Fed. Sec. L. Rep. P 95,379 Marian W. Short v. Belleville Shoe Manufacturing Company

POSNER, Circuit Judge,

concurring.

I have no disagreement with the court’s opinion or judgment, and join both, writing separately only to express reservations about the principle of “borrowing” a period of limitations from one statute for use with another (here, a rule of the SEC, but the principle is the same) that has none. The Supreme Court’s unwavering attachment to the principle leaves us no choice but to apply it, but that attachment is beginning to be questioned, Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143, 157-70 , 107 S.Ct. 2759, 2767-74 , 97 L.Ed.2d 121 (1987) (concurring opinion), and I would like to add my small voice to the chorus.

Borrowing a period of limitations from one statute to use with another that doesn’t have its own limitations provision is a matter of which round peg to stuff in a square hole. It artificially truncates the court’s choice of an appropriate period, one well suited to the particular statute under consideration. It also runs the risk of applying one unprincipled legislative deal to a problem entirely outside the scope of the deal. Suppose Statute A specifies no period of limitations. Statute B regulates analogous conduct, and has a six-month period. But maybe B has such a short deadline for suit only because the *1394 interest group that opposed the enactment of B had enough muscle to block a longer deadline that would have made more sense from a neutral standpoint. In that event, to borrow B’s limitations period for use with A will project the interest-group pressures that deformed B into a completely new area of conduct.

Whether or not courts are aware of this danger, they do attempt to correct for it by considering, as part of the borrowing procedure, the suitability to the substantive rule under consideration of the limitations periods in the various candidate statutes of limitations. But this places a lot of balls in the air. The considerations bearing on the suitability of one limitations period compared to another include the difficulty of investigating potential violations, the possibility that the consequences of wrongdoing will be delayed, the opportunities for wrongdoers to conceal the wrong, the rate at which evidence of wrongdoing and also evidence pertinent to the alleged wrongdoer’s defenses is likely to decay, the sophistication of the relevant tribunals in handling stale evidence, the desirability of freeing court time for fresh claims, the interest of potential defendants in repose— that is, in knowing after a definite period has passed that they no longer have to worry about being sued — and the effect on the deterrence of statutory violators of reducing the time for bringing suit. When these considerations are mingled with the underlying question of the similarity between the conduct in the case at issue and the conduct to which the various candidate statutes of limitations apply, we have the essential condition for standardless, discretionary judgment: a multifactor test with no weights on the factors. Since courts cannot be expected to converge on a uniform outcome when they are operating under such a standard, predicting what statute of limitations will be borrowed is impossible and as a result extensive litigation often is necessary before a definitive conclusion on the limitations period emerges. It may not come until a Supreme Court decision is rendered resolving an intercir-cuit conflict that was years in the brewing.

As we noted in Hemmings v. Barian, 822 F.2d 688, 689 (7th Cir.1987), judges feel that they have to borrow an existing statute of limitations rather than lay down a period of limitations as a matter of federal common law because it would be arbitrary to pick a term of years. They feel in other words that enactment of a limitations period, because of its inescapable arbitrariness, is a legislative rather than a judicial task. Legislators can be as arbitrary as they please within the broad limits set by the Constitution but judges are supposed to reason to their conclusions, and how can you reason to 3 years over 2, 300 days over 240, 20 years over 15? You cannot; but neither can you reason to the right statute of limitations to borrow. The imponderables are so numerous that in the end the borrowing judgment, too, is inescapably arbitrary, as the present case illustrates.

What is to be done? There are several possibilities. One would be for courts to drop the mask and create statutes of limitations for claims that lack them. There is precedent for this in the judicial doctrine of laches, which on at least one occasion was firmed up into a period of definite length. Smith v. City of Chicago, 769 F.2d 408 (7th Cir.1985). Yet even then we borrowed the limitations period in an existing statute. The difficulty with creating a statute of limitations ex nihilo lies in the fact that judge-made rules come in the first instance from the bottom of the judicial hierarchy, rather than being imposed from on high. In the early days of a new substantive statute that specified no limitations period, each district judge would be selecting a period'of limitations for the individual case, each court of appeals would be selecting the period for the cases in the circuit, and only when the Supreme Court got a case would the definitive period finally be declared. The improvements over the borrowing procedure would be modest; they would be chiefly in the area of judicial candor.

An institutional solution is necessary, and two possibilities come to mind. One, which wouldn’t work in this case because the cause of action postdates the enactment of the statute under which it arises, *1395 would be for Congress to adopt a rule that every statute shall contain a statute of limitations. This course would be superior to Congress’s adopting (as sometimes proposed) a general catch-all statute of limitations, because there is no single period of limitations that would be suitable for the entire range of causes of action in statutes that do not specify a period. Such a rule might, it is true, be ineffectual without a nagging agency within Congress to enforce it, some counterpart to the Congressional Budget Office, as proposed in the Report of the Federal Courts Study Committee 21-22, 89-93 (April 2, 1990) — unless the Supreme Court adopted Justice Scalia’s view that if a statute contains no period of limitations, there just is no deadline on suing. Agency Holding Corp. v. Malley-Duff & Associates, Inc., supra, 483 U.S. at 164 , 107 S.Ct. at 2771 . This would cause considerable havoc but could be mitigated by a rule (well within the power of judges to create, I believe) that, in the absence of a statutory limitations period, the courts will apply the equitable doctrine of laches even if the cause of action is legal rather than equitable. Then the defendant could defend by showing that the plaintiff had unreasonably delayed in bringing the suit and that the defendant had been hurt by the delay. There is precedent for applying laches in cases at law. Piper Aircraft Corp. v. Wag-Aero, Inc., 741 F.2d 925, 939 (7th Cir.1984) (concurring opinion).

The second institutional possibility would be for Congress to delegate to the Judicial Conference of the United States, or to some new agency modeled on the Sentencing Commission — perhaps my hypothetical “nagging agency” — the power to adopt by regulation a period of limitations for any statute that does not have one. This would lift the burden from Congress of having to specify a limitations period in every enactment and would shift it to an expert body that could avoid the delay of litigation. It would be a great improvement over borrowing.