Petition — GD Searle & Co. v. Cohn

Supreme Court brief1982

Ask Donna

What actually matters in this document.

Text

—_—

Supreme Court, U.S.

(80-644 FILED

OCT 20 1980

No.

DAK, JR., CLERK

IN THE

Supreme Court of the United States

Octoser Term, 1980

G.D. SEARLE & COMPANY,

Petitioner,

vs.

SUSAN COHN and WALTER COHN,

Respondents,

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Raymonp M. Tierney, JR.

Saantey & FisHer,

Attorneys for Petitioner,

550 Broad Street,

Newark, New Jersey 07102.

(201) 643-1220

Adams Press Corp., 5 Commerce Street, Newark, N. J. 07102—(201) 623-8611

Questions Presented

1. Whether the application of New Jersey’s tolling stat-

ute, N.J.S.A. 2A :14-22, to petitioner, a foreign corporation

amenable to suit in New Jersey, denies petitioner its right

to due process under the Fourteenth Amendment to the

United States Constitution.

2. Whether the application of New Jersey’s tolling stat-

ute, N.J.S.A. 2A :14-22, to petitioner, a foreign corporation

amenable to suit in New Jersey, denies petitioner its right

to equal protection of the laws under the Fourteenth Amend-

ment to the United States Constitution.

3. Whether the application of New Jersey’s tolling stat-

ute, N.J.S.A. 2A :14-22, to petitioner, a foreign corporation

engaged solely in interstate and not intrastate commerce in

New Jersey, constitutes the imposition of a burden of in-

terstate commerce forbidden by the Commerce Clause of

the United States Constitution.

Parties to the Proceedings*

Susan Cohn and Walter Cohn, Plaintiffs-Respondents.

G. D. Searle & Company, Petitioner-Defendant.

* The State of New Jersey is not a party to the within action.

Neither the United States District Court for the District of New

Jersey nor the United States Court of Appeals for the Third Cir-

cuit has certified to the Attorney General of the State of New Jer-

sey the fact that the constitutionality of a statute of that state was

drawn into question pursuant to the United States Supreme Court

Rules, Rule 28. However, Petitioner herein has served notice upon

the Attorney General of the State of New Jersey of the within mat-

ter and has notified him that 28 U.S.C. §2403(b) may be applicable.

Additionally, the constitutionality of the same state statute was at

issue in the case of Velmohos v. Maren Engineering Corp., 168

N.J. Super. 520, 403 A.2d 927 (App. Div. 1979), aff'd, 83 N.J.

282, 416 A.2d 372 (1980). In that case the New Jersey Attorney

General was notified of the fact that the constitutionality of the stat-

ute was at issue and he did not appear. 168 N.J. Super. at 522, 403

A.2d at 928.

TABLE OF CONTENTS

PAGE

Questions PRESENTED i

TaBLe or AUTHORITIES iv

Orrnions BeLow 1

JURISDICTION 2

ConstiTuTIONAL Provisions, Statutes AND Ruues Iy-

VOLVED 2

STATEMENT OF THE CasE 5

Reasons ror GRANTING THE Writ 7

Conclusion 18

APPENDIX:

A—Opinion of the United States Court of Ap-

peals for the Third Circuit la

B—Judgment of the United States Court of

Appeals for the Third Circuit 26a

C—Opinion of the United States District Court

for the District of New Jersey Re: Cohn v.

G. D. Searle & Company 28a

iv TABLE OF AUTHORITIES

PAGE

Table of Authorities

Cases Cited

Allenberg Cotton Co., Inc. yv. Pittman, 419 U.S. 20

(1974) 18

Avdel Corporation v. Mecure, 58 N.J. 264, 277 A.2d

207 (1971) 9

Cohn v. G. D. Searle & Co., 447 F. Supp. 903 (D.N.J.

1978), rev’d, —— F.2d —— (Docket Nos. 79-2406

and 79-2605, 3rd Cir. July 23, 1980) ................ 1, 2, 6, 7, 17

Dahnke-Walker Milling Co. v. Bondurant, 257 U.S.

282 (1921) 13, 14

Heiner v, Donnan, 285 U.S. 312 (1932) 12

Hurwitch v. Adams, 52 Del. 13, 151 A.2d 286 (Super.

Ct. Del.), aff'd, 52 Del. 247, 155 A.2d 591 (Del.

1959) 17

International Shoe Co. v. State of Washington, 326

U.S. 310 (1945) 2 8

International Textbook Co. v. Pigg, 217 U.S. 91

(1910) 13, 16

Lilly & Co. v. Sav-On-Drugs, Inc., 366 U.S. 276 (1961) 14

Lochner v. New York, 198 U.S. 45 (1905) ................. 11

Memphis Steam Laundry v. Stone, 342 U.S. 389

I alls dcls chdoecipiasidbtansiasnansichecestntiarsinctapeedanbniihenebeniesioode 14

Oswalt v. Seripto, Inc., 616 F.2d 191 (5th Cir. 1980) 8

Richardson v. Belcher, 404 U.S. 78 (1971)

Reed v. Reed, 404 U.S. 71 (1971) 9, 10

Robbins v. Shelby Taxing District, 120 U.S. 489

(1887) 13, 14

TABLE OF AUTHORITIES v

PAGE

Royster Guano Company v. Virginia, 253 U.S. 412

(1920) 10

Shaffer v. Heitner, 433 U.S. 186 (1977) 8, 12

Sioux Remedy Co. v. Cope, 235 U.S. 197 (1914) ........ 13, 14

Velmohos v. Maren Engineering Corp., 168 N.J.

Super. 520, 403 A.2d 927 (App. Div. 1979), aff'd,

83 N.J. 282, 416 A.2d 372 (1980) ii, 7, 8, 13

Vlandis v. Kline, 412 U.S, 441 (1973) 11

Will v. Malosky, 432 Pa. 246, 247 A.2d 788 es

1968) 17

World-Wide Volkswagen v. Woodson, 444 U.S. 286,

100 S. Ct. 559, 62 L. Ed. 2d 490 (1980) .................... 8

United States Constitution Cited

Article 1, Section 8, Clause 3

Fourteenth Amendment i, 2

Statutes Cited

28 U.S.C.:

See. 1254 (1) 2

See. 1332(a) 5

See. 1441 5

N.J.S.A. 2A:14-2 5, 6

N.J.S.A. 2A :14-22 i, 3, 6, 11

N.J.S.A. 144 :13-3 13

N.J.S.A. 54:10A-1 13

N.J.S.A. 54:10E-1 13

vi TARLE OF AUTHORITIES

PAGE

Rules Cited

N.J.R. 4:2-2 10, 16

N.J.R. 4:4-4 4

N.J.R. 4:4-4(¢) (1) 5, 9, 16

Other Authority Cited

Comment, “The Tolling Provision of the Statute of

Limitations—A Haven for the Dilatory Plaintiff,”

10 Seton Hall L. Rev. 585 (1980) 18

No.

In THE

Supreme Court of the United States

Ocroser Term, 1980

—

G.D. SEARLE & COMPANY,

Petitioner,

vs.

SUSAN COHN and WALTER COHN,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Petitioner, G. D. Searle & Company, respectfully prays

that a writ of certiorari issue to review the judgment and

opinion of the United States Circuit Court of Appeals for

the Third Circuit entered in this proceeding on July 23,

1980.

Opinions Below

Petitioner requests review of the decision of the United

States Court of Appeals for the Third Cireuit (Third Cir-

cuit) reported sub nom. Cohn v. G. D. Searle & Co, ——

F.2d —— (Docket Nos. 79-2405 & 79-2406, 3rd Cir. July

23, 1980). The opinion is reproduced in the Appendix at

p. la, infra,

The decision of the United States District Court for the

District of New Jersey appears at 447 F. Supp. 903 (D.

N.J. 1978). It is included in the Appendix at p. 28a, infra.

Jurisdiction

The judgment of the Third Cireuit was entered on July

23, 1980." A copy of that judgment is iueluded in the Ap-

pendix at p. 26a, infra. This petition for certiorari has been

filed within 90 days of the date of said judgment. This

Court’s jurisdiction is invoked under 28 U.S.C. §1254(1),

which states:

“eases in the courts of appeals may be reviewed by

the Supreme Court...

(1) By-writ of certiorari granted upon a petition

of any party to any civil or criminal case, before or

after rendition of judgment or decree. .. .”

Constitutional Provisions, Statutes and

Rules Involved

The Fourteenth Amendment to the United States Con-

stitution, Section 1:

1 The within matter had been consolidated and decided by the

Third Circuit in conjunction with the case of Hopkins v. Kelsey-

Hayes, Inc. (Dearket No, 79-1881, 3rd Cir. July 23, 1980). The

defendant in that case has also petitioned this Court for the issuance

of a writ of certiorari.

“All persons born or naturalized in the United States,

and subject to the jurisdiction thereof, are citizens

of the United States and of the State wherein they

reside. No State shall make or enforce any law which

shall abridge the privileges or immunities of citizens

of the United States; nor shall any State deprive

any person of life, liberty, or property, without due

process of law; nor deny to any person within its jur-

isdiction the equal protection of the laws.”

The Constitution of the United States, Art. 1, §8, Cl. 3 (the

Commerce Clause) :

“The Congress shall have Power... To regulate Com-

merce with foreign Nations, and among the several

States, and with the Indian Tribes; .. .”

The New Jersey “Tolling Statute”, N.J.S.A. 2A :14-22:

“Tf any person against whom there is any of the

causes of action specified in sections 2A :14-1 to 2A:

14-5 and 2A :14-8, or if any surety against whom there

is a cause of action specified in any of the sections

of article 2 of this chapter, is not a resident of this

state when such cause of action accrues, or removes

from this state after the accrual thereof and before

the expiration of the times limited in said section,

or if any corporation or corporate surety not or-

ganized under the laws of this state, against whom

there is such a cause of action, is not represented in

this state by any person or officer upon whom sum-

mons or other original process may be served, when

such cause of action accrues or at any time before

the expiration of the times so limited, the time or

times during which such person or surety is not

residing within this state or such corporation or cor-

porate surety is not so represented within this state

shall not be computed as part of the periods of time

within which such an action is required to be com-

menced by the section. The person entitled to any

such action may commence the same after the ac-

crual of the cause therefor, within the period of time

limited therefor by said section, exclusive of such

time or times of nonresidence or nonrepresentation.”

New Jersey’s Long-Arm Rule, N.J.R. 4:4-4:

“Service of summons, writs and complaints shall be

made as folows:

* * *

(1) Corporations. Upon a domestic or foreign cor-

portaion, by serving, in the manner prescribed, in

paragraph (a), either an officer, director, trustee, or

managing or general agent; or any person author-

ized by appointment or by law to receive service of

process on behalf of the corporation; or the person

at the registered office of the corporation in charge

thereof. If service cannot be made upon any of the

foregoing, then it may be made upon the person at

the principal place of business of the corporation

in this State in charge thereof, or if there is no place

of business in this State, then upon any servant of

the corporation within this State acting in the dis-

charge of his duties. If it appears by affidavit of

plaintiff’s attorney or of any person having knowl-

ledge of the facts that after diligent inquiry and ef-

fort personal service cannot be made upon any of

the foregoing and if the corporation is a foreign cor-

poration, then, consistent with due process of law,

service may be made by mailing, by registered or

certified mail, return receipt requested, a copy of the

summons and complaint to a registered agent for

service, or to its principal place of business, or to its

registered office.”

New Jersey’s Statute of Limitations for Personal Injury

Actions, N.J.S.A. 2A :14-2:

“Every action at law for an injury to the person

caused by the wrongful act, neglect or default of any

person within this state shall be commenced within

2 years next after the cause of any such action shall

have accrued.”

Statement of the Case

This is a products liability/negligence action brought by

Mrs. Cohn, a user of the oral contraceptive, Enovid, and

her husband against its manufacturer, G. D. Searle & Com-

pany (Searle). Mrs. Colin’s use of Enovid allegedly re-

sulted in a cerebrovascular accident which she suffered in

1964. Sometime in 1969 or 1970, the plaintiffs became aware

of a possible link between Mrs. Cohn’s stroke and her in-

gestion of Enovid, and, although not at issue in this Peti-

tion, the District Court in an unpublished opinion concluded

that plaintiffs had discovered their cause of action by 1970.

Plaintiffs commenced this action in 1974 by the filing of

a complaint in the Superior Court of New Jersey. Service

was effected on Searle under New Jersey’s long arm rule,

N.J.R. 4:4-4(ce)(1). No difficulty in obtaining the name of

Searle or in effecting service was claimed. Searle removed

the ease to the United States District Court for the Dis-

trict of New Jersey pursuant to 28 U.S.C. $1441, invoking

the diversity of citizenship jurisdiction of that Court un-

der 28 U.S.C. §1332(a).

Searle thereafter moved for summary judgment on the

ground that plaintilfs’ claims were barred by the applicable

two-year statute of limitations, N.J.S.A. 2A:14-2. In op-

position, plaintiffs argued that the statute of limitations

was no bar to their complaint because New Jersey’s tolling

statute, N.J.S.A. 2A :14-22, tolls the statute of limitations

in any action against a foreign corporation, such as Searle,

which is not represented in this state by any person or offi-

cer upon whom summons or other original process may be

served.

Searle, a Delaware corporation with its principal place

of business in Illinois, conducted an entirely interstate and

not intrastate pharmaceutical business in New Jersey. <Ac-

cordingly, Searle argued, inter alia, that the tolling statute

did not apply to it since it was amenable to valid long-arm

service of process. Alternatively, Searle argued that if the

tolling statute were applicable to it, its rights of equai pro-

tection and due process guaranteed by the Fourteenth

Amendment to the United States Constitution were violated.

