Cohn v. G.D. Searle & Co.

• Decision Date: 12 March 1986
• Docket Number: No. 85-5048,85-5048
• Citation: 784 F.2d 460
• Court: U.S. Court of Appeals — Third Circuit
• Parties: Susan COHN and Walter Cohn, her husband, Appellants, v. G.D. SEARLE & CO., Appellee, Irwin I. Kimmelman, Esq., Attorney General of New Jersey, Intervenor.

Page 460

784 F.2d 460

Susan COHN and Walter Cohn, her husband, Appellants, v. G.D. SEARLE & CO., Appellee, Irwin I. Kimmelman, Esq., Attorney General of New Jersey, Intervenor.

No. 85-5048.

United States Court of Appeals, Third Circuit.

Argued Nov. 5, 1985.

Decided Jan. 7, 1986.

As Modified on Denial of Rehearing March 12, 1986.

Walter R. Cohn (argued), Thomas E. Cohn, South Orange, N.J., for appellants.

Irwin I. Kimmelman, Atty. Gen. of N.J., James J. Ciancia, Harry Haushalter (argued), Trenton, N.J., for intervenor.

Raymond M. Tierney, Jr., Susan M. Sharko, Shanley & Fisher, P.C., Morristown, N.J., William P. Richmond, David W. Carpenter (argued), Kathleen Clubb Kauffman Patricia A. Mattern, Rawle & Henderson, Philadelphia, Pa., for amicus curiae, Kelsey-Hayes Co.

Sidley & Austin, Chicago, Ill., for appellee.

Richard T. Conway, David Booth Beers, I. Michael Greenberger, Shea & Gardner, Washington, D.C., Joseph P. La Sala, Joseph F. Lagrotteria, Robinson, Wayne, Levin, Ricco & La Sala, Newark, N.J., for amicus curiae, Brinco Mining Ltd.

Robert H. Jaffe, Howard G. Schlesinger, Jaffe & Schlesinger, P.A., Springfield, N.J., for amicus curiae Asbestos plaintiffs Assn.

Before SEITZ, WEIS and ROSENN, Circuit Judges.

OPINION OF THE COURT

SEITZ, Circuit Judge.

Plaintiffs Susan Cohn and Walter R. Cohn, husband and wife, appeal from the final summary judgment of the district court dismissing their complaint as untimely. Plaintiffs are residents of New Jersey; defendant G.D. Searle & Co. (Searle) is a Delaware corporation whose principal place of business is in Illinois. The district court's jurisdiction over this case was grounded in diversity, 28 U.S.C. Sec. 1332 (1982). We have appellate jurisdiction under 28 U.S.C. Sec. 1291 (1982).

I.

The serpentine course of this litigation may be adequately charted from the five published opinions it has generated, ¹ and there is no need to do more here than briefly note its highlights.

Plaintiffs brought suit in 1974 in the Superior Court of New Jersey. The complaint alleged that Susan Cohn suffered a stroke in 1963 that was caused by her use of the oral contraceptive Enovid, manufactured by Searle. Liability was premised on various state-law tort theories.

After removing the case to federal court, Searle moved for summary judgment on the ground that the suit was untimely under New Jersey's two-year statute of limitations for tort actions, N.J.Stat.Ann. 2A:14-2 (West 1969). Plaintiffs argued in response that the action was timely because N.J.Stat.Ann. 2A:14-22 (West 1969) (the tolling statute), tolled the statute of limitations. ² The tolling statute provides that the statute of limitations is tolled in any action against a foreign corporation not "represented" in New Jersey by an agent for service of process, for as long as the defendant remains unrepresented. Plaintiffs argued--and all parties concede here--that Searle was unrepresented in New Jersey at all relevant times.

Defendant responded, inter alia, by arguing that the tolling statute violated the Equal Protection and Due Process clauses of the United States Constitution. The district court accepted Searle's equal protection argument and dismissed the complaint as time-barred. ³

This court reversed on appeal, holding that the statute violated neither equal protection nor due process. ⁴ Although Searle's brief before this court also attacked the tolling statute on Commerce Clause grounds, our opinion did not address that issue.

The Supreme Court, on certiorari, affirmed this court's equal protection and due process holdings, but remanded for further consideration of Searle's Commerce Clause claims. The Court declined to reach that issue, first, because it had not been addressed here or in the district court, and second, because of a perceived ambiguity as to the manner in which a foreign corporation could become "represented" within the meaning of the tolling statute. We in turn remanded to the district court to consider those issues.

