Opposition Brief — Juzwin v. Asbestos Corp.
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IN THE
Supreme Court of the United States
OCTOBER TERM, 1990
>
STEPHEN JUZWIN, ef ux.,
Petitioners,
_V—
ASBESTOS CORPORATION, LTD., efc., et al.,
Respondents.
ON PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
SEE nRIEE — LL
a aca
BRIEF IN OPPOSITION FOR RESPONDENT
CAREY CANADA, INC.
ANDREW T. BERRY
Counsel of Record
KEVIN J. CONNELL
MCCARTER & ENGLISH
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
(201) 622-4444
Attorneys for Respondent
Carey Canada, Inc.
i
PARTIES TO THE PROCEEDING
AND RULE 29.1 STATEMENT
The parties to the proceeding below included:
1) Carey Canada, Inc. (defendant-appellant below)
[incorrectly listed in the petition as ‘‘Carey Cana-
dian Mines];
2) Stephen Juzwin and Mary Juzwin, his wife
(plaintiffs-appellees below);
3) The State of New Jersey (intervenor below);
4) Amtorg Trading Corp. (defendant-appellee below);
5) Asbestos Corp., Ltd. (defendant-appellee below);
6) Bell Asbestos Mines, Ltd. (defendant-appellee
below);
7) Flintkote Mines, Ltd. (defendant-appellee below);
8) Metropolitan Life Insurance Co. (defendant-appellee
below);
9) Leonard J. Buck, Inc. (third-party defendant-
appellee below).
10) Wilentz, Goldman & Spitzer, P.C. (counsel for ami-
cus curiae below).
Four corporations lis*2d in the petition were parties to the
proceedings in the district court, but were not parties to the
proceedings in the court of appeals: a) Turner & Newall,
P.L.C. (third-party defendant), b) National Gypsum Co.
(third-party defendant), c) Lac D’Amiante du Quebec Limitee
(defendant), d) Associated Ore & Metal Corp., Ltd. (fourth-
party defendant).
Pursuant to Rule 29.1 respondent Carey Canada, Inc.
states that its parent company is The Celotex Corporation.
(The Celotex Corporation’s parent is Jim Walter Corpora-
tion). Respondent has no affiliates or other than wholly
owned subsidiaries.
TABLE OF CONTENTS
PAGE
PARTIES TO THE PROCEEDING AND RULE 29.1
A in occ cae ncdundceue eee i
TADLE OP AATTURIITIOE «<< ccs éccedccscnaeess iii
I od ci vaceae ee 1
COUNTERSTATEMENT OF THE CASE........... 2
A. POURRERETY DROUIN oo nnn cc cesaseicccscecs 2
De ee oo 6a ko 66o kos ee hee ee 3
REASONS FOR DENYING THE WRIT
I. THE DECISION OF THE THIRD CIRCUIT
DOES NOT CONFLICT WITH THE LAW
OF NEW JERSEY AND THE NEW JERSEY
APPELLATE COURTS ARE CURRENTLY
CONSIDERING WHETHER TO FOLLOW
TERRE DB ccs cncnaceceecinessseas 6
A. New Jersey Law Does Not Provide for the
‘Saving Construction’’ of the Tolling Stat-
ute Urged by Petitioners .........cccee0. 6
B. The New Jersey Superior Court, Appellate
Division is Currently Reviewing the Com-
merce Clause Issue Decided by the Third
eo ee ia bed on beeke eke 10
C. The Third Circuit Utilized Petitioners’
‘‘Saving Construction’ in Striking the
Tolling Statute on Commerce Clause
COORG 6.045 nsteeudakdanneeeeaseeeee 12
—
II.
Ill.
IV.
THE THIRD CIRCUIT’S DECISION STRIK-
ING THE NEW JERSEY TOLLING STAT-
UTE UNDER THE INTERSTATE COM-
MERCE CLAUSE IS ENTIRELY CONSIS-
TENT WITH THIS COURT’S PRECE-
A. Heightened Interstate Commerce Clause
Scrutiny is the Appropriate Standard of
Review for the Tolling Provision at Bar..
B. The Tolling Provision at Bar Cannot Sur-
vive Scrutiny Under the Interstate Com-
merce Clause Balancing Test ............
C. The Existence of a Commerce Clause Vio-
lation is Not Dependent Upon a Finding
That a State’s Enactment Confers Com-
petitive Advantages Upon its Residents...
EVEN IF THE THIRD CIRCUIT USED AN
INAPPROPRIATE STANDARD OF INTER-
STATE COMMERCE CLAUSE REVIEW,
THE DECISION BELOW STRIKING THE
NEW JERSEY TOLLING STATUTE IS
WARRANTED UNDER THE STANDARD
OF SCRUTINY APPLICABLE TO REGU-
LATIONS BURDENING INTERNATIONAL
DE CEGAG5 Gs 0866066000reencccces
RETROACTIVE APPLICATION OF THE
THIRD CIRCUIT’S DECISION STRIKING
THE NEW JERSEY TOLLING STATUTE
ON COMMERCE CLAUSE GROUNDS
CONSTITUTES A PROPER APPI ICATION
OF THIS COURT’S PRECEDENTS. ........
ETT TEE Ee
PAGE
14
14
18
21
22
24
30
iv
TABLE OF AUTHORITIES
Cases: PAGE
Allied Signal, Inc. v. Purex Industries, Inc., 242 N.J.
Super. 362, 576 A.2d 942 (N.J. Super. Ct. App. Div.
Anderson v. Owens-Corning Fiberglas Corp., No.
W-012500-89 (N.J. Super. Ct. Law Div. Middlesex
PPT PTTeT CTT TT TTT TOTTI TT TTT TT eT Tee 12
Armenti v. Carey Canada, Inc., No. L-045449-87 (N.J.
Super Ct. Law Div. Middlesex County), aff’d with-
out opinion, No. 177-88T3F (N.J. Super. Ct. App.
Div. order filed November 7, 1988) ............. 6, 7, 10
Badaracco v. Commissioner, 464 U.S. 386 (1984) .... 8
Bendix Autolite Corp. v. Midwesco Enterprises, Inc.,
486 U.S. 888, 108 S. Ct. 2218 (1988) ....7, 8, 13, passim
Board of Trustees of the Univ. of Illinois v. United
NE, See Meats ee CD 6 ha Nek ad ean wcescddesaces 22
Burnham v. Superior Court of California, County of
ee, Re es ks nS oan daca dcascedwses 9
Chevron Oil Co. v. Huson, 404 U.S. 97 (1971)..... 24, 25,
Cohn v. G.D. Searle & Co., 784 F.2d 460 (3d Cir.),
cert. denied, 479 U.S. 883 (1986) ...........ceeoe 27, 28
Cohn v. G.D. Searle & Co., 447 F. Supp. 903 (D.N.J.
1978), rev’d sub nom., Hopkins v. Kelsey-Hayes,
Inc., 628 F.2d 801 (3d Cir. 1980), vacated and
remanded, 455 U.S. 404 (1982), remanded sub nom.,
Hopkins v. Kelsey-Hayes, Inc., 677 F.2d 301 (3d Cir
1982), on remand, 598 F. Supp. 965 (D.N.J. 1984),
reversed in part and remanded, 784 F.2d 460 (3d
Cir.), cert. denied, 479 U.S. 883 (1986)........ 7, 17, 18,
19, passim
—
PAGE
Coons v. American Honda Motor Co., 94 N.J. 307,
463 A.2d 921 (1983) (‘‘Coons I’’), modified, 96 N.J.
419, 476 A.2d 763 (1984) (‘‘Coons II’’), cert. denied,
et Gs Ee EE 66 669.6 6:000-0000c0006e0K805 3, 27, 28
Coons v. American Honda Motor Co., 96 N.J. 419,
476 A.2d 763 (1984) (‘‘Coons II’’), cert. denied, 469
ft FF rr eer re 3
Coons v. Honda Motor Co., 176 N.J. Super. 575,- 424
A.2d 446 (App. Div. 1980), vacated, 455 U.S. 996
ee Pee ee re ee ee ee 26, 27
Crespo v. Stapf, 242 N.J. Super. 254, 576 A.2d 346
CR.t. SR: SA, I Te Te nok ccna ceneesas 15, 16
Cutler v. Raymark Industries, Inc., 707 F. Supp. 168
(D.N.J. 1989), overruled, Juzwin v. Asbestos Corp.,
E5G., GED Fue Ge Cee Gls, BHD bc kee wccnenciens 6
DiFalco v. Subaru of America, Inc., No. W-019907-88
(N.J. Super. Ct. Law Div. Passaic County), motion
for leave to appeal granted, Motion No. M-6197-89,
Docket No. A-6247-89T3F (N.J. Super Ct. App.
ee Se ee 5. 6 b'o 6e 000 0508 506008 11
Duke Power v. Carolina Environmental Study Group,
i Se Se TD 6 6 6 656605 06 Keehn ce cawean 20
Eli Lilly & Co. v. Sav-On-Drugs, Inc., 366 U.S. 276
SEP soc ku os cunssteeaccauansdackscauayecssevess 17
Ford Motor Co. v. Insurance Comm’r of Pa., 874 F.2d
926 (3d Cir.), cert. denied sub nom., United Service
Auto. Ass’n v. Foster, 110 S. Ct. 4i8 (1989) ...... 18
Great Western United Corp. v. Kidwell, 577 F.2d 256
(Sth Cir. 1978), rev’d 443 U.S. 182 (1979)......... 20
Harmon yv. Phillips Petroleum Co., 555 F. Supp. 447
ek Sn MOE na sec eece kas esau nekedunueeaedens 8
ii eee
vi
PAGE
Honda Motor Co. v. Coons, 455 U.S. 996 (1982).... 27
Hopkins v. Kelsey-Hayes, Inc., 628 F.2d 801 (3d Cir.