The District Court, whose opinion appears at 447 F.

Supp. 903 (D.N.J. 1978) and is included in the Appendix at

p. 28a, held that the tolling statute applied to Searle. It

also held, however, that such an application to a foreign cor-

portaion amenable to service of process under the long-arm

rule served no rational purpose and was, therefore, an un-

constitutional denial of equal protection. The District

Court opinion further stated that if the tolling statute was

designed to compel foreign corporations to do business in

New Jersey, it also imposed an unlawful burden on inter-

state commerce under the Commerce Clause. 477 F.Supp.

at 911, n.17.

On appeal to the Third Circuit, Searle argued that the

application of the tolling provision violated both equal

protection and due process of law, and further, when ap-

plied to a corporation engaged solely in interstate com-

merce, violated the Commerce Clause.

Just prior to the Third Cireuit’s consideration of the

Cohn matter, the New Jersey Supreme Court rendered its

decision in Velmohos vy. Maren Engineering Corp., 83

N.J. 282, 416 A.2d 372 (1980), In that opinion, New Jer-

sey’s highest court rejected a foreign corporation’s consti-

tutional claims of violation of due process and equal pro-

tection by denying it the defense of the statute of limitations

although it was at all times subject to the State’s jurisdice-

tion. Thus, under Velmohos, an unregistered and unlicensed

foreign corporation might never assert such a defense, It

should be noted that Maren Engineering Corporation has

docketed an appeal and has filed a Jurisdictional Statement

in that matter with this Court.

The Third Cireuit in Cohn, following the approach chosen

by New Jersey’s highest court, reversed the District Court

and concluded that the application of the tolling statute to

foreign corporations amenable to long-arm jurisdiction,

such as Searle, did not deny equal protection or due proc-

ess. Searle’s Commerce Clause arguments were not ad-

dressed.

Reasons for Granting the Writ

The question of whether a state may subject a foreign

corporation, admittedly not registered to do business in

that state, to its in personam jurisdiction while at the same

time denying to that corporation the protection of a statute

of limitations afforded all other defendants subject to the

state’s jurisdiction, consistent with due process and equal

protection of the law, is a substanstantial and novel one.

Further, the question of whether a state may condition the

implementation of a valid statute of limitations defense by

a foreign corporation, engaged solely in interstate com-

merece, yet subject to that state’s in personam jurisdiction

under its long-arm rule, by compelling qualification to do

business in that state with attendant tax and reporting bur-

dens, consistent with the Commerce Clause, is a substantial

and novel one. These important questions of federal law

have not been, but should be, addressed by this Court. The

New Jersey Supreme Court’s decision in Velmohos v. Maren

Engineering Corp., 83 N.J. 282, 416 A.2d 372 (1980), and

the Third Cireuit’s adoption of that decision in the instant

case causes confusion within the Cireuit and conflicts with

the opinions of other state courts of last resort. These

considerations require that this Court exercise its discre-

tion and grant a writ of certiorari in this case.

This Court has limited the reach of out-of-state service

of process by requiring sufficient minimum contacts with a

state so that a suit does not offend “traditional notions of

fair play and substantial justice.” International Shoe Co.

v. State of Washington, 326 U.S. 310, 316 (1945). In World-

Wide Volkswagen v. Woodson, 444 U.S. 286, 100 S. Ct.

559, 567; 62 L.Ed. 2d 490 (1980), this Court described these

limitations more concretely. Under the Due Process Clause,

it is not unreasonable for a state to subject a foreign cor-

poration to its jurisdiction “if the sale of a product of a

manufacturer ... [arose] from the efforts of the manufae-

turer or distributor to serve directly or indirectly, the mar-

ket for its product in other states. ...” See also, Oswalt vy.

Scripto, Inc., 616 F.2d 191, 198-199 (5th Cir. 1980).

In Shaffer v. Heitner, 433 U.S. 186, 202 (1977), this Court

recognized that a foreign corporation doing business in a

state could be deemed “present” in that state, and thus sub-

ject to service of process, Mr. Justice Marshall wrote for

the Court:

“This basis for in personam jurisdiction over foreign

corporations was later supplemented by the doctrine

that a corporation doing business in the state could

be deemed ‘present’ in the State... .”

Concomitantly, the New Jersey long-arm rule, N.J.R. 4:4-4

(c)(1), permits service of process upon nonresident de-

fendants “to the uttermost limits permitted by the United

States Constitution.” Avdel Corporation v. Mecure, 58 N.J.

264, 268, 277 A.2d 207, 209 (1971).

Once New Jersey has determined a foreign corporation

to be sufficiently “present” in the state to be amenable to

its service of process, it must follow that such a foreign

corporation should be afforded the right to plead the de-

fense of the statute of limitations—a defense available to

domestie corporations and to other foreign corporations

also amenable to service through long-arm jurisdiction but

who by chance may also maintain registered agents within

the State. Yet in the instant case the Third Cireuit has

determined that the petitioner corporation was not sufli-

ciently “present” to avail itself of the two-year statute of

limitations. By doing so, the Third Cireuit has coneluded

that the statute of limitations will never be available to

such a defendant. This novel decision deprives petitioner

of its Constitutional rights to due process and equal pro-

tection of the law. Sueh a decision requires review and

reversal by this Court.

The purpose of the Equal Protection Clause of the United

States Constitution is to prevent irrational and arbitrary

discrimination between persons similarly situated. Peed

v. Reed, 404 U.S. 71 (1971). While a state may make ra-

tional classifications, a state may not provide that different

treatment be accorded te persons placed by a statute into

different classes on the basis of criteria wholly unrelated

to the objective of that statute. Reed v. Reed, 404 U.S. at

75-76.

New Jersey’s distinction, as applied by the Third Circuit,

between petitioner and other foreign corporations, which

for business or other considerations may be qualified to do

business and maintain a registered agent or be licensed by

New Jersey, is arbitrary and has no rational basis. In-

deed, plaintiffs never asserted any difficulty in serving

Searle. Yet, despite plaintiffs’ ease in service of process,

Searle is forever barred from asserting the defense of the

statute of limitations. Such a discriminatory result falls

within the rule of Royster Guano Co, v. Virginia, 253 U.S.

412, 415 (1920), that a classification ‘must be reasonable,

not arbitrary, and must rest upon some ground of differ-

ence having a fair and substantial relation to the object of

legislation, so that all persons similarly cireumstanced shall

be treated alike.” Accord, Reed v. Reed, 404 U.S. at 76.

Essentially, the rationale of the Third Cireuit focused

on the presumed difficulties in serving out-of-state defend-

ants. Such reasoning, however, is irrational both on its

face and as applied. In New Jersey, the filing of a com-

plaint, naming any defendant, whether in-state or out-of-

state, and not the time of service of process, tolls the stat-

ute of limitations against all so named. N.J.R. 4:2-2. In

focusing on the rule’s requirement that plaintiffs attempt

in-state service before utilizing long-arm service, the Third

Cireuit has given judicial approbation to the irrational re-

sult of forever precluding the assertion of the statute of

limitations by the long-arm defendant, regardless of when

the defendant was served or when the complaint was filed

—here, at least four years after the cause of action accrued.

If the expressed reason for tolling the statute of limita-

tions for foreign corporations which are not represented

within New Jersey is difficulty in effecting service, then

the equal protection clause demands that the length of time

that the statute is tolled bear a rational relation to that dif-

fieulty. Yet, despite these constitutional requirements,

N.J.S.A, 2A :14-22 evinces no relation between the ease or

difficulty of service of process upon an out-of-state defend-

ant and the availability of the defense of the statute of lim-

itations to such defendant. As such, it remains arbitrary,

bearing no rational relationship to the legislative objective

sought to be obtained, and, therefore, is constitutionally

infirm.

The Due Process Clause of the United States Constitu-

tion similarly demands that the use of state power bear a

rational relationship to a legitimate societal interest. Iich-

ardson v. Belcher, 404 U.S. 78, 81 (1971); Lochner v. New

York, 198 U.S. 45, 53 (1905). As the long-arm provision

extends the state’s reach to out-of-state corporations, the

legitimate state interest in denying a distant corporation

the benefit of its statute of limitations is correspondingly

diminished. N.J.S.A. 2A :14-22, as construed by the courts

below, conclusively presumes that foreign corporations

without representation in New Jersey are not amenable to

service. This presumption, plainly contradicted by the ap-

pearance of long-arm defendants, is irrational and is a dep-

rivation of due process of law.

“Statutes creating permanent irrebuttable presumptions

have long been disfavored under the Due Process Clauses

of the Fifth and Fourteenth Amendments.” Vlandis vy.

Kline, 412 U.S. 441, 446 (1973). In Vlandis, the state’s pre-

sumption that an out-of-state student would forever re-

main an out-of-state resident during the course of study

at a Connecticut college was stricken as a denial of due

process of law. This presumption financially penalized the

plaintiffs in Vlandis. By the same token, the Third Cir-

cuit’s adoption of New Jersey’s irrebutable presumption,

as expressed in its 1949 tolling statute, that all out-of-state

defendants are not subject to service of process despite

their appearance in an action, is also invalid. “[A] statute

creating a presumption which operates to deny a fair op-

portunity to rebut it violates the due process clause of the

Fourteenth Amendment.” IJeiner v. Donnan, 285 U.S. 312,

329 (1932).

The decision of the Third Cireuit upholding the consti-

tutional viability of the 1949 tolling statute as applied to

long-arm defendants perpetuates a form of discrimination

against foreign corporations engaged in interstate com-

merce that involves not only equal protection and due proc-

ess, but, of equal importance, Commerce Clause considera-

tions intertwined with the concepts of fundamental fairness

and justice. Under not totally dissimilar circumstances this

Court has noted:

“<*TT]raditional notions of fair play and substantial

justice’ can be as readily offended by the perpetua-

tion of ancient forms that are no longer justified as

by the adoption of new procedures that are inconsis-

tent with the basie values of our constitutional heri-

tage.” Shaffer v. Iecitner, 433 U.S. 186, 212 (1977).

The effect of the Third Cireuit’s opinion in upholding the

application of the tolling statute to Searle is to burden un-

constitutionally Searle’s conduct of interstate business op-

erations.? The only mechanism available to Searle to avoid

perpetual exposure to stale claims by dilatory plaintiffs in

New Jersey is to qualify as a corporation authorized to do

business within this state, and thus subject itself to the

requirements of not only designating a registered agent, but

2 As indicated earlier, the Third Circuit ignored the Commerce

Clause argument raised on appeal.

of maintaining an office, complying with various filing and

reporting requirements and subjecting itself to state taxa-

tion. F.g., N.J.S.A. 14A:15-3 et seq.; N.J.S.A. 54:10A-1 et

seq.; N.J.S.A. 54:10E-1 et seq. Such requirements impose

upon a foreign corporation engaged totally in interstate

commerce an unfair burden not countenanced by this Court’s

interpretations of the Commerce Clause.*

In a series of cases beginning almost 100 year ago with

the “drummer” cases and continuing to date, this Court has

summarily struck down similar burdens imposed by states

on foreign corporations engaged in interstate commerce,

Allenberg Cotton Co., Inc, v. Pittman, 419 U.S. 20 (1974);

Dahnke-Walker Milling Co. v. Bondurant, 257 U.S, 282

(1921); Sioux Remedy Co. v. Cope, 235 U.S. 197 (1914);

International Textbook Co. v. Pigg, 217 U.S. 91 (1910);

Robbins v. Shelby Taxing District, 120 U.S. 489 (1887). As

stated in Dahnke-Walker Milling Co. v. Bondurant:

“A corporation of one State may go into another,

without obtaining the leave or license of the latter,

for all the legitimate purposes of such commerce;

and any statute of the latter State which obstructs

3In Velmohos v. Maren Engineering Corp., the New Jersey

Supreme Court suggested, in a footnote, that “whatever hard-

ship on foreign corporations might be caused by continued exposure

to suit can be easily eliminated by the designation of an agent for

service of process within the State.” 83 N.J. at 293, n.10. This is

simply not so. Ludicrous as it may appear, there is no method to

simply designate an agent for service of process. In order to have

an agent for service of process in New Jersey, a foreign corporation

must qualify to do business in the state. There is no statutory au-

thority or procedure for designating an agent for service of process

independently of or without qualifying the corporation to do busi-

ness. Qualification and the designation of an agent in turn trigger

reporting requirements of business activities annnually and the im-

position of a franchise tax liability.

or lays a burden on the exercise of this privilege is

void under the commerce clause.” 257 U.S. at 291.

In Robbins vy. Shelby Taxing District, the Court ruled

that “the neyotiation of sales of goods which are in

another State, for the purpose of introducing them into the

State in which the negotiation is made, is interstate com-

merece.” 120 U.S. at 497. See, also, Memphis Steam Laun-

dry v. Stone, 342 U.S, 389, 392, n. 7 (1952); Siouw Remedy

Co, v. Cope, 235 U.S. 197 (1914); Lilly & Co. v. Sav-On-

Drugs, Inc., 866 U.S.276 (1961).

It is well established that neither the filing of a charter,

the appointment of an agent to receive process nor the pay-

ment of a fee may be required of a corporation involved in

a state solely in interstate commerce as a prerequisite to

the bringing of suit in that state’s court to enforce a claim

arising out of interstate commerce. As this Court stated

in Lilly & Co, v. Sav-On-Drugs, Inc.:

“Under the authority of the so-called ‘drummer’

cases, such as Robbins v. Shelby County Taxing Dist.,

Lilly is free to send salesmen into New Jersey to pro-

mote this interstate trade without interference from

regulations imposed by the State.” 366 U.S. at 278-

279.

