Being Forced to Act Before You Discover the Problem – A Questionable Ruling

As I have discussed in a previous entry <https://danielreitman.wordpress.com/2012/08/21/dont-wait-too-long-to-file-suit/>, most lawsuits must be filed before a statute of limitations expires. The purpose of these statutes is to discourage plaintiffs from waiting until a defense cannot be presented, and to give defendants reassurance that potential plaintiffs have decided not to act. Most statutes of limitations, either by their own terms or by interpretation by the courts, begin to run only when the plaintiff knows of the claim or had enough information to find out about it. Sometimes, however, the law takes away a claim before it can be found – and many people agree with Dickens’ Mr. Bumble that the law is an ass.

There is a related class of laws called statutes of repose, which set a longer outer limit on the filing of some suits. Under a statute of repose, it does not matter when a claim is discovered or should be discovered. If so many years (usually ten or more) pass from the initial incident, the claim is barred, regardless of whether it was discovered. A recent Supreme Court case, by reasoning I think was questionable, ruled that when Congress extended state-law statutes of limitations for environmental claims causing personal injury or property damage, the extension did not apply to statutes of repose.

As a result, plaintiffs – including in Oregon – may be faced with loss of a claim before it becomes known. I have serious questions whether this is fair.

When Congress first passed the Superfund law in 1980, it said landowners could sue for the actual costs of cleanup of environmental contamination. It decided, however, to leave personal injuries and other property damage to state law. Congress did see a problem with this: environmental claims can take a very long time to develop, often as long as decades. This would be longer than most statutes of limitations. As a result, it ordered EPA to create a study group to make recommendations about how statutes of limitations and other issues of the interaction of Superfund with state law should be addressed.

In 1982, the study group’s report recommended that states modify their laws to clearly state that statutes of limitations for environmental claims should start to run only when the claim is or should be discovered, and called for statutes of repose to be repealed out of fairness to injured persons. Congress responded in 1986 with an amendment to the Superfund law extending state statutes of limitations to begin on discovery – but saying nothing as to statutes of repose.

In 2011, a group of landowners in North Carolina sued the former owner of a factory that had closed in 1985, alleging property damage based on hazardous chemical releases. They asserted that they had not discovered their claim until EPA informed them of a contaminated well in 2009. North Carolina has a three year statute of limitations, which would expire in 2012 if the discovery was in 2009. It also has a ten year statute of repose, which, if not extended, would have expired in 1997, ten years after the sale of the factory site, at the latest. The first defense raised by the factory owner was the statute of repose.

The Supreme Court ruled that because Congress did not refer to statutes of repose in the 1986 amendment, but the study group’s report did, and because Congress structured the amendment only by changing the date statutes of limitations began to run, it must have meant only to extend statutes of limitations. Justice Ginsberg’s dissent argued that Congress was concerned with claims that might take more than the ten or twenty years of a typical statute of repose to become known (as noted in the study group’s report), and because the law was written by changing the “commencement date” of statutes of limitations, Congress was referring to both statutes of limitations and statutes of repose. She also argued that statutes of repose have the perverse effect of encouraging concealment of harm. I think, on reading the opinions and the relevant part of the study group’s report, that Justice Ginsberg has the better argument as to what Congress intended. It doesn’t make sense to extend a statute of limitations for as long as environmental claims take to develop if there is also a statute of repose.

Justice Ginsburg also noted that statutes of repose have a tendency to encourage hiding facts so that potential plaintiffs don’t find out until it’s too late. The law usually tries to discourage this behavior, and where, as here, the idea is to clean up the environment, concealment is exactly what the law shouldn’t be promoting. Unfortunately, sometimes the law isn’t fair.

Oregon is one of five states that have a statute of repose for claims arising out of property damage; the period is ten years. Washington does not.

Unfortunately, there isn’t much that you can do if you find a potential claim more than ten years old in Oregon. Watching diligently for potential hazards before then ten years elapse is the best option.

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