1980), vacated and remanded, 455 U.S. 984 (1982),
remanded, 677 F.2d 301 (3d Cir. 1982)........ 19, 20, 26
Hughes v. Oklahoma, 441 U.S. 322 (1979) .......... 15
Japan Line, Ltd. v. County of Los Angeles, 441 U.S.
a ee ee ne a ere 23
Juzwin v. Asbestos Curp., Ltd., 900 F.2d 686 (3d Cir.
errr rer rr TTT PT TET TET TT eee 1, 3, passim
Juzwin v. Amtorg Trading Corp., No. 87-3876, slip
op. (D.N.J. opinion filed February 28, 1989), rev'd,
og = — fF: Ce Ae RAITT IT TTT Tree l
Juzwin v. Amtorg Trading Corp., 705 F. Supp. 1053
(D.N.J. 1989), vacated on reconsideration, 718 F.
BS BAD CN Rs NOEs ccc ccccstevescscenteces 2
Lemke v. Bailey, 41 N.J. 295, 196 A.2d 523 (1963) .. 26
Lemon v. Kurtzman, 411 U.S. 192 (1973) (‘‘Lemon
PL en, SARE ig a a ey ear 24, 25
Leogrande v. Keene Corp., No. W-026197-87 (N.J.
Super. Ct. Law Div. Middlesex County)........... 12
Maine v. Taylor, 477 U.S. 131 (1986)............... 15
Materials Research Corp. v. Metron, Inc., 64 N.J. 74,
i is phe ee beck eeeeeeeknensess 4 17
Mayflower Securities Co. v. Bureau of Securities, 64
ee Oe ee OD CUED 24.0 cc endttcnceeenes ss 10
McGlone v. Corbi, 59 N.J. 86, 279 A.2d 812 (1971) . 29
Michelin Tire Corp v. Wages, 423 U.S. 276 (1976)... 22
Norfolk Southern Corp. v. Oberly, 822 F.2d 388 (3d
Eade nt ht sb0ees hessees beecebussacdeas 24
—
Vii
PAGE
Old Coach Development Corp. v. Tanzman, 881 F.2d
oe ee eT re 15
Pike v. Bruce Church, Inc., 397 U.S. 137 (1970)..... 18
Robinson v. Visual Packaging, Inc., 705 F. Supp. 216
es MING 4S es ONS ES ck cu Wieewetsanenescubeses 9, 10
Service Armament Co. v. Hyland, 70 N.J. 551, 362
EE eT er 10
South Central Timber Development Inc. v. Wunnicke,
Se ee Se hb 8 0 hw She ce he Keke races teedese 23
United States v. Curtiss-Wright Export Corp., 299 U.S.
Se Eo -wob + 6 64-00 u 0 064 Kb 44006000 008senebuens 22
Weinberger v. Salfi, 422 U.S. 749 (1975) ............ 20
Wickard v. Filburn, 317 U.S. 111 (1942) ............ 24
Constitutional Provisions:
is fo Se PTE rere 2, 3, passim
Came GME, GUO, Fwy Bbc ncccecanccccs 14, 19, 20, 21
Statutes:
Se eee, BRD CEOUED bec on ccncccccvecnonnceses 5
ee ce. IE UE Sh 4 6000s cccnennancuecstcann 4
ee ees: he SOE is 6.66 ce ancanuesccceneuces 4
ee se I CE 8 8.6 av oes ewan wan ankseccenn 12
N.J. Stat. Ann. § 2A:14-22 (West 1987) ....... 2, 3, passim
N.J. Stat. Ann. § 2A:53A-1-47 (West 1987).......... 29
N.J. Stat. Ann. § 14A:4-1(1) (West Supp. 1990)...... 16
N.J. Stat. Ann. § 14A:4-2(1) (West Supp. 1990)...... 4, 16
Vili
PAGE
N.J. Stat. Ann. § 14A:13-3(2) (West 1969)........... 17
N.Jj. Stat. Ann. § 14A:13-11(2) (West 1969).......... 17
Rules:
POF. COOUE TR. BSD ccc ccccncncccccccccsessccceces 7
PEF. SARE TR. GE cc ccc ccccccenccsccccccsccecans 12
Miscellaneous Authorities:
H. Black, Black’s Law Dictionary (Sth ed. 1979)..... 29
G. Gunther, Cases and Materials on Constitutional
SAD GE GE, BEND 0 6c chcccccccesvacscecsosceenes 20
RED PRB. SED Gk ccc cccccccnsecccsesesseses 27
J. Nowak, R. Rotunda & J. Young, Constitutional
Law (3d ed.
L. Tribe, American Constitutional Law (2d ed. 1988) 17, 22
cc onc de Ce ein ee ee eel ae ausched kee ees
0 ot oe > | eee SLR ec eek cee heed oe aee 5
LA
|
IN THE
Supreme Court of the United States
OCTOBER TERM, 1990
No. 90-76
>_>
STEPHEN JUZWIN, ef ux., _
Petitioners,
—Y
ASBESTOS CORPORATION, LTD., efc., ef al.,
Respondents.
ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE THIRD CIRCUIT
>_>
BRIEF IN OPPOSITION FOR RESPONDENT
CAREY CANADA, INC.
Respondent Carey Canada, Inc. [hereinafter ‘‘Carey Can-
ada’’] respectfully requests that this Court deny the petition
for a writ of certiorari seeking review of the Third Circuit’s
decision in this matter.
OPINIONS BELOW
Although the petition correctly notes the citation for the
court of appeals’ reported decision below, this respondent
wishes to add that the district court opinion it reversed is not
published and bears a different caption: Juzwin v. Amtorg
Trading Corp., Civil No. 87-3876, slip op. (D.N.J. opinion
filed February 28, 1989) (reprinted in the appendix to the
Dnata
2
petition’ at 27a). Two other district court opinions in the case
were published, but they concern issues unrelated to those
raised in the petition.’
COUNTERSTATEMENT OF THE CASE
A. Preliminary Statement
This case involves the constitutionality of the New Jersey
“tolling statute,’’ N.J. Stat. Ann. § 2A:14-22 (West 1987),’
which provides, inter alia, that the statute of limitations
applicable to a plaintiff’s claim will toll—that is, cease to
run—as to a defendant foreign corporation (not organized
under the laws of New Jersey) during the time it is not ‘‘rep-
resented’’ within the state. For purposes of the tolling stat-
ute, a foreign corporation not ‘‘represented’’ within the
jurisdiction ‘‘by any person or officer upon whom summons
or other original process may be served,’’ will be ‘‘deemed
represented for purposes of this section if the corporation has
filed with the Secretary of State a notice designating a repre-
sentative to accept service of process.’’ N.J. Stat. Ann
§ 2A:14-22. Since respondent Carey Canada was ‘‘formed
under the laws of Canada, has no corporate offices in the
1 Hereinafter citations to the appendix to the petition will be stated as:
**Pet. App. a’’; citations to the petition itself will be stated as: ‘‘Pet.
2 The petition addresses the validity of the New Jersey ‘‘tolling stat-
ute’’ under the Commerce Clause of the United States Constitution; the two
published district court opinions concern the constitutionality of punitive
damages: Juzwin v. Amtorg Trading Corp., 705 F. Supp. 1053 (D.N.J.