And as this Court previously enunciated in Sioux Remedy

Co. v. Cope:

“We think that when a corporation goes into a State

other than that of its origin to collect, according to

the usual or prevailing methods, the purchase price

of merchandise which it has lawfully sold therein in

interstate commerce, it is there for a legitimate pur-

pose of such commerce, and that the State cannot,

consistently with the limitations arising from the

commerce clause, obstruct or hamper the attainment

of that purpose. Jf it were otherwise, the purpose

of the Constitution to secure and maintain the free-

dom of commerce by whomsoever conducted could be

largely thwarted by the States and the commerce it-

sel/ seriously crippled,

The conditions which the statute imposes are: First,

that the company shall file in the office of the Secre-

tary of State an authenticated copy of its charter or

articles of incorporation; second, that it shall appoint

a resident agent upon whom process may be served

in any action against it * * * The second one, respect-

ing the appointment of a resident agent upon whom

process may be served, is particularly burdensome,

because, as the Supreme Court of the State has said,

it requires the corporation to subject itself to the jur-

isdiction of the courts of the State in general as a

prerequisite to suing in any of them; that is to say,

it withholds the right to sue even in a single instance

until the corporation renders itsclf amendable to suit

in all the courts of the State by whosoever chooses

to sue it there. If one State can impose such a con-

dition others can, and in that way corporations en-

gaged in interstate commerce can be subjected to

great embarrassment and serious hazards in the en-

forcement of contractual rights directly arising out

of and connected with such commerce, As applied

to such rights we think the conditions are unreason-

able and burdensome, and therefore in conflict with

the commerce clause.” 235 U.S. at 204-205. (m-

phasis supplied).

In the instant case, the tolling statute deprives Searle, a

foreign corporation involved in New Jersey only in inter-

state commerce, of the benefit of the statute of limitations

unless Searle takes certain otherwise unnecessary acts, such

as registering to do business in New Jersey and designat-

ing an agent, or maintaining an office or manager in this

state. In effect, every foreign corporation transacting bus-

iness in interstate commerce in New Jersey must now take

some affirmative act or be denied the benefit of the statute

of limitations. While the intent of the tolling statute may

not have been to impose such unconstitutional requirements,

the practical effect of the statute does just that. Jnterna-

tional Textbook Co. v. Pigg, 217 U.S. at 110-111. Such a

result is totally incompatible with the Commerce Clause,

Since Searle is engaged totally in interstate and not intra-

state commerce in New Jersey, this Court should now hold

that New Jersey cannot so condition Searle’s effective de-

fense of suits in New Jersey courts arising unavoidably

from that interstate commerce.

This is especially true considering that New Jersey has

already provided plaintiffs with an available alternative to

the tolling statute in its long-arm rule, N.J.R. 4:4-4(¢) (1),

read in conjunction with N.J.R, 4:2-2.. As mentioned above,

a New Jersey action is commenced by the filing of the com-

plaint, thereby tolling the statute of limitations. Thus, a

New Jersey plaintiff can commence an action within the

limitations period by filing his complaint and search for

the out-of-state defendant later, Upon a pro forma show-

ing that the out-of-state corporation cannot be served in

New Jersey, he may then have the summons and complaint

mailed under the long-arm rule. Such an alternative pro-

vides ease of service for the plaintiff and at the same time

protects defendants from stale claims, It accordingly im-

poses no burden on interstate commerce.

Tn sum, measured by any standard, this Court should hold

that the tolling statute places on Searle’s conduct of its in-

terstate business a burden which is unlawful under the

Commerce Clause.

The New Jersey Supreme Court’s unequal treatment of

foreign corporations subject to long-arm jurisdiction and

the Third Cireuit’s adoption of that treatment has resulted

in unequal results throughout the Third Cireuit.

Within the Third Circuit, Delaware and Pennsylvania

have statutes which toll the statute of limitations for non-

resident defendants. However, the highest courts of both

Delaware and Pennsylvania have ruled that where the de-

fendant, although a non-resident, is amenable to service and

thus subject to the state’s jurisdiction, the tolling statute

is inapplicable. See e.g., Hurwitch vy. Adams, 52 Del. 13,

151 A.2d 286 (Super. Ct. Del.), aff'd, 52 Del, 247, 155 A.2d

591 (Del, 1959); Will v. Malosky, 482 Pa. 246, 247 A.2d

788 (1968). Yet, the Third Cireuit has denied to Searle

the same privileges afforded to others in the Circuit.

The Third Cireuit’s reversal of the District Court’s deci-

sion in Cohn was in error. It has cogently been observed:

“Under the current statutory framework, a plaintiff

maintaining an action against a nonresident has the

option to proceed or postpone; the defendant is con-

clusively denied the right to interpose the defense of

the statute of limitations, Through the plaintiff's

utilization of long-arm procedures, in addition to de-

riving the benefit of the suspension of the limitation

period, the nonresident defendant may be continually

subject to the jurisdiction of the New Jersey courts

while remaining totally unaware that an injured

party is contemplating suit. The operation of the

tolling provision poses a severe hardship to nonresi-

dents in preparing an adequate defense, creates an

irrational classification in regard to nonresident de-

fendants amenable to service of process, and flaunts

the purpose and intent of the statute of limitations.”

Comment, “The Tolling Provision of the Statute of

Limitations—A Haven for the Dilatory Plaintiff”,

10 Seton Hall L. Rey. 585, 586 (1980),

It is respectfully submitted that the judgment of the

Third Cireuit is constitutionally infirm.

CONCLUSION

For the foregoing reasons, it is respectfully urged

that this Court issue a writ of certiorari to review the

judgment and opinion of the Third Circuit.

Respectfully submitted,

By: Raymonp M. Tierney, Jr.

SHantey & Fisuer,

Attorneys for Petitioner,

550 Broad Street,

Newark, New Jersey 07102,

(201) 643-1220

Dated: October 20, 1980

APPENDIX A

Opinion of the United States Court of Appeals

for the Third Circuit

(Filed: July 23, 1980)

UNITED STATES COURT OF APPEALS

For tae Turmp Circuit

»™

—

No, 79-1881

ROY HOPKINS,

Appellee,

Vv.

KELSEY-HAYES, INC.,

Appellant.

Nos. 79-2406 and 79-2605

SUSAN COHN and WALTER COHN, her husband,

Appellants in No, 79-2406,

Cross-Appellee in No, 79-2405,

G. D. SEARLE & COMPANY,

Appellee in No, 79-2406,

Cross-Appellant in No. 79-2405.

—

[1a]

Appendix A

Apprats From tur Unrrep States District Courr

Fyr THE District or New Jersey

D.C, Civil Nos, 78-1646 and 74-0450)

Argued: February 11, 1980.

Before: Apams, Garru and Van Dusen, Circuit Judges.

Ape.yt, Howarp ANnp MatHews

J. Luewettyn Matruews (Argued)

P.O, Box 95

Browns Mills, N.J. 08015

Attorneys for Appellee (79-1881)

Suantey & Fisner

Raymonp M., Trerney, Jn., (Argued)

Anpotrr 8 Brown

550 Broad Street

Newark, N.J. 07102

Attorneys for Appellee,

Cross-Appellant (79-2406 and 2605)

Rawie & Henperson

Lowett A, Resp, Jr. (Argued)

2100 Packard Building

Philadelphia, PA 19102

Attorneys for Appellant (79-1881)

Appendia A

Watter R, Conn, (Argued)

Exvarne Harris

15 Valley Street

South Orange, N.J. 07079

Attorneys for Appellants

(79-2406 and 2605)

OPINION or THE CouRT

Gartu, Circuit Judge.

These appeals’ present up with constitutional challenges

to a New Jersey statute, N.J.S.A. §2A:14-22, which tolls the

statute of limitations in actions against foreign corpora-

tions which are not represented in New Jersey, but which

may nonetheless be amenable to New Jersey’s long-arm

jurisdiction. By contrast, foreign corporations which are

represented in New Jersey receive the full benefit of all

limitations statutes. Thus, the defendants here, both non-

represented foreign corporations, claim that N.J.S.A. §2A:

14-22, by refusing them the protection of the limitation stat-

ute, has denied them due process and equal protection of

the laws under the United States constitution.

We do not agree, as we conclude that the New Jersey

statute is not irrational. Thus, we will not disturb New

Jersey’s legislative enactment, which we hold satisfies con-

stitutional standards.

? Although these cases were tried separately before two differ-

ent district court judges, because they involve identical challenges

to the constitutionality of a New Jersey statute, N.J.S.A. §24.:14-22,

we consolidated them for the purpose of oral argument and dis-

position,

Appendix A

In the first of these appeals, Cohn v. D. D. Searle & Co.,

the plaintiffs, who are husband and wife, sued G, D. Searle

& Co, (herinafter “Searle”) in tort for damages caused by

a birth control pill, Enovid, which had been manufactured

by Searle and which allegedly contributed to a stroke suf-

fered by Mrs. Cohn. Searle is a Delaware corporation with

its principal place of business in Illinois. Although it was

at all times subject to New Jersey’s long-arm jurisdiction,

see N.J. Ct. R. 4:4-4(¢)(1),? Searle was not registered to

do business in New Jersey, and it maintained no agent for

service of process in New Je:sey. In fact, the only person-

nel affiliated with Searle who were located in New Jersey,

during the time period relevant to this litigation, were 40

so-called “detail-persons” who worked out of their own

homes and whose sole function was to generate good-will

for Searle among New Jersey doctors.

Before trial, Searle claimed the benefit of New Jersey’s

two year statute of limitations as a defense. N.J.S.A. §2A:

2 Rule 4:4-4(c)(1) permits long-arm service upon out-of-state

corporations in the following circumstance:

If it appears by affidavit of plaintiff's attorney or of any

person having knowledge of the facts that after diligent

inquiry and effort personal service cannot be made upon

any of the foregoing [methods for service within the state]

and if the corporation is a foreign corporation, then, con-

sistent with due process of law, service may be made by

mailing, by registered or certified mail, return receipt re-

quested, a copy of the summons and complaint to a regis-

tered agent for service, or to its principal place of business,

or to its registered office.

Appendia A

14-2° In response, the plaintiff claimed that the statute of

limitations was no bar to their complaint because N.J.S.A.

§2A :14-22 (hereinafter the “tolling provision”) tolls the

limitations statute in any action against a foreign corpora-

tion which “is not represented in this state by any person

or officer upon whom summons or other original process

may be served... .”*

§N.J.S.A. §2A:14-2 provides:

Every action at law for an injury to the person caused

by the wrongful act, neglect or default of any person within

this state shall be commenced within 2 years next after the

cause of any such action shall have accrued.

4N.J.S.A. §2A:14-22 provides in relevant part:

If any person against whom there is any of the causes

of action specified . . . is not a resident of this state when

such cause of action accrues, or removes from this state

after the accrual thereof and before the expiration of the

times limited in said sections, or if any corporation or cor-

porate surety not organized under the laws of this state,

against whom there is such a cause of action, is not repre- °

sented in this state by any person or officer upon whom

summons or other original process may be served, when

such cause of action accrues or at any time before the ex-

piration of the times so limited, the time or times during

which such person or surety is not residing within this

state or such corporation or corporate surety 7s not so re-

presented within this state shall not be computed as part

of the periods of time within which such an action is re-

quired to be commenced by the section. The person en-

titled to any such action may commence the same after the

accrual of the cause therefor, within the period of time li-

mited therefor by said section, exclusive of such time or

(Footnote continued on following page)

Appendix A

With the issue thus framed, and conceding that no

facts were in dispute, Searle then moved for summary

judgment, asserting that the Colins’ claim was barred by

the statute of limitations. Searle argued that the tolling

provision was not applicable in this case because Searle

was “represented” in New Jersey by its detail-persons.

Alternatively, Searle contended that the tolling provi-

sion, if applicable to it, couid not pass muster under the

equal protection clause of the United States constitution

in that it drew an arbitrary and irrational distinction be-

tween foreign corporations represented in New Jersey and

foreign corporations not so represented, but which were

nevertheless subject to New Jersey's long-arm jurisdiction.

The district court rejected Searle’s argument that the

presence of detail-persons in New Jersey afforded Searle

the benefit of the statute of limitations. On the other hand,

the district court accepted Scarle’s contention that the toll-

ing provision was unconstitutional, 447 F. Supp. 903 (D.

N.J. 1978). Reasoning that the tolling provision must be

interpreted in light of the legislative intent at the time of

(Footnote continued from preceding page)

times of nonresidence or nonrepresentation. (emphasis ad-

ded).

Plaintiffs claimed, alternatively, that the statute of limitations

was tolled by N.J.S.A. §2A:14-21 which stops the running of the

limitations period against persons who are “insane” when their

causes of action accrue. In an unpublished opinion, the district

court found that on this record, plaintiff's condition did not con-

stitute insanity within the meaning of N.J.S.A. §2A:14-21. Con-

sequently, the district court rejected this alternative argument.

In light of our conclusion, see infra, that N.J.S.A. §2.A:14-22 tolled

the running of the limitations statute in this case, we need not,

and do not, reach the merits of this contention.