Following our remand, but before the district court could issue its decision, the Supreme Court of New Jersey decided Coons v. American Honda Motor Co., 94 N.J. 307, 463 A.2d 921 (1983) (Coons I ). In that case, whose operative facts were similar in relevant respects to those here, the court resolved the ambiguity in the state law perceived by the Supreme Court by holding that a corporation could only be represented in the state by obtaining a certificate of authority to do business there. See N.J.Stat.Ann. 14A:13-4 (1969). As noted by the court, a corporation thus registered is subject, inter alia, to personal jurisdiction in any lawsuit commenced in New Jersey. The New Jersey court went on to hold, however, that the tolling statute, thus interpreted, was a "forced-licensure provision" which violated the Commerce Clause.

Subsequently, on rehearing, the court held that its invalidation of the tolling statute would not be accorded retroactive effect ⁵; thus, "the statute of limitations as to foreign, unrepresented corporations commences to run as of" August 3, 1983, the date of the Coons I decision. Coons v. American Honda Motor Co., 96 N.J. 419, 476 A.2d 763 (1984) (Coons II ). It held further that even the litigants in the case before it would continue to be governed by the tolling statute. The court stated explicitly that the nonretroactivity of Coons I was a matter of state law.

After the New Jersey Supreme Court handed down its decision in Coons II, Searle renewed its summary judgment motion in the district court to dismiss the complaint as untimely, again arguing that the tolling statute violated the Commerce Clause. Plaintiffs apparently did not contend, at least in their briefs, that the tolling statute was consistent with the Commerce Clause, but argued instead--as they do here--that the holding in Coons II that the statute was only invalid prospectively was binding on the federal district court as an interpretation of state law. Alternatively, they argued that federal retroactivity principles dictated the same result reached in Coons II. The district court granted Searle's motion and dismissed the complaint. It held, first, that the tolling statute violated the Commerce Clause. Second, it rejected plaintiffs' contention that it was bound by Coons II to apply its Commerce Clause holding nonretroactively, and, applying federal retroactivity principles, held that retroactive application was proper. This appeal followed.

II.

Plaintiffs reiterate their contention that under Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), we are obliged to follow the New Jersey Supreme Court in applying its Coons I holding prospectively. This argument gravely misconceives the Erie doctrine. The basis of our jurisdiction here is diversity, but it does not follow that all issues in this case are to be decided under state law. Rather, although we are required to defer to the state's highest court as the ultimate arbiter of the meaning of state law, that law is only applicable "where the Constitution or treaties of the United States or Acts of Congress [do not] otherwise require or provide." 28 U.S.C. Sec. 1652 (1982) (the Rules of Decision Act). See Donegal Steel Foundry Co. v. Accurate Prods. Co., 516 F.2d 583, 587 n. 6 (3d Cir.1975); Maternally Yours, Inc. v. Your Maternity Shop, Inc., 234 F.2d 538, 540-41 n. 1 (2d Cir.1956). Where a state statute is held to violate the federal Constitution, the retroactivity vel non of that holding is similarly a matter of federal law which we must determine independently. Chapman v. California, 386 U.S. 18, 21, 87 S.Ct. 824, 826, 17 L.Ed.2d 705 (1967). Cf. Pierzga v. Ford Motor Co., Inc., 778 F.2d 149 at 151 (3d Cir.1985) (following state court with respect to retroactive application of state law holding); Ettinger v. Central Penn National Bank, 634 F.2d 120, 124 (3d Cir.1980) (same).

III.

We have not been asked to consider the correctness of the district court's holding that the tolling statute violates the Commerce Clause, and consequently we do not reach that question. ⁶ Instead, we will assume without deciding that it was answered correctly by the district court. Thus, the only issue before us is whether the district court correctly resolved the secondary matter of retroactivity. Our standard of review is plenary.

In Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), the Court stated a three-factor test for determining whether a new decision is to be applied retroactively:

First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it has been stressed that "we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective application would further or retard its operation." Finally, we have weighed the inequity imposed by retroactive application, for "[w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the 'injustice or hardship' by a holding of nonretroactivity."

404 U.S. at 106-07, 92 S.Ct. at 355-56 (citations omitted). Chevron's approach to the question of retroactivity is premised on "our recognition that statutory or even judge-made rules of law are hard facts on which people must rely in making decisions and in shaping their conduct." Lemon v. Kurtzman, 411 U.S. 192, 199, 93 S.Ct. 1463, 1468-69, 36 L.Ed.2d 151 (1973). Under the first prong of the Chevron test, therefore, we look to the state of the law prior to the decision sought to be applied retroactively to determine whether that decision had the potential to upset reasonable reliance upon prior law. Marino v. Bowers, 657 F.2d...