1989), vacated on reconsideration, 718 F. Supp. 1233 (D.N.J. 1989). Unfor-
tunately, in preparing the reported version of the Third Circuit opinion
below striking the New Jersey tolling statute on commerce clause grounds,
West Publishing Co. erroneously replaced citations to the district court’s
unpublished tolling statute opinion with citations to one of the district
court’s reported punitive damages opinions. See Juzwin v. Asbestos Corp.,
Lid., 900 F.2d 686, 688 (3d Cir. 1990) (citing 705 F. Supp. 1053, 1055).
3. ~=Pet. App. 6a. Hereinafter cited without parenthetical reference to
publisher and date.
state of New Jersey, has never been registered to do business
there, and has not appointed an agent for service of process
with the Secretary of State. . . it is not ‘represented’ in New
Jersey within the meaning of the tolling statute.’’ Juzwin v.
Asbestos Corp., Ltd., 900 F.2d 686, 688 (3d Cir. 1990). Pet.
App. 7a. It is this provision regarding designation of an
agent to accept service of process’ which presented the issue
litigated below.
The relevant provision of the tolling statute was added to
the ‘‘current’’ tolling statute’ in 1984 in an attempt to cure a
constitutional defect responsible for the predecessor statute’s
invalidation by both state® and federal courts.’
B. The Facts
On or about July 24, 1987, petitioners Stephen Juzwin and
Mary Juzwin, his wife, filed an action in the Law Division of
the Superior Court of New Jersey alleging that Stephen
4 ‘‘Acorporation shall be deemed represented for purposes of this sec-
tion if the corporation has filed with the Secretary of State a notice designat-
ing a representative to accept service of process.’’ Pet. App. 6a.
5 Except for the addition of the relevant provision set forth in the pre-
ceding note supra, the ‘‘current’’ tolling statute stricken by the decision
below is identical to the ‘‘predecessor’’ tolling statute.
6 ~- In Coons v. American Honda Motor Co., 94 N.J. 307, 463 A.2d 921
(1983) [hereinafter ‘‘Coons I’’], modified, 96 N.J. 419, 476 A.2d 763 (1984)
{hereinafter ‘‘Coons IT’’], cert. denied, 469 U.S. 1123 (1985), the New Jersey
Supreme Court held that by requiring a foreign corporation to obtain a ‘‘cer-
tificate of authority’’ to do business in New Jersey in order to achieve ‘‘rep-
resentation’ and realize the benefits of the statute of limitations, the
predecessor tolling statute amounted to a ‘‘forced licensure provision’’ which
unconstitutionally burdened interstate commerce. Jd. at 318, 463 A.2d at
927. In Coons II the court held that its Coons J ruling should be applied pro-
spectively. [Hereinafter, where appropriate, the Coons opinions will be cited
without subsequent history].
7 Cohn v. G.D. Searle & Co., 598 F. Supp. 965 (D.N.J. 1984) (striking
statute on commerce clause grounds and applying decision retroactively),
reversed in part and remanded, 784 F.2d 460 (3d Cir.) (requiring prospective
application), cert. denied, 479 U.S. 883 (1986). [Hereinafter, where appropri-
ate, opinions in the Cohn line of decisions from 1978 to 1986 will be cited
without subsequent history].
4
Juzwin [hereinafter ‘‘Juzwin’’] developed a pulmonary condi-
tion as a result of his exposure to various asbestos-containing
products manufactured or supplied by the defendants.
Among the defendants named in the complaint was respon-
dent Carey Canada, a corporation organized under the laws
of Canada.
Upon application of defendant Amtorg Trading Corpora-
tion, the action was removed to the United States District
Court for the District of New Jersey, where jurisdiction was
based upon diversity of citizenship.®
During the course of discovery, plaintiffs supplied answers
to interrogatories admitting that Juzwin knew that he had
been diagnosed as having an asbestos-related condition on or
about August 16, 1982.” Moreover, on June 7, 1982—several
months before he learned of that diagnosis—Juzwin, repre-
sented by counsel, filed a Workers Compensation action for
the same type of condition at issue in the instant case and
subsequently collected benefits.'® Since plaintiffs’ action was
not filed within twc years of his diagnosis as required by the
applicable statute of limitations governing personal injury
claims, N.J. Stat. Ann. § 2A:14-2 (West 1987), defendant
Carey Canada moved for dismissal of plaintiffs’ complaint
on that ground, arguing that the New Jersey tolling statute
was invalid under the Commerce Clause of the United States
Constitution and therefore could not operate to toll the run-
8 To assist the Court and petitioner with respect to Rule 14.1(i), Carey
Canada notes that jurisdiction in the district court was predicated upon
diversity of citizenship pursuant to 28 U.S.C. § 1441(a) and 28 U.S.C.
§ 1332(c). The amount in controversy was alleged to exceed $10,000.
9 See Joint Appendix in Juzwin v. Asbestos Corp., Ltd., 900 F.2d.
686 (3d Cir. 1990) at pages i1 and 16c. [Hereinafter citations to the Joint
Appendix before the Third Circuit will be stated as ‘‘Jt. App. ”"). See
also tne opinion of the district court below at Pet. App. 29a-30a.
10 See Plaintiffs’ Answers to Part I Interrogatories, response to I[.27
attaching ‘‘Employee’s Claim Petition,’’ No. 82-16872 (filed June 2, 1982
with the Division of Workers Compensation, Department of Labor and
Industry, State of New Jersey), as well as two ‘‘Order(s] Approving Settle-
ment With Dismissal.’’ (Discussed in Carey Canada’s opening brief to the
Third Circuit at page 6).
5
ning of the limitations period. Carey Canada also requested
that the decision striking the tolling statute be applied retro-
actively. Pet. App. 28a; Jt. App. at 16.
Although Carey Canada, a Canadian corporation, has been
joined as a defendant in numerous federal and state actions
in New Jersey over the past eight or more years, it is not
‘*represented’’ in the jurisdiction for tolling statute purposes.
See Preliminary Statement supra. Furthermore, since Carey
Canada sold its asbestos fiber ‘‘F.O.B. Quebec, Canada,’’”
it did not conduct its business operations in the United
States.
The district court upheld the constitutionality of the tolling
statute, denied Carey Canada’s motion, and certified the toll-
ing statute issue for interlocutory appeal under 28 U.S.C.
§ 1292(b). The Third Circuit granted Carey Canada permis-
sion to appeal and reversed, holding that the tolling statute
impermissibly burdened interstate commerce. Furthermore,
the Third Circuit, speaking through the Honorable Collins J.
Seitz, C.J., held that its decision striking the tolling statute
should be retroactively applied. Juzwin, 900 F.2d 686, 696
(3d Cir. 1990). Pet. App. la, 26a.
11 Carey Canada’s Answers to Interrogatories at A.4. (Discussed in
Carey Canada’s opening brief to the Third Circuit at 7). A ‘‘Free on Board”’
point of origin contract requires the seller to put his goods in the possession
of the carrier at that location. See U.C.C. §§ 2-319 and 2-504.
al
6
REASONS FOR DENYING THE WRIT
I.
THE DECISION OF THE THIRD CIRCUIT DOES NOT
CONFLICT WITH THE LAW OF NEW JERSEY AND
THE NEW JERSEY APPELLATE COURTS ARE
CURRENTLY CONSIDERING WHETHER TO
FOLLOW THAT DECISION
A. New Jersey Law Does Not Provide for the ‘‘Saving Con-
struction’’ of the Tolling Statute Urged by Petitioners
One of the principal arguments advanced by petitioners for
grant of certiorari in the case at bar is that the Third Circuit
disregarded a ‘‘saving construction’’ of the tolling statute
adopted by New Jersey state courts. See, e.g., Pet. at 4, 6, 7,
12, 13, 14 and 24. In support of this argument, petitioners
cite the unpublished summary affirmance of the New Jersey
Superior Court, Appellate Division in Armenti v. Carey Can-
ada, Inc.,'* and a district court opinion, Cutler v. Raymark
Industries, Inc., 707 F. Supp. 168 (D.N.J. 1989), which was
overruled’? by the Third Circuit decision at bar.
Contrary to petitioners’ assertions, neither the bench opin-
ions rendered by Law Division Judges Keefe and Mannion,“
nor the order of the Appellate Division (Pet. App. 47a) con-
stitutes precedent ‘‘binding upon any court”’ since those deci-
12. Armenti v. Carey Canada, Inc., No. L-045449-87 (N.J. Super. Ct.
Law Div. Middlesex County), aff’d without opinion, No. 177-88T3F (N.J.
Super. Ct. App. Div. order filed Nov. 7, 1988).
13. In Cutler, the district court upheld the same tolling provision at bar
in Juzwin against a commerce clause challenge.