Appendia A

its enactment, the court held that Searle’s detail-persons

were not adequate corporate “representatives” within the

meaning of the tolling provision inasmuch as, as the time

that provision was most recently amended, in 1949,° juris-

5 As the New Jersey Supreme Court has noted, the roots of

the tolling provision are traceable as far back as 1820. See Lempke

v. Bailey, 41 N.J. 295, 196 A.2d 523 (1963). In its original form,

and up until 1949, however, the tolling provision made no specific

reference to corporations, Jd. (citing Pennington, Laws of New

Jersey, 1703-1820 at 670 (1821). As of 1949, the tolling provi-

sion, which thus denied both represented and non-represented for-

eign corporations the benefits of New Jersey's statutes of limita-

tions, read as follows:

If any person against whom there is or may be a cause

of action specified in sections 2:24-1, 2:24-2, 2:24-3, 2:24-5,

2:24-6, 2:4-16 or 2:24-17 of this title is not a resident of

this state when such cause of action accrues, or removes

from this state after the accrual thereof and before the ex-

piration of the times limited in said sections, the time or

times during which such person is not residing within this

state shall not be computed as a part of the periods of time

within which such actions are required to be commenced

by said sections; and the person entitled to any such action

may commence the same after the accrual of the cause

thereof, within the periods of time limited therefor by said

sections, exclusive of such time or times of non-residence.

N.J.R.S. §2:24-7.

In 1949, the tolling provision was amended to its present form,

referring, for the first time, to corporations “represented in this

state by any person or officer upon whom summons or other ori-

ginal process may be served.” Act of May 18, 1949, 1949 N.]J.

Laws, ch. 125 (amending N.J.R.S. §2:24-7) (1937)) (currently

codified at N.J.S.A. §2A:14-22) (emphasis added). The legis-

(Footnote continued on following page)

Appendia A

diction could be obtained over a foreign corporation only

by serving, within New Jersey, an “officer, director, trustee

or a managing or general agent of the corporation.” ® Jn

(Footnote continued from preceding page)

lative statement accompanying the 1949 amendments to the tolling

provision explained this provision as follows:

Foreign corporations licensed to do business in New Jersey

are now deprived by judicial construction of the benefit of

the statute of limitations. The purpose of this bill is to

correct that situation. New York State found it necessary

to make a similar change in its law in view of recent court

decisions.

The New York tolling law which is referred to in the

legislative statement was N.Y.C.P.A. §19, which had been

amended in 1943 so as to include as beneficiaries of the

New York statutes of limitations, foreign corporations with

“one or more officers or other persons in the state on whom

a summons for such corporation may be served.” Act of

April 3, 1943, 1943 N.Y. Laws, ch. 263.

®In 1949, the New Jersey rules governing service of process on

corporations were as follows:

N.J.RS. §2:26-43. Domestic corporations in personal ac-

tion, personal or substituted service summons.

Service of a summons in a civil action commenced against

a domestic corporation in any of the courts of this State

may be made by delivering a copy hereof to an officer,

director, trustee or a managing or general agent of the cor-

poration personally, or by leaving a copy thereof at his

dwelling house or usual place of abode with some compe-

tent member of his family of the age of fourteen years or

over then residing therein, or by delivering a copy thereof

(Footnote continued on following page)

Appendia A

personam jurisdiction over Searle, therefore, could not

have been obtained by service on mere detail-persons. 447

F. Supp. at 909-10.

Having disposed of this statutory issue, the district

court then turned to Searle’s constitutional claims, The

court observed that the purpose of the tolling provision,

when it was originally enacted and as it was subsequently

amended, see note 5 supra, was to protect New Jersey

plaintiffs asserting causes of action against corporate de-

fendants which were not subject to in personam jurisdic-

tion in the New Jersey courts. In light of this purpose,

the court concluded that the tolling provision was no

longer relevant in cases where the out-of-state defend-

ant was now subject to the long-arm jurisdiction of the

New Jersey courts—a jurisdictional expansion which, in

(Footnote continued from preceding page)

to any person authorized by appointment or by law to re-

ceive service of process on behalf of the corporation, or by

leaving a copy thereof at the registered office of the cor-

poration with any person in charge thereof.

N.J.R.S. §2:26-44. Foreign corporations.

Service of a summons in a civil action commenced against

a foreign corporation may be made in the same manner as is

provided in section 2:26-43 of the Revised statutes for serv-

ice of summons upon a domestic corporation.

New Jersey’s rule for long arm service was not promulgated

until 1958, N.J. Ct. R.R. 4:4-4(d) (effective September 3, 1958)

(presently N.J. Ct. R. 4:4-4(c)). See note 2 supra. It was not

until 1971, however, that the New Jersey Supreme Court con-

strued the long-arm rule to permit out-of-state service “to the utter-

most limits permitted by the United States Constitution.” Avdel

Corp. v. Mecure, 58 N.J. 264, 277 A.2d 207 (1971).

10a

Appendia A

New Jersy,’ post-dated the 1949 amendment to the toll-

ing provision. Therefore, the district court held that the

continued application of the tolling provision in cases

such as this one served no rational purpose and conse-

quently violated the United States constitution. See 447 F.

Supp. at 910-12.

Both parties appealed from the judgment of the dis-

trict court. In No. 79-2605, Searle contends that the dis-

trict court erred by concluding that the presence of its

detail-persons in New Jersey did not entitle it to the

benefit of the statute of limitations. In No, 79-2406, the

Cohns argue, contrary to the district court’s holding, that

the tolling provision is a rational exercise of the legisla-

ture’s prerogative and thus is constitutional.

In the second appeal before us, Jlopkins v. Nelsey-IHayes,

Inc., the plaintiff, Hopkins, was injured on May 18, 1975

when a tire mounted on a rim which had been manufactured

by Kelsey-Ilayes exploded, This lawsuit was filed on April

27, 1978, nearly three years after plaintiff's cause of action

had accrued. Kelsey-layes is a Delaware corporation,

which has never been represented in New Jersey. How-

ever, at all times it has been subject to New Jersey’s long-

arm jurisdiction.

™The United States Supreme Court sanctioned broad long-arm

rules in /nternational Shoe Co. v. Washington, 326 U.S, 310 (1945),

when it held that states could exercise in personam jurisdiction

over out-of-state defendants with only “certain minimum contacts”

with the forum state. Expansive long-arm jurisdiction in New

Jersey was not recognized until much later, however. See note 6

supra,

lla

Appendix A

Before a different district court judge than the judge who

presided in Cohn v. G, D, Searle, Inc., Kelsey-Hayes claimed

the benefit of New Jersey’s two year statute of limitations

and moved for summary judgment. Plaintiff responded

that the running of the limitations statute was tolled by

N.J.S.A. §2A:14-22, see note 4 supra, and that therefore

its complaint was not barred. Alternatively, the plaintiff

argued that the statute was tolled under New Jersey’s “dis-

covery rule,” see Lopez v. Swyer, 62 N.J. 267, 300 A.2d 563

(1973), Fernandi v. Strully, 35 N.J. 484, 173 A.2d 277 (1961),

under which the statute does not begin to run until the

plaintiff has had a reasonable opportunity to “discover”

the identity of the person who caused his injury. At the

pre-trial stage, Kelsey-Hayes responded only to the plain-

tiff’s first argument, It claimed that the tolling provision,

when applied to defendants subject to New Jersey’s long-

arm jurisdiction, violated the due process and equal protec-

tion clauses of the United States constitution.

In ruling on Kelsey-Hayes’ summary judgment motion,

the district court similarly confined its analysis to the con-

stitutionality of the tolling provision. The district court

judge in Hopkins expressly disagreed with the constitu-

tional holding reached by the district court judge in Cohn

v. G. D. Searle, Inc., supra, The Hopkins court concluded

that since under New Jersey law, obtaining jurisdiction

over non-represented foreign corporations process under

the long-arm rule was more difficult than obtaining juvisdie-

tion over foreign corporations which were represented in

New Jersey, a rational basis existed for distinguishing be-

tween these two categories of defendants. Having found

that this “rational basis” supported the tolling provision,

the district court rejected both defendant’s due process and

12a

Appendix A

equal protection arguments. J/opkins v. Kelsey-IHayes, Inc.,

463 F. Supp. 539, 542 (D.N.J. 1978).

Pursuant to 28 U.S.C. § 1292(b), the district court and

this court certified Kelsey-Hayes’ interlocutory appeal from

the order denying summary judgment.

Shortly before we heard argument in these cases, counsel

called our attention to Velmohos v. Maren Engineering

Corp., No. A-72/143 (N.J. Sup. Ct. June 18, 1980), a ease

which was at that time pending before the New Jersey Su-

preme Court. Velmohos involves the identical issues raised

in these appeals.

In Velmohos, as in these cases, New Jersey plaintiffs had

sued non-represented foreign corporations in tort, and had

relied upon the tolling provision in response to a statute

of limitations defense. The state defendants in Velmohos

raised two arguments against application of the tolling pro-

vision, First, they claimed that their amenability to New

Jersey’s long-arm jurisdiction constituted sufficient “rep-

resentation” within the state to entitle them to a limita-

ions defense—in that case, two years. Secondly, they argued

that, as applied to them, the tolling provision violated the

federal constitution, In an unreported opinion, the state

trial court in Velmohos struck down the tolling provision

on federal constitutional grounds, adopting the reasoning of

the district court in Cohn y. G. D. Searle & Co., supra. This

decision was reversed by the Appellate Division of the Su-

perior Court, which held that the tolling provision was ra-

tional and was thus constitutional, 168 N.J. Super. 520

(App. Div. 1979).

13a

Appendix A

Notwithstanding the pendency of the Velmohos appeal

before the New Jersey Supreme Court, we heard arguments

on the merits in the appeals before us. Nevertheless, ree-

ognizing that certain holdings of the New Jersey Supreme

Court would have binding effect upon us," and at the sugges-

tion of all the parties, we agreed to withhold decision in

these cases pending the decision in Velmohos,

On June 18, 1980 the New Jersey Supreme Court filed its

opinion in Velmohos, affirming the Appellate Division, Vel-

mohos v. Maren Engineering Corp., No. A-72/143 (NJ.

Sup, Ct. June 18, 1980). The court, in construing the New

Jersey statute which provides for tolling, held that a for-

eign corporation’s mere amenability to New Jersey's long-

arm jurisdiction did not constitute suflicient “representa-

tion” of that corporation in New Jersey to prevent the toll-

ing of the statute of limitations, /d., slip op. at 17, In so

holding, the New Jersey Supreme Court reasoned that the

“language [of the tolling provision] must be interpreted

from the intent of the Legislature at the time of enactment.”

Id., slip op. at 15, At the time the tolling provision was en-

acted, the concept of “representation” within New Jersey,

as that term is used in the tolling provision, could not have

included amenability to long-arm jurisdiction, because long-

arm jurisdiction did not then exist. See notes 6 and7 supra.

Thus, the court reasoned that incorporating the judicial ex-

pansion of long-arm jurisdiction into its interpretation of

*’Any construction of the New Jersey tolling provision by the

state’s highest court would, of course, be binding upon us. Simi-

larly, we would be bound if the New Jersey Supreme Court struck

down the provision on state constitutional grounds, However, any

decision of the New Jersey Supreme Court on federal constitu-

tional grounds is not binding upon us.

lda

Appendia A

the tolling provision would be accepting the argument that

“a Rule of Court can act as an implied, partial repeal of a

legislative enactment.” This the Supreme Court of New

Jersey refused to do, Velmohos, supra, slip op. at 16.

Having thus disposed of the defendants’ statutory argu-

ments,” the Velmohos court then proceeded to consider

and, after consideration, to reject the constitutional chal-

lenges to the tolling provision, The court concluded that

the existence of long-arm jurisdiction did not destroy the

rationality of the tolling provision, observing that extra-

territorial service is far more difficult to achieve than

service within the state, /d., slip op. at 23.'°

Since Velmohos has been decided and we have received

comments from the parties, we now turn to the issues

presented to this court. We conclude that the defendants

in both cases are subject to the New Jersey tolling pro-

vision and that the tolling provision does not violate the

fourteenth amendment of the United States constitution.

® Two justices dissented from the majority opinion in Velmohos.

They would have construed the tolling provision as inapplicable to

corporations which are amenable to long-arm jurisdiction, Conse-

quently, they did not reach the constitutional questions. See Vel-

mohos v. Marne Engineering Corp., supra (Sullivan, J. dissenting,

joined by Handler. J.)

10©The New Jerscy Supreme Court observed that, had the statute

been attacked under the New Jersey state constitution, its analysis

and result would have been no different. Velmohos, supra, slip op.

at 18-19 n.12,

The first step in our analysis of the merits of these ap-

peals has been facilitated, to a great extent, by the opin-

ion of the New Jersey Supreme Court in Velmohos, For

after Velmohos, a corporation whose only “presence”

in New Jersey is that it is amenable to the state’s long-

arm jurisdiction, clearly cannot argue that under the toll-

ing statute it is “represented” in New Jersey so as to

obtain the benefit of New Jersey’s limitations statute.’ In

Kelsey-llayes, this holding settles the statutory issue, en-

abling us to proceed directly to the constitutional question,

because Aelsey-Iayes, the corporate defendant in that

case, had no other “presence” in New Jersey apart from its

amenability to long-arm jurisdiction,

In Searle, however, the statutory issue has not been

completely resolved by Velmohos in light of the presence

of Searle’s detail-persons in New Jersey. The district

court in Searle ruled that the existence of these detail-

persons did not preclude the operation of the tolling stat-

ute, and Searle’s appeal from that ruling is the subject

of No, 79-2605. Although it has not expressly decided

the issue before us, we are convinced from the Velmohos

opinion, that the New Jersey Supreme Court would simi-

Many other state courts have construed their tolling provisions

differently, so that out-of-state defendants amenable to long-arm

jurisdiction would be exempt from the tolling rule. See generally

Annot., Tolling of Statute of Limitations During Absence from State

as Affected by Fact that Party Claiming Benefit of Limitations Re-

mained Subject to Service During Absence or Nonresidence, 55

A.L.R.3d 1158. As the Velmohos majority points out, however, those

cases involved different statutory language than the New Jersey tolling

provision, See Velmohos, supra slip op. 14 & 14n8

léa

Appendix A

larly conclude that Searle's detail-persons are not the

“representatives” contemplated within the tolling provi-

sion,

As previously indicated, in Velmohos, the New Jer-

sey Supreme Court emphasized that the language of the

tolling provision “must be interpreted from the intent of

the Legislature in light of the circumstances at the time

of enactment.” Velmohos, supra, slip op, at 15. At the

time the tolling provision was amended to refer to corpo-

rations which were “represented” in New Jersey, see note

5 supra, personal service upon minor functionaries such

as Searle's detail-persons would not have sufliced to ob-

tain jurisdiction over foreign corporations. Jn personam

jurisdiction over foreign corporations could only have

been obtained by service upon officers or duly appointed

agents of the company, See NwJ.S.A, §2:26-44 (repealed)

(quoted in note 6 supra); Porcelli vy. Great Atlantic &

Pacific Tea Co., 128 N.J.L. 608, 27 A2d 641 (Sup. Ct.

