repose and statutes of limitation, the Court found the distinctions important—statutes of repose are not related to the accrual of any cause of action and  cannot be tolled.  Because the Study Report made the distinction between the two, and because section 9658 fails to mention “statute of repose” and is not written in a way to suggest that it is intended to include both, the Court reversed.

The Court cited, as additional support for its conclusion the “well-established ‘presumptions about the nature of pre-emption.’”  The presumption against preemption counsels courts, when interpreting the text of a preemption clause susceptible of more than one possible reading, to “ordinarily accept the reading that disfavors pre-emption.”   The Fourth Circuit failed to mention this presumption (although the dissent relied on it).

This opinion follows recent Superfund cases in the Supreme Court in two respects.  First, the Supreme Court attempts to apply the “natural reading” of the statutory text rather than to reach out to interpret the statute broadly to effectuate its “remedial purpose.”  Indeed, Justice Kennedy explicitly derides that rationale for interstitial lawmaking.  Second, the Supreme Court attempts to preserve ordinary state law principles to the greatest extent possible.  So, for example, United States v. Bestfoods, 524 U.S. 51 (1998), was very respectful of state corporation law, and so too Waldburger is respectful of state tort law.  In this way, one might consider today’s decision to be fairly unremarkable.

The majority does not even address Justice Ginsburg’s dissent in which she and Justice Breyer worry that personal injuries with long latencies—like cancers—will go uncompensated.  But some of the long latencies arise not from the progress of some disease but of slow migration of a hazardous substance, in a groundwater plume for example.  Indeed, to the extent that many environmental toxic tort claims rest on allegations of property damage or diminution in value, the cancer model may be misplaced.