14 Thetwo bench opinions are reprinted in the appendix to this brief at
la and 23a, respectively. [Hereinafter citations to the appendix to this brief
will be stated as: ‘‘Brief App.’’].
ieee
7
sions were not approved for publication pursuant to N.J.
Court R. 1:36-3."°
Furthermore, this respondent respectfully maintains the
decisions in Armenti cannot serve even as persuasive author-
ity regarding the statutory construction and commerce clause
issues raised by petitioner. Both the initial trial court bench
opinion, rendered before this Court’s decision in Bendix
Autolite Corp. v. Midwesco Enterprises, Inc., 486 U.S. 888
(1988), and the second trial court bench opinion rendered
thereafter pursuant to defendants’ motion for rehearing, are
marred by erroneous interpretations of significant issues.'®
The Appellate Division’s order in Armenti cannot serve as a
greater source of persuasive authority since it ‘‘summarily
affirm[s] the Law Division’s ruling ‘‘for the reasons
expressed in the September 16, 1988 oral opinion of Judge
Mannion which effectively supplemented the May 27, 1988
oral opinion of Judge Keefe.’’ Pet. App. 47a.
A review of petitioners’ other arguments in support of the
‘saving construction’’ reveals the weakness of their position.
As in the proceedings below, petitioners maintain that the
New Jersey tolling statute is valid since, unlike the Ohio toll-
ing provision invalidated by this Court’s decision in Bendix,
486 U.S. 888 (1988), the New Jersey enactment permits out-
of-state corporations not registered to do business in New
Jersey to obtain the protection of the statute of limitations by
15 That rule provides: ‘‘No unpublished opinion shall constitute prece-
dent or be binding upon any court. Except to the extent required by res judi-
cata, collateral estoppel, the single controversy doctrine or any other similar
principle of law, no unpublished opinion shall be cited by any court. No
unpublished opinion shall be cited to any court by counsel unless all other
parties are served with a copy of the opinion and of all other relevant unpub-
lished opinions known to counsel including those adverse to the position of
his client.’’ Jd.
16 For example, Judge Keefe stated that the enactment did not unduly
burden interstate commerce on the theory that since it pertains to both indi-
viduals and corporations it is ‘‘not aimed simply at commerce conduct.”’
Brief App. 19a. Regarding Judge Mannion’s bench opinion, this respondent
respectfully maintains that undue weight was given to the New Jersey legisla-
ture’s perceived desire to create a constitutional statute. See Brief App.
at 39a.
8
designating a representative for service of process whose
authority is limited to causes of action as to which the corpo-
ration has a ‘‘nexus’’ with New Jersey, i.e., the minimum
contacts necessary for in personam jurisdiction under the Due
Process Clause of the Fourteenth Amendment. See, e.g., Pet.
at 5.
Although nothing in the wording of the New Jersey tolling
statute suggests that it permits the appointment of an agent
for service of process whose authority is limited to minimum
contact causes of action,'’ proponents of the statute in the
proceedings below argued that the absence of language pro-
hibiting such appointments permitted the federal courts to
perform ‘‘judicial surgery’’ and read in such a provision. The
argument that a judicial interpretation of the New Jersey toll-
ing statute may ignore the plain meaning of the enactment to
avoid an unconstitutional result conflicts with the sound legal
principle that a court cannot substitute its judgment for that
of the legislature by rewriting a statute."
Petitioners’ limited designation argument is also undercut
by New Jersey decisional law that designation of an agent to
accept service of process subjects a corporation to the general
jurisdiction of the forum.”
17 _—‘ The statute flatly states that: ‘‘A corporation shall be deemed repre-
sented for purposes of this section if the corporation has filed with the Secre-
tary of State a notice designating a representative to accept service of
process.’’ N.J. Stat. Ann. § 2A:14-22.
18 See, e.g., Badaracco v. Commissioner, 464 U.S. 386 (1984) (courts
are not authorized to rewrite a statute because they might deem its effects
susceptible of improvement); Harmon v. Phillips Petroleum Co., 555 F.
Supp. 447 (D. Mont. 1982) (court cannot substitute its judgment for that of
the legislature or insert what it deems has been omitted).
Unlike the excision of a severable unconstitutional provision, the task
urged by proponents of the “‘limited designation’’ argument would require a
court to traverse the boundaries between the judicial and legislative branches
of government and engage in the quintessentially legislative function of for-
mulating a new statute.
19 See, e.g., Allied-Signal, Inc. v. Purex Industries, Inc., 242 N.J.
Super. 362, 576 A.2d 942 (N.J. Super. Ct. App. Div. 1990). In Allied, plain-
— |
9
In support of their argument that the New Jersey tolling
statute permits the filing of limited designations, petitioners
also refer to the affidavit of Paul E. Wermuth, an attorney
for the New Jersey Secretary of State. Pet. at 12-13 & n.6. In
that affidavit, Mr. Wermuth, relying upon unpublished
‘tadvice of the New Jersey Attorney General’’ rather than a
formal opinion from that official, maintains that the Secre-
tary of State permits the ‘‘filing of designations by unregis-
tered, foreign corporations of representatives for service of
process only with respect to causes of action which have the
minimum contacts for due process purposes in this State.
Such designations are recorded by this office and insulate
foreign corporations filing such designations from causes of
action which have no nexus with New Jersey.’’”
tiff served its complaint on Purex’s registered agent for service of process
appointed pursuant to N.J. Stat. Ann. § 14A:4-1 and -2 (West. Supp. 1990).
[Reprinted at Pet. App. 56a-58a]. The ‘‘only question’’ on appeal was
whether plaintiff obtained personal jurisdiction over Purex by virtue of that
service. 576 A.2d at 943. ‘‘Purex contended that, while it owned real prop-
erty here, registering its agent for process was only related to New Jersey
~ environmental litigation stemming from its predecessor’s activities,’’ and
that ‘‘it had effectively left the State for purposes of Allied’s action.’’ /d.
Rejecting Purex’s limited designation argument, the court stated: ‘‘We know
of no New Jersey or Supreme Court authority for the proposition that a cor-
poration may limit a state’s jurisdiction in the manner Purex suggests and
none has been cited to us. Moreover, Purex asserts no limiting action on its
part in the appointment process under N.J.S.A. 14A:4-2.’’ Jd. Drawing on
Burnham v. Superior Court of California, County of Marin, 110 S. Ct. 2105
(1990), the court held that service on Purex’s registered agent conferred per-
sonal jurisdiction over that firm ‘‘regardless of the nature of the litigation.”’
576 A.2d at 945.
20 ‘‘Affidavit of Paul E. Wermuth’’ dated September 8, 1988 at para-
graph 5. [The affidavit is reprinted in the appendix hereto at Brf. App. 4Sa.]
The affidavit bears the caption of, and is discussed in, Robinson v. Visual
Packaging, Inc., 705 F. Supp. 216, 220 (D.N.J. 1989) (rejecting limited des-
ignation argument and striking iolling statute under commerce clause).
Although the proponents of the tolling statute referred to the affidavit in
making their ‘‘limited designation’’ argument, the document was not filed
with the clerk of the district court in the proceedings below. Nevertheless, the
i
10
Since the Wermuth affidavit is by no means a controlling
interpretation of the tolling statute,’ in the absence of a
binding state court precedent the Third Circuit was free to
construe the statute in a manner consistent with its plain
meaning and reject petitioners’ limited designation argument.
Indeed, a district court which struck the tolling statute on
commerce clause grounds prior to the Third Circuit’s ruling
below did exactly that.”
B. The New Jersey Superior Court, Appellate Division Is
Currently Reviewing the Commerce Clause Issue Decided
by the Third Circuit
One of the most obvious and compelling reason for deny-
ing the writ is the fact that the Appellate Division of the
Superior Court of New Jersey is currently considering
whether to follow the Third Circuit’s opinion in Juzwin v.
Asbestos Corp., Ltd., 900 F.2d 686 (3d Cir. 1990).
In DiFalco v. Subaru of America, Inc., the Appellate Divi-
sion of the New Jersey Superior Court recently granted a
defendant’s motion for leave to appeal to consider whether
the New Jersey tolling provision stricken in Juzwin violat
the Commerce Clause of the United States Constitution.”
Third Circuit considered the affidavit and permitted its filing in the supple-
mental appendix of the intervenor, the State of New Jersey.
The Wermuth affidavit does not indicate when the Secretary of State initi-
ated the informal administrative practice of accepting limited desi:nations.
Brf. App. 45a.
21 Service Armament Co. v. Hyland, 70 N.J. §51, 561, 362 A.2d 13, 19
(1976) (‘‘ ‘An appellate tribunal is . . . in no way bound by [an] agency’s
interpretation of a statute... .’’’) (quoting Mayflower Securities Co. v.