1941); cf. N.J. Ct. R. 4:4-4(¢) (1); Wright v. News Syndr-

cate Co., 35 N.J.Super. 1383, 118 A.2d 215 (1955) (service

on “any servant of the corporation” within New Jersey

appropriate under current rules), Thus, the New Jersey

legislature could not have intended that individuals such

as Searle’s detail-persons could obtain the benefits of the

limitations statutes for their companies, particularly since

the detail-persons had only a minimal affiliation with Searle

and could not, at the time tolling provision was enacted,

have subjected Searle to in personam jurisdiction in New

Jersey.

Moreover, it is significant, as the New Jersey Supreme

Court noted, see Velmohos, supra, slip op. at 15, that the

tolling provision speaks of individuals who “represent,”

17a

Appendix A

rather than just “act” for, the foreign corporation in New

Jersey. By contrast, the applicable court rules of service

speak only of “servants” who merely “act” in New Jer-

sey. See N.J. Ct.R. 4:4-4(¢)(1). It appears to us, there-

fore, that the statutory tolling provision contemplates a

much more significant corporate figure or presence—one

capable of “representing” the corporation—than does the

service rule. This higher standard which requires “repre-

sentation” in New Jersey before a foreign corporation can

receive the benefits of the limitations statutes, comports

with the original purpose of the tolling rule: to permit plain-

tiffs who have causes of action against foreign corporate

defendants which are not represented in New Jersey, to

maintain the viability of their actions despite the passage

of time. Moreover, this purpose is consistent and compat-

able with New Jersey’s policy of liberally construing limi-

tations statutes so as to preserve, whenever possible, a

plaintiff’s opportunity to litigate his claim on the merits.

See Velmohos, supra, Galligan vy. Westfield Centre Service,

Inc., 82 N.J. 188, 412 A.2d 122 (1980).

Therefore, in light of its own statutory analysis, we are

satisfied that the New Jersey Supreme Court, if faced

with this question, would hold that Searle’s detail-per-

sons do not constitute “representation” of Searle in New

Jersey, sufficient to provide New Jersey’s limitations pro-

tections to Searle. To the contrary, we are convinced

that the New Jersey Supreme Court would hold, and conse-

quently we hold, that Searle’s detail-persons do not exempt

it from the tolling provision. Accordingly, unless the toll-

ing provision is unconstitutional, and we conclude that

it is not, the limitations statute will not bar the plaintiffs’

claims against the defendants in both cases before us.

18a

Appendix A

Thus, there remains for consideration only the constitu-

tional challenges made here to the tolling provision. The

defendants concede that the tolling provision does not

implicate any fundamental interest or suspect classifica-

tion.’* In these circumstances, we ordinarily afford great

leeway to legislative judgments. As we recently stated:

12 Indeed, this concession would seem to be compelled by Cemp-

bell v. Holt, 115 U.S. 620 (1885) where the Supreme Court held

that repeal of a statute of limitations as to debts which had already

been barred did not implicate the fourteenth amendment rights of the

debtor. In reaffirming Campbell, some 60 years later, the Court,

speaking through Justice Jackson, stated:

Statutes of limitation find their justification in necessity

and convenience rather than in logic. They represent ex-

pedients, rather than principles. They are practical and prag-

matic devices to spare the courts from litigation of stale

claims, and the citizen from being put to his defense after

memories have faded, witnesses have died or disappeared, and

evidence has been lost. Order of Railroad Telegraphers v.

Railway Express Agency, 321 U.S. 342, 349. They are by

definition arbitrary, and their operation does net discriminate

between the just and the unjust claim, or the voidable and

unavoidable delay. They have come into the law not through

the judicial process but through legislation." They repre-

sent a public policy about the privilege to litigate. Their

shelter has never been regarded as what now is called a

“fundamental” right or what used to be called a “natural”

right of the individual. He may of course, have the protection

of the policy while it exists, but the history of pleas of limita-

tion shows them to be good only by legislative grace and to be

subject to a relatively large decree of legislative control.

Chase Securities Corp. v. Donaldson, 325 U.S. 304, 314 (1945)

(footnote omitted). Thus, it is clear that the defendants have no

“right” to protection of the statute of limitations. Their only claim

can be that the state legislature acted irrationally, under the circum-

stances, by denying them the benefit of the limitations statute.

19a

Appendix A

In reviewing a state statute or constitutional

provision under the due process or equal protection

clause, a court must determine if the provision ra-

tionally furthers any legitimate state objective.

“For these purposes, it is, of course, constitutionally

irrelevant whether this reasoning in fact underlay

the legislative decision. . . .” Flemming v. Nestor,

363 U.S. 603, 612 (1960). The court may even

hypothesize the motivations of the state legisla-

ture to find a legitimate objective promoted by the

provision under attack. See Weinberger v. Salfi,

422 U.S. 749, 780 (1975); Williamson v, Lee Optical

Ine., 348 U.S. 483, 487-90 (1955) ; Trafelet v. Thomp-

son, 594 F. 2d 623, 626 (7th Cir.), cert. denied, ——

US. , 48 U.S.L.W. 3239 (Oct. 1, 1979).

Malmed vy. Thornburgh, No. 79-2467, slip op. at 7, (3d

Cir. May 13, 1980) (Aldisert, J.) (emphasis in original).

Thus, the defendants challenging the constitutionality of

the tolling provision have the difficult burden of demon-

strating that the provision cannot “rationally further[ ]

any legitimate state objective.” Id.

In seeking to meet this burden, the defendants argue

that the tolling provision violates the constitution be-

cause it is overprotective.” They argue that the purpose

18\Vhen no fundamental interests or suspect classifications are

involved, both “underinclusive’ and “overinclusive’” statutes are

subjected to the same “minimum rationality” test. Nevertheless, it

has been argued that “overinclusive” or overprotective statutes

present even less need for judicial action than statutes which are

“underinclusive” in their regulatory sweep.

(Footnote continued on following page)

20a

Appendia A

of the tolling provision was to protect New Jersey plain-

tiffs who could not obtain in personam jurisdiction over

out-of-state defendants.* ‘lhe defendants contend that

the tolling provision is no longer relevant or needed

to promote this interest in cases where an out-of-state

corporate defendant is amenable to New Jersey’s long-

arm jurisdiction. In such cases, they contend the plain-

tiffs may assert their causes of action and serve their

complaints upon non-represented foreign corporate defend-

ants in the same fashion as they serve domestie corpora-

(Footnote continued from preceding page)

“Overinclusiveness,” a second variant of legislative ap-

proximation for which a classification may be overturned,'®

poses less danger than underinclusiveness, at least from the

viewpoint of political accountability, for overinclusiveness

does not exempt potentially powerful opponents from a law’s

reach.

L. Tribe, American Constitutional Law, 999 (1978). (Footnote

omitted).

4 Tn a technical sense, this appears to be an over-simplification.

In 1949, the tolling provision was amended to exempt foreign cor-

porations “represented in this state by any person or officer upon

whom summons ... may be served... .” Four years earlier, how-

ever, the Supreme Court had greatly expanded the states’ jurisdic-

tional powers over out-of-state defendants, permitting the state

courts to exercise in personam jurisdiction over out-of-state defend-

ants with “certain minimum contacts” with the forum state. /nter-

national Shoe Co. v. Washington, 326 U.S. 310 (1945). Thus,

at the time the tolling provision was last amended, New Jersey

plaintiffs could have constitutionally obtained service on foreign cor-

porations who did not have “representatives” in the state. The

New Jersey courts did not recognize the full expanse of long-arm

jurisdiction until much later, however. See Avdel Corp. v. Mecure,

58 N.J. 264, 277 A.2d 207 (1971) ; notes 6 and 7 supra.

2la

Appendiz A

tions or foreign corporations “represented” in New Jer-

sey. Thus, they claim that the extra protection provided

New Jersey plaintiffs by the tolling provision, is unneces-

sary and arbitrary in light of the original purpose of the

tolling provision. Being arbitrary, they contend the

statute is therefore unconstitutional.

The defendant’s argument overiooks the fact that the

tolling provision must be upheld if it “rationally furthers

any legitimate state objective,” without regard to whether

the legislature specifically focused on that objective. Mal-

med v. Thornburgh, supra. In this case, at least one such

legitimate objective is readily apparent: the tolling pro-

vision eases the burdens upon New Jersey plaintiffs prose-

cuting lawsuits against out-of-state defendant corporations

which are not represented in New Jersey and which, in a

great many instances, are difficult to locate and to serve,

despite the availability of the longarm rule. The New

Jersey Court Rules, by their very terms, make clear that

long-arm service may be utilized only as a last resort.

They provide that service may be made

[u] pon a domestic or foreign corporation, by serving

... either an officer, director, trustee, or managing

or general agent; or any person authorized by ap-

pointment or by law to receive service of process

on behalf of the corporation; or the person at the

registered office of the corporation in charge there-

of. If service cannot be made upon any of the fore-

going, then it may be made upon the person at the

place of business of the corporation in this State in

charge thereof, or if there is no place of business in

this State, then upon any servant of the corporation

within this State acting in the discharge of his

duties. Jf it appears by affidavit of plaintiff’s at-

22a

Appendia A

torney or of any person having knowledge of the

facts that after diligent inquiry and effort personal

service cannot be made upon any of the foregoing

and if the corporation is a foreign corporation, then,

consistent with due process of law, service may be

made by mailing, by registered or certified mail, re-

turn receipt requested, a copy of the summons and

complaint to a registered agent for service, or to its

principal place of business, or to its registered

office.

N.J. Ct.R. 4:4-4(c)(1) (emphasis added).

Moreover, Justice Pashman in writing for the New Jer-

sey Supreme Court in Velmohos emphasized the special

burdens which inhere in achieving long-arm service:

Under our rules, extra-territorial service is not sim-

ply an alternative to service within the State. Plain-

tiffs may not resort to out-of-state service unless

proper efforts to effect service in New Jersey have

failed. The rule imposes a further burden on a

plaintiff by requiring him to gather sufficient in-

formation to satisfy a court that service is “consist-

ent with due process of law.”

Velmohos, supra, slip op. at 23.

Since long-arm service is more difficult to achieve than

service within the state, it is not irrational for New Jersey

to distinguish between two classes of foreign corporations.

Those foreign corporations which are represented in New

Jersey, and are thus more readily available to plaintiffs,

are afforded limitations protections. On the other hand,

the limitations statutes are tolled against foreign corpora-

23a

Appendix A

tions which are not represented in New Jersey and thus

are not as available to New Jersey plaintiffs. This distine-

tion betwen represented and non-represented foreign cor-

porations reflects the pragmatic difficulties which may be

encountered by plaintiffs suing foreign corporations. Since

service of process under the long-arm statute is more diffi-

cult and time-consuming to achieve than service within the

state, and since out-of-state, non-represented corporate de-

fendants may be difficult to locate let alone serve, tolling

the statute of limitations protects New Jersey plaintiffs

and facilitates their lawsuits against such defendants.

Because the tolling provision fulfills the legitimate state

purpose of easing the special burdens of suits against non-

represented foreign corporations, we cannot say that the

distinction which it recognizes is irrational.”

In arguing against the constitutionality of the tolling

provision, the defendants attempt to distinguish between

the service of a complaint and the filing of a complaint. They

point out that, under New Jersey practice, a plaintiff can

as to exempt individuals who are subject to service of process in

the state, sce note 10 supra, no court, other than the district court in

Cohn v. Searle, supra, has concluded that such a result was man-

dated by the constitution. In fact, in Vaughn v. Deitz, 430 S.W.2d

487 (Sup. Ct. Tex. 1968), the Texas Supreme Court specifically

upheld the Texas tolling statute against a constitutional argument

identical to that raised here.

Moreover, in Bauserman v. Blunt, 147 U.S. 647 (1893), the Su-

preme Court gave effect to a Kansas statute which tolled the statute

of limitations in an action against an out-of-state defendant who was

nevertheless subject to service in the state. Although Bauserman

did not discuss the constitutional issue, the court implicitly recog-

nized the constitutionality of this type of tolling provision.

24a

Appendia A

file a “John Doe” complaint, and thereby stop the running

of the statute of limitations without having served the de-

fendant with process. See N.J. Ct.R, 4:4-1 (summons must

be served within 10 days of filing a complaint or action may

be dismissed on defendant’s motion). This procedure, they

argue, enables a plaintiff to preserve his complaint against

a statute of limitations defense, notwithstanding any later

difficulties encountered in serving process. Because of this

procedure, the defendants contend that the protection af-

forded by the tolling provision is superfluous and that the

tolling provision is thus arbitrary, irrational and, conse-

quently, unconstitutional.

We are not persuaded by the defendants’ argument, In

the first instance, the protection afforded plaintiff by the

“John Doe” procedure is imperfect, at best. Complaints

filed in this manner are subject to dismissal after six months

on the court’s own motion, unless the plaintiff, by proving

his diligence, can convince the court to retain the ease on

the docket. N.J.Ct.R. 1:13-7, We do not believe that, given

their crowded calendars, the state courts would permit a

“John Doe” complaint to remain on the docket for a lengthy

or indefinite period of time. Thus, the “John Doe” proced-

ure does not, in fact, afford New Jersey plaintiffs the same

protection as the tolling provision. Furthermore, the de-

fendants’ argument suffers from a more basie flaw. Even

if the tolling provision could be considered superfluous in

light of the “John Doe” procedure, this would not necessar-

ily lead to our holding that the tolling provision is arbitrary

or irrational. Nothing in law or logie prevents the New

Jersey legislature from providing New Jersey plaintiffs

with a mechanism for relief from the burdens of suits

against non-represented foreign corporations which is addi-

tional to any mechanism found in the Court Rules.

25a

Appendiz A

Accordingly, since we find that N.J.S.A. §2A :14-22 has a

rational foundation, and recognizing that rationality is the

test for both due process and equal protection challenges in

this context, see Malmed v. Thornburgh, supra, we reject

the defendants’ constitutional attacks on the statute.

III.

We therefore hold that the foreign corporate defendants

in these cases, not being represented in New Jersey, are

subject under New Jersey law to New Jersey’s tolling pro-

vision, which we hold to be constitutional. Thus, in these

cases, defendants may not claim the protection of the stat-

ute of limitations. In light of our conclusion, the interloeu-

tory order of the district court which denied summary judg-

ment in Hopkins v, Kelsey-Hayes, ut No. 79-1881, will be

affirmed, and the order of the district court in Cohn v. G. D.

Searle, at Nos. 79-2406 and 79-2605, entering judgment for

the defendant will be reversed. Each case will be remanded

to the particular district court for further proceedings.

Costs in each case will be taxed against the respective de-

fendant.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

26a

APPENDIX B

Judgment of the United States Court of Appeals

for the Third Circuit

UNITED STATES COURT OF APPEALS

For tue Tuirp Circuit

».

No. 79-1881

ROY HOPKINS

vs.

KELSEY-HAYES, INC.,

Appellant

(D. C. Civil No. 78-1646)

Nos. 79-2406 and 79-2605

SUSAN COHN and WALTER R. COHN, her husband,

Appellants in No. 79-2406

vs.

G. D. SEARLE & COMPANY,

Appellant in No. 79-2605

(D. C. Civil No. 74-0450)

On APPEAL FROM THE Unitep States Districr Court

FOR THE District or New JERSEY

27a

Appendix B

Present: Apams, Van Dusen and Gartu, Circuit Judges

JUDGMENT

These causes came on to be heard on the records from

the United States District Court for the District of New

Jersey and were argued by counsel on February 11, 1980.

On consideration whereof, it is now here ordered and

adjudged by this Court that the judgment of the said

District Court, filed April 27, 1979 and appealed at our

No. 79-1881, be, and the same is hereby affirmed, and the

judgment of the said District Court filed August 6, 1979

and appealed at our Nos. 79-2406 and 79-2005, be, and the

same is hereby reversed, and the causes are remanded to

the particular District Court for further proceedings eon-

sistent with the opinion of this Court. Costs in each case

are taxed against the respective defendant.

ATTEST:

Tomas Quinn

Clerk

July 23, 1980

28a

APPENDIX C

Opinion of the United States District Court for the District

of New Jersey Re: Cohn v. G. D. Searle & Company

UNITED STATES DISTRICT COURT

For rue District or New Jersey

Civ. A. No, 74-450

March 22, 1978

Susan Coun and Watrer Conn, her husband,

Plaintiffs,

Vv.

G. D. Searte & Company,

Defendant.

Walter R. Cohn, Newark, N. J., for plaintiffs.

Shanley & Fisher by Raymond M. Tierney, Jr., Robert L.

Dughi, Newark, N. J., for defendant.

OprInion

Meanor, District Judge.

This matter comes before the court on defendant’s mo-

tion for summary judgment. For reasons stated herein-

after, the issues presented by this motion will be treated

29a

Appendix C

in two stages. This first opinion is addressed to the ques-

tion whether the defendant is entitled to the benefit of the

statute of limitations. The resolution of the issue turns

on the construction and application of the New Jersey toll-

ing statute to a foreign unlicensed corporate defendant

which, from the time of the occurrence of the injury alleged

in the instant complaint, had no formal presence within

New Jersey yet remained amenable to long-arm service.

If it is determined that the defendant has available to it

the defense of the statute of limitations, then it will be

necessary to decide whether the plaintiffs are entitled to

the “discovery” exception to strict application of the stat-

ute.

Plaintiffs Susan and Walter Cohn have brought this suit

against G. D. Searle & Co. (hereinafter “Searle”), the

manufacturer of the oral contraceptive Enovid, for per-

sonal injury and per quod damages allegedly resulting

from Mrs. Cohn’s use of the drug. Mrs. Cohn commenced

taking the contraceptive in the spring of 1963 and con-

tinued its use until December 22, 1964. On that date she

suffered a stroke, or cerebral vascular accident (C.V.A.),

when a blood clot lodged in the circulatory system of her

brain. The C.V.A. required surgery, long hospitalziation

and rehabilitative therapy and resulted in permanent physi-

eal injury.

From the sparse information before me at this time it ap-

pears that in 1964 little or nothing was known about poten-

tial coagulant side effects of oral contraceptives. However,

from at least 1966 the medical literature and the lay press

increasingly reported work which sugzested a relationship

between oral contraceptives and abnormal blood clotting.

Sometimes between 1966 and late 1973 the Cohns became

30a

Appendix C

aware of the possible linke between Mrs. Cohn’s C.V.A. and

ingestion of Enovid. They initiated suit against Searle on

January 29, 1974. Their complaint, predicated on theories

of negligence, breach of warranty, statutory violations and

strict liability, was filed in the Superior Court of New Jer-

sey, Law Division, Bergen County. Service was effected on

Searle under the long-arm rule. On April 1, 1974 the case

was removed to this court pursuant to 28 U.S.C, § 1441.

Jurisdiction is vested under 28 U.S.C, § 1332.

At all times relevant to this action the plaintiffs have been

residents of New Jersey. Searle is a Delaware corporation

with its principal place of business in Liiinois. Prior to De-

cember 30, 1960 Searle was registered to do business in New

Jersey, but on that date it formally withdrew from the state.

However, from 1964 to 1974, the period between Mrs, Cohn’s

C.V.A. and the filing of the instant complaint, Searle re-

tained in its employ some four dozen persons known as

Medical Service Representatives or “detailmen” who

worked and, in most cases, resided in New Jersey. The func-

tion of these detailmen was to call on physicians to discuss

Searle’s pharmaceutical products.

Searle moves for summary judgment on grounds that

plaintiffs’ cause of action is time-barred undere the rele-

vant two-year statute of limitations, N.J.S.A. 2A:14-2

(1952). Searle acknowledges that plaintiffs may have some

relief from the strict two-year limit under the New Jersey

“discovery” rule. Fernandi v. Strully, 35 N.J. 434, 173 A.

1N.J.S.A. 2A:14-2 provides:

Every action at law for an injury to the person caused

by the wrongful act, neglect or default of any person within

his state shall be commenced within 2 years next after the

cause of any such action shall have accrued.

3la

Appendix C

2d 277 (1961); Lopez v. Swyer, 62 N.J. 267, 300 A.2d 563

(1973). Nevertheless, Searle asserts that the Cohns had

reason to know of the cause of action against Searle no la-

ter than 1970, and, therefore, their claims are precluded.

[1] Plaintiffs respond that their action is timely because

the causal relationship between contraceptives and clotting

was not definitively demonstrated until late 1973, and that

in any case the New Jersey tolling statute, N.J.S.A, 2A:

14-22 (1952),? deprives Searle of the statute of limitations

because Searle is a foreign corporation not represented with-

in the state by “any person or officer” upon whom process

2N.J.S.A. 2A:14-22 provides:

If any person against whom there is any of the causes

of action specified in sections 2A:14-1 to 2A:14-5 and

2A :14-8, or if any surety against whom there is a cause

of action specified in any of the sections of article 2 of this

chapter, is not a resident of this state when such cause of

action accrues, or removes from this state after the accrual

thereof and before the expiration of the times limited in

said sections, or if any corporation or corporate surety not

organized under the laws of this state, against whom there

is such a cause of action, is not represented in this state

by any person or officer upon whom summons or other

original process may be served, when such cause of action

accrues or at any time before the expiration of the times

so limited, the time or times during which such person or

surety is not residing within this state or such corporation

or corporate surety is not so represented within this state

shall not be computed as part of the periods of time within

which such an action is required to be commenced by the

section. The person entitled to any such action may com-

mence the same after the accrual of the cause thereof, within

the period of time limited thereof by said section, exclusive

of such time or times of nonresidence or nonrepresenta-

tion.

32a

Appendix C

could be served within the meaning of the tolling statute.

Searle retorts that the tolling statute is inapplicable be-

cause Searle was effectively represented within the state

by its detailmen, or alternatively, by virtue of the fact that

from the date of the C.V.A. onward it was subject to New

Jersey long-arm jurisdiction. Finally, if the tolling statute,

as interpreted by the New Jersey courts, is deemed to apply

to a foreign corporation amenable to long-arm service,

Searle asserts that the statute as applied violates the equal

protection and due process clauses of the United States

Constitution. Thus, the questions presented by this motion

are whether Searle is entitled to the benefit of the statute

of limitations, and if so, whether the plaintiffs’ action is

timely upon application of the “discover, ” rule even though

the instant complaint was filed over nine years after the in-

jury to Mrs. Cohn. I shall consider the statute of limita-

tions issue here. Because I find Searle is entitled to a stat-

ute of limitations defense, I must reach the second question,

but I leave it for another day.’

8 The parties are still negotiating over the terms of a submission,

if necessary, on the discovery issue. In the New Jersey courts

resolution of that issue would take place without a jury, Lofez

v. Swyer, supra, but here jury trial exists as a matter of right.

Goodman v. Mead Johnson & Co., 534 F.2d 566 (3d Cir. 1976).

I understand that the parties are willing to submit the discovery

question to me on the existing written record without an evidentiary

hearing and, of course, without jury trial. I am willing to accept

it on that basis. However, I am informed that the defendant seeks

to exact from the plaintiffs an agreement that any facts found

as a result of such a submission of the issue be reviewed on ap-

peal by the “clearly erroneous” standard of Rule 52{a), F.R.Civ.P.,

rather than to permit the Court of Appeals to review such fact

determinations without the constraints of the clearly erroneous

standard. See Government of Virgin Islands v. Gereau, 523 F.2d

140, 145-146 (3d Cir. 1975).

33a

Appendiz CU

[2-5] At the heart of the issue of whether Searle has a

statute of limitations defense is the construction and ap-

plication of the tolling statute. N.J.S.A. 2A :14-22 provides

in relevant part:

If any person against whom there is any of the

causes of action specified in section 2A :14-1-5 and 2A:

14-8... is not a resident of this state when such cause

of action accrues, or removes from this state after

the accrual thereof and before the expiration of the

times limited in said sections, or if any corporation

... not organized under the laws of this state, against

whom there is such a cause of action, is not repre-

sented in this state by any person or officer upon

whom summons or other original process may be

served, when such cause of action accrues or at any

time before the expiration of the times so limited,

the time or times during which such person... is not

residing within this state or such corporation ... is

not so represented within this state shall not be com-

puted as part of the periods of time within which such

an action is required to be commenced by the section.

The person entitled to any such action may com-

mence the same after the accrual of the cause there-

for, within the period of time limited therefor by

said section, exclusive of such time or times of non-

residence or nonrepresentation.

(Emphasis supplied.) The statute exempts from its effect

foreign corporations represented in the state by “any per-

son or officer” upon whom process may be served.

It is undisputed that Searle has had no statutory or ap-

pointed agent in New Jersey at any time from the date of

34a

Appendix C

Mrs. Cohn’s C.V.A, Nevertheless, Searle first argues that

it is within the foreign corporation exception because it was

represented by detailmen who are “persons or officers” with-

in the meaning of the tolling statute. The rules pertaining

to service on foreign corporations from the date of Mrs.

Cohn’s injuries are R.R. 4:4-4(d) (effective Sept. 3, 1958)

and its successor R. 4:4-4(c)(1) (effective Sept. 8, 1969)

(current version). Searle notes that under these rules jur-

isdiction may be obtained over a foreign corporation “by

serving... any servant of the corporation within this State

acting in the discharge of his duties.” Searle argues that

the tolling statute must be construed to be consistent with

the service rules during the time period relevant to this

action, and since personal jurisdiction could have been ob-

tained over Searle by serving a detailman in the discharge

of his duties, representation by detailmen during the period

was sufficient to stay the tolling of the statute of limita-

tions,

Searle’s argument is not persuasive for two reasons.