Bureau of Securities, 64 N.J. 85, $3, 312 A.2d 497, 501 (1973)).
22 Robinson v. Visual Packaging, Inc., 707 F. Supp. 216, 220 (D.N.J.
1989).
23. +~=In DiFalco, defendant Takata Corporation, a Japanese enterprise
not ‘‘represented’’ within New Jersey for purposes of the tolling statute,
moved for summary judgment on the ground that plaintiff’s action was not
filed within the two-year limitations period provided by N.J. Stat. Ann.
i iineniaiaeai il
11
Even if New Jersey’s Appellate Division does not reach the
commerce clause issue in DiFalco,“ grant of certiorari still
would not be appropriate in the case at bar since there are a
number of ‘‘tolling statute’? motions pending in the New Jer-
sey state trial courts which provide an opportunity for review
of that issue by New Jersey’s appellate courts.”
§ 2A:14-2 (West 1987). Relying on the Third Circuit’s decision in Juzwin,
Takata argued that the tolling statute could not be invoked to extend plain-
tiff’s time since the statute is invalid under the Commerce Clause. Both
plaintiff and the State of New Jersey as intervenor opposed the motion on
the ground that the Law Division should uphold the constitutionality of the
tolling statute despite the Third Circuit’s decision in Juzwin. The trial court
trial heard argument on June 15, 1990 and denied Takata’s motion ‘‘for the
reasons stated by the Deputy Attorney General.’’ Transcript of Proceedings
at page 30, lines 23-24. That ruling was memorialized by order dated June
21, 1990. Brief App. 49a. Defendant Takata then filed a motion for leave to
appeal with the Appellate Division of Superior Court which by order dated
August 6, 1990, agreed to review the trial court’s order. Brief App. 41a. See
also Brief App. at 43a (scheduling order).
24 ~~ Based upon this respondent’s review of available briefs in that case,
it appears that the plaintiff resisted Takata’s trial court motion on two
grounds: 1) the validity of the tolling statute and 2) a state procedural law
argument that her amended complaint against Takata should ‘‘relate back’’
to the filing of her original complaint (naming other defendants) so as to be
deemed timely.
25 Counsel for respondent Carey Canada represents defendants in a
considerable number of pending state court actions in which the tolling stat-
ute issue is potentially outcome determinative and virtually certain to be
appealed no matter which side prevails. If a particular state trial court judge
upholds the tolling statute and denies our defendant’s statute of limitations
motion, that defendant will appeal to the Appellate Division. If that state
trial court finds the tolling statute invalid under the commerce clause, either
plaintiff or the State of New Jersey—which intervenes in such actions to
defend the tolling statute—is quite likely to appeal. (Pursuant to N.J. Court.
R. 4:28-4(a)-(d), a litigant ‘‘question[ing]’’ the ‘‘validity of a statute, execu-
tive order, franchise, or constitutional provision of [the State of New Jer-
sey]’’ in an action to which the state is not a party, must notify the Attorney
General who may intervene to defend the statute. In the district court pro-
ceedings in the case at bar, the State of New Jersey intervened pursuant to
the analogous federal statute, 28 U.S.C. § 2403(b)).
12
Thus it would be an unnecessary departure from this
Court’s established practice to devote resources to the resolu-
tion of an illusory conflict between that intermediate state
appellate court” and the court of appeals when the former
may, within the next few weeks or months, choose to follow
the Third Circuit’s decision below. See Rule 10(b).
C. The Third Circuit Utilized Petitioners’ ‘‘Saving Construc-
tion’’ in Striking the Tolling Statute on Commerce Clause
Grounds
This respondent is obligated by Rule 15.1 to point out that
the Third Circuit did not ignore the ‘‘saving construction’’
urged by petitioners below.
Petitioners argue that the Third Circuit ‘‘abandoned the
principle that unnecessary constitutional adjudication should
be avoided if a statute can fairly be given a constitutional
interpretation”’ by refusing to employ the ‘“‘limited designa-
tion’’ construction described above under Point IA. See Pet.
at 4; 6-7; 12 & n.6; 14. Contrary to petitioners’ assertions,
the Third Circuit expressly stated that it evaluated the consti-
tutionality of the tolling statute in accordance with the lim-
ited designation argument urged by petitioners and adopted
by the district court below.
The district court concluded that, unlike the Ohio statu-
tory scheme, the New Jersey tolling statute does not
compel the conclusion that designation of an agent for
service of process subjects a foreign corporation to the
general jurisdiction of the New Jersey courts. The court
noted the Secretary of State’s practice of accepting des-
Two state court cases in which counsel for respondent Carey Canada soon
expects decisions on the constitutionality of the tolling statute are: Leogrande
vy. Keene Corp., No. W-026197-87 (N.J. Super. Ct. Law Div. Middlesex
County) (motion of defendant Pittsburgh Corning returnable September 14,
1990}; Anderson v. Owens-Corning Fiberglas Corp., No. W—012500-89
(N.J. Super. Ct. Law Div. Middlesex County).
26 See discussion of the New Jersey Superior Court, Appellate Divi-
sion’s unpublished summary affirmance in Armenti under Point IA supra.
13
ignations of a representative for service of process only
for causes of action having a nexus with New Jersey.
Such a limited designation, the court held, imposed no
unconstitutional burden on interstate commerce.
II. As we read Bendix, the New Jersey tolling statute
would be invalid if it were applied to all foreign corpo-
rations, regardless of their connection with New Jersey.
However, we will assume without deciding that the New
Jersey Supreme Court would interpret the statute to per-
mit designation of an agent for service of process only
for causes of action having a nexus with New Jersey.
The issue then become whether the statute so interpreted
still constitutes an impermissible burden on interstate
commerce.
Juzwin v. Asbestos Corp., Ltd., 900 F.2d 686, 689 (3d Cir.
1990). Pet App. 7a-8a. The concluding paragraph of Judge
Seitz’s commerce clause discussion also notes that the ‘‘lim-
ited designation’’ construction of the tolling statute was uti-
lized: ‘‘Thus, even with a limiting construction, N.J. Stat.
Ann. § 2A:14-22 violates the commerce clause under either
[the heightened scrutiny or balancing] test since a nondiscrim-
inatory procedure, less burdensome to interstate commerce,
could be adopted by New Jersey.’’ Jd. at 692. Pet. App. 14a-
1Sa.
Even if one were inclined to accept petitioners’ suggestion
that the Third Circuit merely ‘‘purported’’ to utilize the
saving construction while actually evaluating the statute on
the premise that it did not permit foreign corporations to file
limited designations,” one must note that the court of
appeals would have been within its rights in doing so since
petitioners’ construction is at variance with the plain meaning
of the statute and not supported by any binding state prece-
dents. See Point IA supra.
27 ~=—s See, e.g., Pet. at 4.
14
Il.
THE THIRD CIRCUIT’S DECISION STRIKING THE
NEW JERSEY TOLLING STATUTE UNDER THE
INTERSTATE COMMERCE CLAUSE IS ENTIRELY
CONSISTENT WITH THIS COURT’S PRECEDENTS
A. Heightened Interstate Commerce Clause Scrutiny Is The
Appropriate Standard of Review for the Tolling Provision
at Bar
Petitioners raise a number of objections to the Third Cir-
cuit’s resolution of the commerce clause issue. Initially, peti-
tioners complain that the New Jersey tolling provision should
not have been reviewed under the ‘‘heightened scrutiny’’
interstate commerce clause standard. See Pet. at 15-17. Peti-
tioners begin their argument with the unusual assertion that
‘*[jJudicial review of state statutes challenged under the Com-
merce Clause are governed by a two-track standard, similar
to the two-tiered scrutiny of the Equal Protection Clause.’’”
Petitioners claim that the ‘‘sole basis for the [Third Cir-
cuit’s] application of the heightened scrutiny standard was its
erroneous conclusion that the statute on its face, ‘applies to
out-of-state corporations but not to New Jersey corpora-
tions.’ 900 F.2d at 689 and n.3 (9a).””
Contrary to petitioners’ assertion, the tolling statute provi-
sion at issue in the case at bar—the one which permits ‘‘cor-
28 See Pet. at 15. Respondent Carey Canada understands there are
three basic levels of review under the equal protection clause (strict scrutiny,
intermediate tier review typically employed in gender discrimination cases,
and rational basis review) and three basic standards of review under the com-
merce clause. See generally J. Nowak, R. Rotunda & J. Young, Constitu-
tional Law § 14.3 at 528-33 (3d ed. 1986) (regarding equal protection). A
brief discussion of the three standards of commerce clause review appears in
the Third Circuit’s opinion below. Juzwin v. Asbestos Corp., Ltd., 900 F.2d
686, 689 (3d Cir. 1990). Pet. App. 8a.