First, Searle’s proposed construction of the foreign cor-

poration exception to the tolling statute is inconsistent with

the manifest purpose of the statute itself. That enact-

ment was intended to protect plaintiffs in New Jersey

courts* by preserving their causes of action where ser-

*The courts of New Jersey have found that the tolling statute

operates to the benefit of residents and nonresident plaintiffs whose

causes of action have accrued within the state. Govan v. Trade

Bank & Trust Co., 109 N.J.Super. 271, 263 A.2d 146 (App.Div.

1970); Marsh v. Davis, 99 N.J.Super. 130, 238 A.2d 709 (Law

Div. 1968). However, in a subsequent opinion which failed to

mention Govan the Third Circuit has held that the tolling statute

protects only New Jersey residents. Zelson v. Thomforde, 428

F.2d 1360 (3d Cir. 1970).

Sha

Appendix C

vice could not be had upon a defendant on account of

absence from the state. Lemke vy. Bailey, 41 N.J. 295, 303,

196 A.2d 523 (1963) (Schettino, J., dissenting) ; Ferraro v.

Ferro Trucking Co., 72 N.J.Super. 519, 524, 179 A.2d 74

(Law Div. 1962). Searle’s detailmen operated out of their

homes because Searle had no office within this state. They

reported to Searle’s office in Skokie, Illinois. Their fune-

tion was to talk to New Jersey doctors about Searle’s

products to advertise them and generate good will for the

company. Searle does not assert that they had any power

to make contracts or place orders. Thus, the detailmen

had minimal association with Searle in the public eye and

had very limited authority to act on behalf of the com-

pany. It is inconceivable, in light of the purpose of the

tolling statute, that the legislature intended to give the

benefit of the statute of limitations to a foreign corporate

defendant whose only representation within the state was

by employees so invisible as these.

The second reason that Searle’s rationale is not convine-

ing is that it incorporates into the tolling statute changes

in the law which were made after the act’s passage. Nar-

rowly drawn statutory language must be interpreted from

the intent of the legislature in light of circumstances at the

time of enactment. 2A Sutherland, Statutory Construction

§ 49.02 (4th Ed. 1973). “A new meaning may not be given

the words of an old statute in consequence of changed con-

ditions probably not foreseen by the Legislature.” F'i-

delity & Deposit Co. of Maryland vy. Abaguale, 97 N.I.

Super. 132, 143-44, 284 A.2d 511, 518 (Law Div. 1967).

The present tolling statute has its origins in an enactment

of the Council and General Assembly of New Jersey on

February 21, 1820. The foreign corporations exception was

36a

Appendia C

added by amendment in 1949.5. The only legislative his-

tory relating to the 1949 amendment is the introduction

statement of the bill’s sponsor, Assemblyman Mackey,

which provides:

Foreign corporations licensed to do business in New

Jersey are now deprived by judicial construction of

the benefit of the Statute of Limitations. The pur-

pose of this bill is to correct that situation. New

York State found it necessary to make a similar

change in its laws in view of recent court decisions.

The import of this statement of legislative purpose is

far from unambiguous, but it sheds some illumination on

the phrase “any person or officer” as used in the tolling

statute.

An understanding of Mackey’s introductory statement

requires an analysis of the New York law to which it re-

fers. In 1949 New York’s tolling statute was C.I.A. § 19,

which had most recently been amended in 1943. Before

1943, § 19 had included an exception® fiem the tolling

5 Act of May 18, 1949, 1949 N.J.Laws, ch. 125 (amending N.J.R.S.

2:24-7 (1937); current version at N.J.S.A. 2A:14-22).

® Before 1943 C.P.A. § 19 provided in pertinent part:

But this section does not apply while a designation made

in pursuance of law of a resident of the state on whom a sum-

mons may be served for another person or corporation re-

mains in force. Nor does this section apply while a foreign

corporation has had or shall have one or more officers in the

state on whom a summons for such corporation may be

served,

N.Y.C.P.A. § 19 (1920), as amend by Act of Apr. 5, 1928, 1928

N.Y.Laws, ch. 809 (current version at N.Y.Civ.Prac.Law (McKin-

ney) § 207 (1972)).

37a

Appendix C

statute for persons or corporations with a designated agent

for the service of process and foreign corporations with

officers who might be served within the state. The 1943

amendment’ to § 19 enlarged the exception to inelude per-

sons or corporations with agents for service of process

designated by statute or appointment and foreign corpora-

tions with “officers or other persons” who might be served.

The revision notes appended to the amendment indicate

that the foreign corporation exception was broadened to

include persons besides officers who were servable pursu-

ant to C.P.A. § 229. At that time, C.P.A. § 229,° governing

7The amendment provided in pertinent part:

But this section does not apply in either of the follow-

ing cases:

1. while a designation or appointment, voluntary or in-

voluntary, made in pursuance of law, of a resident or

nonresident person, corporation, or private or public officer

on whom a summons may be served within the state for

another resident or nonresident person or corporation with

the same legal force and validity as if served personally

on such person or corporation within the state, remains

in force.

2. while a foreign corporation has had or shall have

one or more officers or other persons in the state on whom

a summons for such corporation may be served.

Act of Apr. 3, 1943, 1943 N.Y.Laws, ch. 263.

8C.P.A. § 229 at that time provided in pertinent part:

When any natural person or persons not residing in this

state shall engage in business in this state, in any action

against such person or persons arising out of such business,

the summons may be served by leaving a copy thereof with

the complaint with the person who, at the time of service,

is in charge of any business in which the defendant or de-

fendants are engaged within this state... ..

Act of Apr. 15, 1941, 1941 N.Y.Laws, ch. 455, amending N.Y.

C.P.A. § 229 (1920) (repealed 1962).

38a

Appendix C

service on nonresidents engaging in business in New York

State, permitted service on the person in charge of any

business in which the defendant was engaged within the

state. Interpreting the language of the 1943 amendment

to C.P.A. § 19 in light of C.P.A. § 229, it appears that at

most the amendment broadened New York’s foreign corpo-

ration exemption to include companies represented within

the state by statutory or appointed agents, oflicers or busi-

ness managers. Since the New Jersey Legislature in-

tended in 1949 to adopt a tolling exemption similar to New

York’s, the New Jersey Legislature could not have in-

tended that an employee with no managerial authority, such

as a detailman, could be a representative sufficient to bring

a foreign corporation out of the tolling statute.®

® Mackey’s introductory statement to the 1949 amendment to the

New Jersey tolling statute indicated that New York had amended

its tolling statute in a similar fashion in response to recent court

decisions. Research has disclosed no significant cases prior to 1943

regarding persons through whom a foreign corporation might be

served. However, section 1 of the 1943 amendment to C.P.A.

§ 19, n. 5 supra, was adopted specifically to alter the rule of Maguire

v. Yellow Taxicab Corp., 253 A.D. 249, 1 N.Y.S.2d 749, rehear-

ing denied, 253 A.D. 890, 2 N.Y.S.2d 1021, aff'd mem., 278 N.Y.

576, 16 N.E.2d 110 (1938), which held that amenability to process

through the Director of Motor Vehicles did not exempt a non-

resident defendant from the tolling statute. These facts suggest

that the New Jersey Legislature may well have intended that repre-

sentation by a statutory agent within the state would be sufficient

to satisfy the tolling statute’s foreign corporation exemption. See

Ferraro v. Ferro Trucking Co., 72 N.J.Super. 519, 179 A.2d 74

(Law Div. 1962). But see Whalen v. Young, 28 N.J.Super. 543,

101 A.2d 64 (Law Div. 1953), reversed on other grounds, 15 N.J.

321, 104 A.2d 678 (1954); Lackovic v. New England Paper Tube

Co., Inc., 127 N.J.Super. 394, 317 A.2d 426 (Law Div. 1974).

Cf. Lemke v. Bailey, supra.

39a

Appendix CU

This conclusion is strengthened by reference to the law

in New Jersey regarding service on foreign corporations

at the time of enactment of the New Jersey foreign cor-

poration exemption. In 1948, a year before the tolling

statute amendment, the legislature amended N.J.R.S, 2:26-

43 and 44'° providing for service on corporations. Those

amendments permitted acquisition of personal jurisdiction

over foreign corporations by service on an oflicer, director,

trustee, managing or general agent or agent by appoint-

ment or by law for the service of process. A detailman

with minimal agency powers could not be considered a

1°The 1948 amendment to N.J.R.S. 2:26-43 and 44 (1937)

(repealed 1951) provided:

2:26-43. Domestic corporations in personal actions; per-

sonal or substituted service of summons.

Service of a summons in a civil action commenced against

a domestic corporation in any of the courts of this State

may be made by delivering a copy thereof to an officer, di-

rector, trustee or a managing or general agent of the cor-

poration personally, or by leaving a copy thereof at his dwell-

ing house or usual place of abode with some competent

member of his family of the age of fourteen years or over

then residing therein, or by delivering a copy thereof to any

person authorized by appointment or by law to receive serv-

ice of process on behalf of the corporation, or by leaving

a copy thereof at the registered office of the corporation

with any person in charge thereof.

2:26-44. Foreign corporations.

Service of a summons in a civil action commenced against

a foreign corporation may be made in the same manner

as is provided in section 2:26-43 of the Revised Statutes

for service of summons upon a domestic corporation.

Act of Sept. 10, 1948, 1948 N.J.Laws, ch. 356,

40a

Appendix C

managing or general agent, nor any other individual with-

in the statutory list. Since in 1949 personal jurisdiction

over a foreign corporation could not have been obtained

by serving a detailman, the legislature could not have

intended an exemption from the tolling provision for an

entity represented by snch an employee. Searle urges

that N.J.S.A. 2A :14-22 be interpreted as consistent with

the rule regarding service of process at the time of plain-

tiff’s injury. Such an approach would be inappropriate,

however, since the reach of service was substantially

expanded in 1953, Wright v. News Syndicate Co., Inc., 35

N.J. Super. 133, 135, 1138 A.2d 215 (Law Div. 1955), a

change which the legislature could not have anticipated

in 1949,

[6, 7] Searle next takes the position that because Searle

was at all times relevant to the instant complaint amenable

to long-arm service," it was represented within the state

within the meaning of the tolling statute. The effect of

amenability to long-arm jurisdiction on N.J.S.A, 2A:14-22

is a novel question heretofore not considered by the courts.

A number of courts have considered the construction

of the New Jersey tolling provisions in light of a defend-

ant’s amenability to service through the Director of Motor

Vehicles under the nonresident motorist statute, N.J.S.A.

11 New Jersey does not have a long-arm statute under the New

Jersey Constitution of 1947, the Supreme Court has exclusive rule-

making power over practice, procedure and administration of the

courts. Winbery v. Salisbury, 5 N.J. 240, 74 A.2d 406 (1950),

From 1963 to 1974, long-arm service was available over Searle pur-

suant to the court rules. R.R. 4:4-4(d) (effective Sept. 3, 1958) ;

R. 4:4-4(c) (1) (effective Sept. 8, 1969) (current version).

4la

Appendix C

39:7-2 (1973)."* In the leading case, Lemke v. Bailey,

supra, the New Jersey Supreme Court held that the tolling

statute deprived a nonresident individual defendant of the

benefit of the statute of limitations even though the de-

fendant had been subject to service pursuant to N.J.S.A.

39:7-2. Searle argues that Lemke should not be considered

controlling here because the Supreme Court specifically

reserved the question of the effect of availability of sub-

stituted service upon a corporate defendant, and, in any

case, there the court relied heavily on legislative acquies-

cence in, and plaintiffs’ reliance on, prior court inter-

pretation of the relationship between 2A :14-22 and 39:7-

22 and 39:7-2, which consideration would be irrelevant to

the novel question here presented. Plaintiffs urge that

Lemke should be read broadly to hold that the statute of

limitations does not run against a nonresident individual,

and that Lemke binds the court here because there is no

reason to treat individual and corporate defendants dif-

ferently.”

12 Holding that amenability to service through the Director of Mo-

tor Vehicles does not entitle a nonresident defendant to the benefit

of the statute of limitations are Gotheiner v. Lenihan, 20 N.J.Mise.

119, 25 A.2d 430 (Sup.Ct. 1942); Whalen v. Young, 28 N.J.Super.

543, 101 A.2d 64 (Law Div. 1953), rev'd on other grounds, 15 N.J.

321, 104 A.2d 678 (1954); Lemke v. Bailey, supra; Lackovie v. New

England Paper Tube Co., 127 N.J.Super. 394, 317 A.2d 426 (Law

Div. 1974); Blackmon v. Govern, 138 F.Supp. 884 (D.N.J. 1956).

Contra, Ferraro v. Ferro Trucking Co., supra.

13 Plaintiffs cite two cases for the proposition that the tolling

statute deprives a nonresident defendant of a statute of limitations

defense despite amenability to substituted service. Kenny v. Duro-

(Footnote continued on following page)

42a

Appendix C

(Footnote continued from preceding page)

Test Corp., 91 F.Supp. 633 (D.N.J. 1950); Mann v. Morristown

Memorial Hospital, Civ. No. L-23529-64 (N.J.Super., Law Div.,

filed Aug. 6, 1965, dismissed by consent Mar. 6, 1968). Neither

case supports plaintiffs’ argument. Kenny held that under the

tolling statute a foreign licensed corporation could not plead the

statute of limitations despite the fact that it was servable within

the state. However, the court indicated that the 1949 foreign cor-

poration exemption was only prospective in effect and therefore

inapplicable to that case. Jd. at 635-36.

On the other hand, the facts in Mann do not support the read-

ing that plaintiffs give to its result. \/ann was a malpractice ac-

tion against a hospital and two doctors. The plaintiff was treated

by the defendants until June 1963, when his cause of action ac-

crued, Tortorello v. Reinfeld, 6 N.J. 58, 66, 77 A.2d 240 (1950).