29 ~=—s— Pett. at. 16. Petitioners buttress this argument with the assertion that
since the tolling statute has provisions applicable to individual ‘‘citiz¢ns’’ of
New Jersey who temporarily leave the state, it is a facially neutrai, nondis-
criminatory enactment. See Pet. at 16-17.
is A a i aommmpacoanape aaa
15
porations’’ to achieve representation by designating an agent
for service of process*°—applies exclusively ‘‘to out of state
corporations but not to New Jersey corporations. .. .”’
Juzwin, 900 F.2d 686, 689 [footnote omitted]. As the Third
Circuit noted: ‘‘The critical words are ‘any corporation or
corporate surety not organized under the laws of this
State.’ ’’ Juzwin, 900 F.2d at 689, n.3 (quoting N.J. Stat.
Ann. § 2A:14-22). Since the New Jersey tolling provision is
facially discriminatory, the heightened scrutiny test is appro-
priate:
Statutes which discriminate on their face or in their
plain effect against interstate commerce are subject to
heightened scrutiny. This heightened scrutiny places the
burden on the state to ‘‘demonstrate both that the stat-
ute ‘serves a legitimate local purpose,’ and that this pur-
pose could not be served as well by available
nondiscriminatory means.”’
Old Coach Development Corp. v. Tanzman, 881 F.2d 1227,
1231 (3d Cir. 1989} (citations omitted) (quoting Maine v.
Taylor, 477 U.S. 131, 138 (1986)) (quoting Hughes v. Okla-
homa, 441 U.S. 322, 336 (1979)).
Also unpersuasive is petitioners’ argument that the tolling
statute should be deemed ‘‘a facially neutral, non-
discriminatory enactment”’ in the case at bar since it also tolls
the statute of limitations with respect to individuals who
leave the state. Even if one could accept the premise that the
existence of a distinct provision depriving individuals of a
limitations defense justified the discrimination between for-
eign and domestic corporations, a binding New Jersey state
trial court precedent has stricken the tolling statute on com-
merce clause grounds with respect to a nonresident individ-
ual. Crespo v. Stapf, 242 N.J. Super. 254, 576 A.2d 346
(N.J. Super. Ct. Law Div. 1990).
In Crespo, plaintiff brought a product liability action alleg-
ing personal injuries attributable to a machine supplied by
defendant Stapf, a resident of Germany who operates his
30 ~=The only provision relevant to the case at bar is contained in the
final paragraph of the statute: See Pet. App. 6a, or see n. 4 supra.
16
unincorporated business in that nation. The court, reviewing
the relevant provision’! under a balancing test,’” held the stat-
ute unduly burdensome of interstate commerce since ‘‘the
only method by which a nonresident individual may receive
the protection of our statute of limitations is to become a res-
ident of this state.’’ Jd. at 260, 576 A.2d at 348. ‘‘A state
‘may not condition this exercise of the defense (of the statute
of limitations) on the relinquishment of rights that the for-
eign . . . (defendant) would otherwise retain.” Among the
rights a foreign defendant would retain is the right to choose
his residence, and in particular, to choose not to be a resident
of this State.’’ Jd. at 260, 576 A.2d at 349 (citation omitted)
(quoting Bendix Autolite Corp. v. Midwesco Enterprises,
Inc., 486 U.S. 888, 893 (1988)).
Petitioners’ next argument against application of strict
interstate commerce clause scrutiny is based on the premise
that since corporations organized under the laws of New Jer-
sey (as well as those foreign corporations licensed to transact
business within the state) are required to continuously main-
tain ‘‘a registered office in [the] State’’ and a ‘“‘registered
agent [for service of process] having a business office identi-
cal with such registered office,”””? the New Jersey tolling stat-
ute is nondiscriminatory in that it ‘‘does not impose any
burden on nonresident corporations that is not imposed
equally on domestic corporations’’ which must ‘‘appoint an
agent for service of process as a precondition to obtaining
corporate status.’’ Pet. at 7. See also, Pet. at 17 (‘‘No out-
31 See n.4 supra.
32 The court declined to review the provisions regarding nonresident
individual defendants under the per se test on the theory that: ‘‘The purpose
of this statute, however, is to preserve causes of action which New Jersey res-
idents may have against nonresidents, not to erect barriers against foreign
businesses competing with New Jersey ones.’’ Crespo v. Stapf, 242 N.J.
Super. 254, 258, $76 A.2d 346, 347-48 (N.J. Super. Ct. Law Div. 1990). This
respondent respectfully maintains that the tolling provision in Crespo war-
ranted review under the per se test.
33. sON..J. Stat. Ann. § 14A:4-1(1) (West 1990). Pet. App. 56a-57a. See
also, N.J. Stat. Ann. § 14A:4-2(1) (West 1990) (requiring said agent to
accept service of process on behalf of corporation). Pet. App. 57a.
te padi ty inate viva
17
of-state-corporation is subjected to a registration burden that
is not applied equally to New Jersey corporations’’). This
previously unasserted™ argument fails to appreciate the basic
difference between intrastate and interstate commerce, and
fails to understand the elementary proposition of constitu-
tional law that the scope of permissible state regulation is
considerably greater with respect to the former.** Moreover,
petitioners’ argument regarding the scope of permissible state
regulations with respect to corporations with substantial
intrastate activities is completely irrelevant to foreign corpo-
34 Since this statutory argument was not raised below, petitioners can-
not properly assert it in their petition to this Court. See G.D. Searle & Co. v.
Cohn, 455 U.S. 404, 412, n.7. Petitioner did make arguments below based
upon different New Jersey statutes affecting corporations, but they were sig-
nificantly different. N.J. Stat. Ann § 14A:13-11 (West 1969) pertains to for-
eign corporations engaged in intrastate business activities, and provides, infer
alia, that any such corporation which fails to obtain a certificate of authority
to transact business in the state is prohibited from maintaining ‘‘any action
or proceeding in any court of this State.’’ § 14A:13-11(1). Petitioners, citing
subparagraph (2) of the statute, argued that since foreign corporations trans-
acting business in the state who fail to obtain a certificate of authority are
not precluded from ‘‘defending any action or proceeding’’ the New Jersey
tolling statute was not unduly burdensome:
Furthermore, the denial of a limitations remedy does not even impair
the ability to defend a suit on the merits or to raise the equitable
defense of laches. The New Jersey statutory scheme explicitly states:
{citation to N.J. S.A. § 14A:13-11(2).
Third Circuit ‘‘Brief for Plaintiffs-Appellees Stephen and Mary Juzwin’’ at
9. See Materials Research Corp. v. Metron, Inc., 64 N.J. 74, 312 A.2d 147
(1973) (“‘transacting business term of § 14A:13-11 does not apply to corpora-
tions engaged only in interstate commerce).
In support of their argument petitioners also cited N.J.S.A. § 14:13-3(2)
(West 1969) which provides, inter alia, that ‘‘a foreign corporation shall not
be considered to be transacting business within this State’’ by virtue of its
participation in a legal proceeding. § 14:13-3(2)a). See above-referenced
brief at 16 (also citing N.J.S.A. § 14A:13-11(2)).
35 See, e.g., Eli Lilly & Co. v. Sav-On-Drugs, Inc., 366 U.S. 276, 284
(1961) (non-New Jersey corporation which engaged in ‘‘local intrastate busi-
ness’’ through New Jersey office with 18 salaried employees could be barred
from maintaining action in state court for noncompliance with state statu-
tory scheme requiring such corporations to obtain certificate of authority.
See generally L. Tribe, American Constitutional Law § 6-5 (2d ed. 1988).
18
rations engaged in purely interstate or (like respondent Carey
Canada) international commerce.
Given the facially discriminatory character of the tolling
provision at bar, the Third Circuit’s use of the heightened
scrutiny standard of commerce clause review is clearly proper
and in accordance with this Court’s decision in Bendix Auto-
lite v. Midwesco Enterprises, Inc., 486 U.S. 888, 891 (1990).
B. The Tolling Provision at Bar Cannot Survive Scrutiny
Under the Interstate Commerce Clause Balancing Test
Petitioners maintain that the Third Circuit also erred in
finding the tolling statute violative of the commerce clause
under the balancing test enunciated in Pike v. Bruce Church,
Inc., 397 U.S. 137 (1970). See Pet. at 18-21. Petitioners do
not contend that the statute at bar should have been reviewed
under the deferential standard of commerce clause review;”
rather they maintain that the Third Circuit improperly
applied the balancing test in a manner “‘tantamount to very
strict scrutiny.’’ Pet. at 18.