He filed his complaint on Aug. 6, 1965. Summary judgment was

granted to two defendants on statute of limitation grounds, but

denied as to Dr. Matthews, who had moved from New Jersey in

August 1963 and been served under the long-arm rule. Plaintiffs

herein assert that Matthews had been subject to long-arm service

from the time of his departure, and, therefore, the denial of his

motion for summary judgment represents a holding that the tolling

statute always applies to a nonresident defendant despite amena-

bility to sustituted service.

However, long-arm jurisdiction was not available against indi-

vidual defendants until January 1964, R.R. 4:4-4(j) (effective

Jan. 2, 1964) (current version at R. 4:4-4(e)). Assuming that

the limitations period would ordinarily run during periods of ab-

sence when subject to substituted service, the statute ran against

Matthews for two months in 1963 and then re-commenced to run

in January 1964, By that calculation, the complaint was filed only

some seven months into the limitations period, and the action was

timely without the aid of the tolling statute. Thus, the disposi-

tion of Matthews’ summary judgment motion does not reflect

on the relationship between the tolling statute and substituted

service,

43a

Appendix C

Amenability to long-arm service cannot be deemed to con-

stitute representation within the state for the very same

reason that the foreign corporation exemption is not trig-

gered by he presence within the state of servants acting in

the discharge of their duties. The narrow foreign corpora-

tion exception must be construed in light of legislative in-

tent at the time of enactment. The tolling statute exemp-

ion was adopted in 1949. Although the Supreme Court had

held four years earlier that the reach of state process could

contitutionally extend beyond the territorial boundaries of

a state, International Shoe Co, y. State of Washington, 326

U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), long-arm service

was not adopted in New Jersey until 1958." Further, the

New Jersey courts have tended to construe the tolling stat-

ute narrowly so as not to incorporate subsequent broaden-

ing of the service laws. See, n. 12, supra. One court has

held in the context of an individual defendant that amen-

ability to long-arm service does not satisfy the tolling stat-

ute, Fidelity & Deposit Co. of Maryland y, Abagnale,

supra, 97 N.J.Super. at 144, 234 A.2d 511. For these rea-

sons, the foreign corporation section of the tolling statute

cannot be construed to encompass extraterritorial service

unknown to the legislature at the time of enactment and not

within the intendment and scope of the statutory language.”

™Long-arm service over corporations was adopted in 1958,

R.R. 4:4-4(d) (effective Sept. 3, 1958). It was extended to in-

dividuals in 1964, R.R. 4:4-4(j) (effective Jan. 2, 1964),

1 Searle has relied on cases construing the Ohio and Idaho

tolling statutes to be inapplicable to foreign corporations subject

to long-arm jurisdiction, Pertis vy. Miller Equipment Co., 324

F.Supp. 898 (N.D.Ohio 1970); Lipe v. Javelin Tire Co., Ine.

96 Idaho 723, 536 P.2d 291 (1975). The tolling statutes in those

states provide for tolling when a person is “absent from the state.”

Such general language lends itself to a broader interpretation than

the more restrictive wording of the New Jersey statute.

dia

Appendix C

[8,9] Finally, Searle argues that if the New Jersey toll-

ing statute acts to deny the statute of limitations to a for-

eign corporation subject to long-arm jurisdiction, that stat-

ute violates the equal protection clause of the United States

Constitution.” This, toc, is an issue of first impression.

Searle’s position is that a statutory classification must bear

a rational relationship to the purpose of the enactment to

withstand an equal protection challenge. Where an out- of-

state defendant is amenable to process, Searle argues that

the purpose of the tolling statute is satisfied, and there is

no reason to deny such a defendant the statute of limita-

tions. While conceding that Searle is correct as to the equal

protection standard, plaintiffs reply that the classification

here under attack is rational because one of the purposes

of the tolling statute is to penalize foreign unlicensed cor-

porations by denying them repose to encourage domesti-

cation.”

Searle also makes a due process argument. Because of my

holding on the equal protection question, I need not reach Searle’s

due process claim.

17 Plaintiffs’ position that the tolling statute was intended as

a penalty to induce licensure is flawed. N.J.S.A. 14A;:13-3(1)

(1969) provides that a foreign corporation has no right to trans-

act business within New Jersey without obtaining a certificate of

authority from the Secretary of State. Where corporate activities

do not meet the standard of “transacting business,” registration

is not required. See N.J.S.A. 14A:13-3(2); N.J.S.A. 14A:13-11

(1969); Meterials Research Corp. v. Metron, 64 N.J. 74, 312

A.2d 147 (1973); United States Time Corp. v. Grand Union Co.,

64 N.J.Super. 39, 165 A.2d 310 (Ch.Div. 1960). Assuming, ar-

guendo, that the tolling statute was intended to impose a penalty

(Footnote continued on following page)

45a

Appendix C

The thrust of the equal protection clause is the pro-

eription of arbitrary discrimination between persons simi-

larly situated. Schmidt v. Board of Adjustment of City

of Newark, 9 N.J. 405, 88 A.2d 607 (1952). As more fully

stated by the Supreme Court,

the Fourteenth Amendment does not deny to the

States the power to treat different classes of per-

sons in different ways. Barbier v. Connolly, 113

U.S. 27, 5 S.Ct. 357, 28 L.Ed. 923 (1885), Lindsley v.

Natural Carbonic Gas Co., 220 U.S. 61, 31 S.Ct. 337,

55 L.Ed. 369 (1911); Railway Express Agency v.

New York, 336 U.S. 106, 69 S.Ct. 468, 93 L.Ed, 533

(Footnote continued from preceding page)

on unlicensed foreign corporations, such a penalty would fall with

equal weight on all foreign corporate defendants without repre-

sentation by persons or officers, irrespective of the nature of their

New Jersey activities. Lecause the standard of state contacts

sufficient for long-arm jurisdiction is substantially lower than that

for “transacting business,” Materials Research Corp. v. Metron,

supra, 64 N.J. at 84, 312 A.2d 147, the sanction of the tolling

statute would be imposed on corporations which would not be re-

quired to register under N.J.S.A. 14A:13-3. While there may

be some justification for denying the statute of limitations to cor-

porations transacting business without registration, the tolling sta-

tute would reach a far greater class of corporate defendants and,

as construed by plaintiffs, that statute would itself effect an irra-

tional classification. Further, since state licensure may not be re-

quired of a foreign corporation which is involved in the state

solely in interstate commerce, Eli Lilly & Co. v. Sav-On Drugs,

Inc., 366 U.S. 276, 278 & n. 7, 81 S.Ct. 1316, 6 L.Ed.2d 288

(1961), plaintiffs’ reading of the tolling statute would run afoul

of the commerce clause. I am aware of no provision imposing

penalties for transacting business without a license other than

N.J.S.A. 14A:13-11.

46a

Appendix C

(1949) ; McDonald v. Board of Election Commission-

ers, 394 U.S. 802, 89 S.Ct. 1404, 22 L.Ed.2d 739 (1969).

The Equal Protection Clause of that amendment does,

however, deny to States the power to legislate that

different treatment be accorded to persons placed by

a statute into different classes on the basis of eri-

teria wholly unrelated to the objective of that stat-

ute. A classification “must be reasonable, not arbi-

trary, and must rest upon some ground of difference

having a fair and substantial relation to the object of

the legislation so that all persons similarly cireum-

stanced shall be treated alike.” Royster Guano Co.

v. Virginia, 253 U.S. 412, 40 S.Ct. 560, 64 L.Ed. 989

(1920).

Reed v. Reed, 404 U.S. 71, 75-76, 92 S.Ct. 251, 253, 30 L.Ed.

2d 225 (1971). Accord, N.J. Restaurant Association v.

Holderman, 24 N.J. 295, 131 A.2d 773 (1957).

As indicated, the purpose of the tolling statute is to pre-

serve a plaintiff’s cause of action where service cannot be

effected upon the defendant on account of nonamenability

to process. Lemke v. Bailey, supra (Schettino, J., dis-

senting); Ferraro v. Ferro Trucking Co., supra, Nothing

in the legislative history or court construction of N.J.S.A.

2A :14-22 supports plaintiffs’ assertion that a purpose of

the statute is to penalize foreign unlicensed corporations to

encourage licensure.”*

18 While the sponsor’s statement regarding the 1949 amend-

ment indicated that the legislature intended to give the benefit of

the statute of limitations to foreign licensed corporations, the lan-

guage of the amendment is not so narrowly phrased as to deny

unlicensed corporations a statute of limitations defense.

47a

Appendia C

The effect of the foreign corporation section of the toll-

ing statute is to distinguish between domestic and foreign

corporations subject to service through representative

agents within the state and foreign corporations subject to

service under the long-arm rule. The former are entitled

to plead the statute of limitations while the latter are de-

nied its reprose. Since this difference in treatment bears

no rational relationship to the object of the tolling statute,

I find that the statute denies equal protection to foreign cor-

porations amenable to long-arm jurisdiction.” Cf. Lemke

v. Bailey, supra 41 N.J. at 305-06, 196 A.2d 523 (Schettino,

J., dissenting).

” While this holding is limited to corporate defendants, indi-

viduals are subject to long-arm jurisdiction in New Jersey, R.4:4-4

(ec), and I agree with plaintiffs that “[t]here is no logical reason

to treat corporate and individual defendants in a different manner.”

Lackovic v. New England Paper Tube Co., Inc., supra, 127 N.J.

Super. at 398, 317 A.2d at 429. One court has held that it does

not deny equal protection of the laws to apply a tolling statute

to an individual defendant subject to substituted service pursuant

to a nonresident motorist statute because of the latter statute’s

requirement of actual notice to the defendant for a personal judg-

ment and the difficulty of locating an individual in another state.

Vaugn v. Deitz, 430 S.W.2d 487 (Tex.1968). However, the bur-

dens on plaintiffs found so onerous by that court are minimized

in New Jersey practice. In New Jersey, an action is commenced

by filing a complaint with the court, R. 4:2-2, and a summons

is to be issued and served 10 days thereafter. R. 4:4-1. How-

ever, liberal relief is granted from the 10-day service rule where

the plaintiff uses due diligence to find the defendant. See Cooke

v. Yarrington, 62 N.J. 123, 299 A.2d 400 (1973); X-L Liquors,

Inc. v. Taylor, 17 N.J. 444, 454, 111 A.2d 753 (1955). Thus,

there is no prejudice to plaintiffs in requiring them to file a com-

plaint within the limitations period where their cause of action

will be preserved so long as they make reasonable efforts to find

the defendant.

48a

Appendix C

One who by law is subject to a state’s jurisdiction is ef-

fectively present and represented within that state. //ur-

witch v. Adams, 151 A.2d 286 (Del.Super.Ct.), aff’d 52 Del.

247, 155 A.2d 591 (1959); Bolduc v. Richards, 101 N.H. 303,

142 A.2d 156 (1958); Snyder v. Clune, 15 Utah 2d 254, 390

P.2d 915 (1964). Where the long-arm rule places an out-

of-state defendant on an equal footing with a resident or

represented one, there is no rational justification for differ-

ential treatment of such defendants with regard to the stat-

ute of limitations, While the tolling statue made eminent

good sense in the days of territorial restrictions on service,

it has become dated in the instant context by modern

changes in the law of in personam jurisdiction. The in-

firmity which the statute has developed in the course of the

aging process is over-permissiveness: until today it allowed

a plaintiff to postpone indefinitely the assertion of his cause

of action even though the defendant was subject to service.

As a matter of fair judicial administration, where a de-

fendant may be brought before the courts, he should be per-

mitted to assert the statute of limitations to implement the

important policies behind that statute to spare defendants

from being put to a defense after evidence is lost, memories

have faded and witnesses have died or disappeared and to

deliver the courts from the litigation of stale and possibly

fraudulent claims. Union City Housing Authority v. Com-

monwealth Trust Co., 25 N.J. 330, 335, 136 A.2d 401 (1957).

The instant holding brings New Jersey law” into conform-

20T express no view on the rule of Lemke v. Bailey, supra, but

note that any defendant subject to service under the New Jersey

nonresident motorist statute, N.J.S.A. 39:7-2, is also amenable

to long-arm jurisdiction.

49a

Appendiz C

ity with the rule in the majority of the states** that amena-

bility to process by substituted or long-arm service renders

the tolling statute inapplicable.

In light of the above result, it will become necessary to

resolve the second issue tendered by the motion of defendant

for summary judgment—whether plaintiffs are entitled to

the benefit of the “discovery” rule in bar of the statute of

limitations. There will be no necessity to enter an order on

the motion until that question is resolved.

21 Of the 42 states which have considered the question, 38 take

the majority position. See 94 A.L.R. 485 (1935); 119 A.L.R.

859 (1939); 17 A.L.R.2d 502 (1951); 55 A.L.R.3d 1158 (1974).

Contra:

New Jersey:

Lemke v. Bailey, 41 N.J. 295, 196 A.2d 523 (1963).

Ohio:

Couts v. Rose, 152 Ohio St. 458, 90 N.E.2d 139 (1950).

However, the Ohio courts have taken a different approach

to corporations. Sce Partis v. Miller Equipment Co., 324

F.Supp. 898 (N.D.Ohio 1970), aff'd, 439 F.2d 262 (6th

Cir. 1971).

S. Carolina:

Macri v. Flaherty, 115 F.Supp. 739 (E.D.S.C. 1953).

Texas;

Dietz v. Vaughn, 423 S.W.2d 113 (Civ.App. 1967), aff'd,

430 S.W.2d 487 (Tex. 1968).

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.