Petitioners’ argument that the balancing test was misap-
plied is based primarily upon their assertion that the Third
Circuit’s decision below ‘‘was in flagrant disregard of this
Court’s decision in G.D. Searle & Co. v. Cohn, 455 U.S.
404, 410-11 (1982).’’?”’ The decision below does not conflict
36 Asthe Third Circuit noted: ‘‘None of the parties argue that the cor-
rect standard to be applied to the New Jersey tolling statute is that of defer-
ential review. New Jersey has, of course, a legitimate interest in facilitating
the claims of its citizens, but we are not here concerned with a ‘peculiarly
strong’ state interest, such as health or safety. These are the areas that most
commonly invoke the deferential standard. Juzwih v. Asbestos Corp., Lid.,
900 F.2d 686, 689, n.2 (3d Cir. 1990) (quoting Ford Motor Co. v. Insurance
Comm’r of Pa., 874 F.2d 926, 941 (3d Cir.), cert. denied sub nom., United
Services Auto. Ass’n v. Foster, 110 S. Ct. 418 (1989)).
Petitioners’ statements to the effect that the Third Circuit should have
been ‘‘relatively deferential’ or shown ‘‘substantial deference’’ to the New
Jersey tolling statute appear only in connection with their request for review
under the Pike balancing test. See, ¢.g., Pet. at 7 and 18.
37 ~—s Pet. at 19. See also Pet. at 6 (‘‘[The Third Circuit's] holding was in
direct conflict with this Court’s decision in G.D. Searle & Co. v. Cohn, 455
ala ee
19
with this Court’s decision in Cohn. In Cohn, this Court
affirmed the Third Circuit's ruling upholding New Jersey’s
previous—not current—tolling statute against an equal pro-
tection challenge, but nevertheless vacated the judgment
below and remanded the case to the court of appeals for con-
sideration of petitioner G.D. Searle’s argument that the stat-
ute violated the Commerce Clause.*
As in the proceedings below, petitioners rely on decisions
upholding the previous New Jersey tolling statute against due
process”? and equal protection challenges in support of their
argument that the courts’ ‘‘balancing’’ of the predecessor
tolling statute’s burdens and benefits under those constitu-
tional tests impels the conclusion that the current tolling stat-
ute should be upheld if reviewed under the ‘‘balancing test’’
employed in commerce clause cases.“ This argument ignores
U.S. 404 (1982), a decision which rejected the identical overinclusivity attack
on the New Jersey tolling statute asserted in the guise of an equal protection
challenge.’’) (emphasis in original); Pet. at 7 (‘‘flagrant disregard’); Pet. at 6
and 19 (Third Circuit ‘‘did not even attempt to distinguish’’ Cohn).
38 455 U.S. 404, 412 (1982), remanded sub nom., Hopkins v. Kelsey-
Hayes, Inc. , 677 F.2d 301 (3d Cir. 1982). The Third Circuit in turn remanded
the case to the district court to develop a record regarding the commerce
clause issues. 677 F.2d at 302, on remand, 598 F. Supp. 965 (D.N.J. 1984).
The district court held the predecessor tolling statute violative of the com-
merce clause and determined that its decision should be retroactively applied.
598 F. Supp. at 969. The Third Circuit reversed the district court’s decision
only with respect to the retroactivity issue and remanded for further proceed-
ings consistent with that ruling. Cohn v. G.D. Searie & Co., 784 F.2d 460,
467 (3d Cir.), cert. denied, 479 U.S. 883 (1986).
39 ~~ In the consolidated Cohn v. G.D. Searle & Co./Hopkins v. Kelsey-
Hayes cases, Third Circuit rejected both due process and eqmal protection
challenges to the previous New Jersey tolling statute. Hopkins v. Kelsey-
Hayes, Inc., 628 F.2d 801, 811 (3d Cir. 1980). Since G.D. Searle & Co. tried
to assert different due process arguments in the proceedings before this
Court, only the equal protection challenge was reviewed. G. D. Searle & Co.
v. Cohn, 455 U.S. 404, 412, n.7 (1982)
40 = See, e.g., Pet. at 6 (stating that the Third Circuit’s decision below
‘‘was in direct conflict with this Court’s decision in G.D. Searle & Co. v.
Cohn, 455 U.S. 404 (1982), a decision that rejected the identical over-
inclusivity attack on the [predecessor] New Jersey tolling statute asserted in
the guise of an equal protectiun challenge’’) (emphasis in original).
20
the reality that the ‘‘balancing tests’? employed in due process
and equal protection cases vindicate different interests*’ and
are substantially more deferential to state regulations than the
“‘balancing test’? employed in commerce clause cases.”
Indeed, to illustrate this principle one need only recall that
although the predecessor New Jersey tolling statute was
upheld by the Third Circuit and this Court against equal pro-
tection and due process challenges in Cohn v. G.D. Searle,
41 For purposes of due process and equal protection analysis, so-called
‘feconomic and social regulations’’ (such as tolling statutes) are reviewed
under the highly deferential ‘‘rational basis’’ test which virtually presumes an
enactment valid unless the litigant challenging it shows it to be ‘‘demonstra-
bly arbitrary or irrational.’’ Duke Power Co. v. Carolina Environmental
Study Group, Inc., 438 U.S. 59 (1978) (due process). Equal protection and
due process review require only that the court ask whether the challenged
enactment is rationally related to any constitutionally permissible state inter-
est. See Hopkins v. Kelsey-Hayes, Inc., 628 F.2d 801, 809 (3d Cir. 1980).
Furthermore, there is authority that review under that standard permits the
court to hypothesize as to the motivations of the state legislature to find a
legitimate objective promoted by the legislation under attack. See Wein-
berger v. Salfi, 422 U.S. 749 (1975). Since the Commerce Clause vindicates
the exclusively federal power over international and interstate commerce, a
less deferential standard of review is appropriate than that employed in
rational basis due process and equal protection cases reviewing economic and
social regulations predicated upon the states’ traditional police powers.
42 See, e.g., Bendix Autolite v. Midwesco Enterprises, Inc., 486 U.S.
888, 893-94, text preceding n.3 (1988) (‘‘It is true that serving foreign corpo-
rate defendants may be more arduous than serving domestic corporations or
foreign corporations with a designated agent for service, and we have held
for Equal Protection purposes that a State rationally may make adjustments
for this difference by curtailing limitations protection for absent foreign cor-
porations. G.D. Searle & Co. v. Cohn, 455 U.S. 404 (1982). Nevertheless,
State interests that are legitimate for equal protection or due process pur-
poses may be insufficient to withstand Commerce Clause scrutiny’’); Great
Western United Corp. v. Kidwell, 577 F.2d 1256, 1285 (Sth Cir. 1978) (Wis-
dom, J., opinion of the court) (striking an Idaho ‘‘takeover statute’ under
commerce clause balancing test characterized as providing ‘‘a stricter stan-
dard [of review] than the ‘rational relationship’ test of due process analy-
sis’’), rev’d on other grounds, 443 U.S. 182 (1979). See also G. Gunther,
Cases and Materials on Constitutional Law at 311 (%h ed 1975) (cited in
Great Western, $77 F.2d at 1285); Juzwin, 900 F.2d 686, 695. Pet. App. 23a.
wh Sow iat
21
that same statute was shortly thereafter stricken as viclative
of the Commerce Clause.”
Contrary to petitioners’ assertions that the court below
‘*failed to recognize New Jersey’s legitimate interest in its
tolling statute,’ the Third Circuit expressly acknowledged
that interest, but found the burdens of the statute ‘‘grossly
disproportionate to the state’s interest in assisting resident
plaintiffs in the pursuit of claims against foreign corpora-
tions.’’ Juzwin, 900 F.2d 686, 691, 692. Pet. App. 14a.
C. The Existence of a Commerce Clause Violation is Not
Dependent Upon a Finding that a State’s Enactment Con-
fers Competitive Advantages Upon its Residents
Petitioners seem to argue that the tolling statute does not
impermissibly burden interstate commerce since it does not
create any competitive advantages for New Jersey businesses.
See Pet. at 7, 10, 15-16. While not conceding the factual
premise of that argument, this respondent maintains that
petitioners’ legal theory is far too simplistic a view of the
commerce clause and one not adequately supported even by
the cases they cite.”
43 See note 38 and accompanying text supra.
44 Pet. at 18. See also Pet. at 6 (The [Third Circuit] held that New Jer-
sey lacked a legitimate interest in ameliorating the impact of the statute of
limitations. . . .’’)
45 For example, petitioners’ theory fails to account for the heightened
scrutiny standard of review applicable to facially discriminatory enactments.
See Point IIA supra. Furthermore, this respondent does not find support in
the cases cited for the broad proposition that creation of competitive advan-
tages for domestic corporations is the definitive test of a commerce clause
violation.
22
Ill.
EVEN IF THE THIRD CIRCUIT USED AN INAPPRO-
PRIATE STANDARD OF INTERSTATE COMMERCE
CLAUSE REVIEW, THE DECISION BELOW STRIKING
THE NEW JERSEY TOLLING STATUTE IS WAR-
RANTED UNDER THE STANDARD OF SCRUTINY
APPLICABLE TO REGULATIONS BURDENING
INTERNATIONAL COMMERCE
Even if this Court determines that the Third Circuit erred
in striking the New Jersey tolling statute under the heightened
scrutiny or balancing tests applicable to regulations burdening
interstate commerce, issuance of the writ would nevertheless
be inappropriate since the enactment could not survive review
under the most stringent standard of review applicable to
enactments burdening ‘‘foreign’’—i.e. international—
commerce. Although defendant Carey Canada argued below
that the tolling statute could be stricken under the foreign
commerce clause, the Third Circuit found it unnecessary to
reach that issue in light of its holding that the enactment
impermissibly burdened interstate commerce. See Juzwin v.
Asbestos Corp., Ltd., 900 F.2d 686, 690, n.6. Pet. App. 12a.
Article I, § 8 of the United States Constitution grants Con-
gress the power ‘‘to regulate Commerce with f- -eign
Nations.’’ ‘‘This clause has been construed as all but exclu-
sive: ‘It is an essential attribute of the power that it is...
plenary . . . [and that] its exercise may not be limited, quali-
fied or impeded to any extent by state action.’ ’’ L. Tribe,
American Constitutional Law, § 6-21 at 468 (2d ed. 1988)
(quoting Board of Trustees of the Univ. of Illinois v. United
States, 289 U.S. 48, 56 (1933)). [Hereinafter cited as
‘*Tribe’’]. See also Michelin Tire Corp. v. Wages, 423 U.S.
276 (1976) (regulation of foreign commerce is exclusively a
federal power); J. Nowak, R. Rotunda & J. Young, Consti-
tutional Law 125, 131 (3d ed. 1986).
Since the powers of the federal government concerning for-
eign or external affairs are different in origin and nature
from those involving domestic or internal affairs,“ it is
46 United States v. Curtiss-Wright Export Corp., 299 U.S. 304 (1936).
Power over domestic affairs is shared by the federal government and the
|
ee Tee ee ee TE ere we ee
uw
“ 2 East
23
hardly surprising that state enactments burdening inter-
national commerce are subject to stricter scrutiny than those
which burden only interstate commerce. ‘‘It is a well-accepted
rule that state restrictions burdening foreign commerce are
subjected to a more rigorous and searching scrutiny.’’ South
Central Timber Development Inc. v. Wunnicke, 476 U.S. 82,
100 (1984). In Japan Line, Ltd. v. County of Los Angeles,
441 U.S. 434 (1979), a decision striking a California ad
valorem property tax statute as applied to Japanese shippers,
the Court expressly rejected arguments that regulations bur-
dening international commerce are entitled to no more strin-
gent review under the Commerce Clause than that applied to
regulations affecting interstate commerce. Jd. at 446, 448 and
nn. 12 and 13.
As mentioned above, Carey Canada is incorporated under
Canadian law, has no corporate offices in the state of New
Jersey, has never been registered to do business in the state
of New Jersey, and has not appointed an agent for service of
process with the New Jersey Secretary of State. Since Carey
Canada sold its asbestos fiber ‘‘F.O.B. Quebec, Canada’’®’ it
did not conduct its business operations in the United States
and is entitled to have the New Jersey tolling statute reviewed
under the exacting standard applicable to state regulations
burdening foreign commerce. Given the broad definition of
‘foreign commerce,’’“ and the obvious impact or such com-
states since the former’s powers were carved from the general legislative
powers originally held by the states. In the domestic sphere the federal gov-
ernment possesses only those powers specifically granted to it by the Consti-
tution and those ‘‘necessary and proper’’ to the exercise of those enumerated
powers. Power over foreign affairs, however, was never possessed by the
States since it passed directly from the sovereign nation of Great Britain to
the federal government. Jd. at 316-18.
47 See n.il and accompanying test supra.
48 Tribe at 468-469. In the proceedings below, Carey Canada called the
Third Circuit's attention to a case in which that court declined to employ the
brozdest permissible interpretation of the term ‘‘burden on commerce’’ for
purposes of foreign commerce clause review. As Carey Canada explained
below, however, that decision is distinguishable from the case at bar since it
involved a nondiscriminatory regulation which presented only a hypothetical
ee
24
merce in the case at bar, review under the foreign commerce
clause would surely strike the tolling statute in the case at
bar. Indeed, in Bendix this Court struck a similar Ohio toll-
ing statute under a less rigorous interstate commerce clause
standard due to the ‘‘significant’? burdens that enactment
imposed. 108 S. Ct. 2218, 2221 (1988). Furthermore, the
greater cumulative burden the tolling statute poses to interna-
tional commerce also argues for invalidation of the statute
under the foreign commerce clause.”
IV.
RETROACTIVE APPLICATION OF THE THIRD CIR-
CUIT’S DECISION STRIKING THE NEW JERSEY TOLL-
ING STATUTE ON COMMERCE CLAUSE GROUNDS
CONSTITUTES A PROPER APPLICATION OF THIS
COURT’S PRECEDENTS
Petitioners maintain that the Third Circuit’s ruling accord-
ing its decision striking the tolling statute retroactive effect
represents ‘‘an inappropriate application of the standards laid
out in Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) and
Lemon v. Kurtzman, 411 U.S. 192 (1973).’’ Pet. at 22. Peti-
tioners do not assert that the Third Circuit employed a prin-
ciple of retroactivity which conflicts with a decision of this
Court, or a decision of another court of appeals, nor do they
ask this Court to enunciate a new rule of law. See Pet. at
22-25.
burden to foreign commerce: its only potential effect on that commerce was
an increase in price to ultimate consumers of the litigant’s product. Norfolk
Southern Corp. v. Oberly, 822 F.2d 388, 404-407 (3d Cir. 1987). In addition
to distinguishing that case, Carey Canada also argued that a broad interpre-
tation of the term ‘‘burden on commerce’’ for purposes of international and
interstate commerce clause review is supported by the decisions of this Court.
See, e.g., Wickard v. Filburn, 317 U.S. 111 (1942) (farmer growing wheat for
home consumption subject to regulation under federal power over interstate
commerce).
49 The cumulative nature of burdens imposed by the tolling statute was
discussed in Carey Canada’s opening brief to the Third Circuit at 22.
25
Respondent Carey Canada respectfully maintains that peti-
tioners’ mere claim of misapplication of the correct retroac-
(ivity standards does not constitute a sufficiently ‘‘special’’ or
‘*important’’ matter to warrant issuance of the writ. Rule 10.
Indeed, review of the retroactivity issue in accordance with
petitioners’ request would amount to no more than a repeti-
tion of the Third Circuit’s meticulous application of the
proper balancing test to a case involving a state statute with a
long, intricate history.
In making its retroactivity ruling, the Third Circuit, draw-
ing on Lemon v. Kurtzman, 411 U.S. 192 (1973) (Lemon I1),
applied the three-factor test enunciated by this Court in
Chevron Oil Co. v. Huson, 404 U.S. 97 (1971):
First the decision to be applied nonretroactively must
establish a new principle of law, either by overruling
clear past precedent on which litigants may have relied,
or by deciding an issue of first impression whose resolu-
tion was not clearly foreshadowed. Second, it has been
stressed that ‘‘we must ... weigh the merits and
demerits in each case by looking to the prior history of
the rule in question, its purpose and effect, and whether
retrospective operation will further or retard its opera-
tion.’’ Finally, we have weighed the inequity imposed by
retroactive application, for ‘‘{w]here a decision of this
Court could produce substantial inequitable results if
applied retroactively, there is ample basis in our cases
for avoiding the ‘injustice or hardship’ by a holding of
nonretroactivity.”’
404 U.S. at 106-07 (citations omitted).
Although Chevron calls for consideration of arguments
pertaining to each of the three factors, the ultimate decision
regarding retroactivity must be based on an overall evaluation
of the merits. A litigant seeking to avoid retroactive applica-
tion bears the burden of establishing that ‘‘on balance the
weight of the three Chevron factors favors prospective appli-
cation.’’ Juzwin, 900 F.2d at 693. Pet. App. 17a-18a. In the
case at bar the Third Circuit ordered retroactive application
based upon a finding that all three Chevron factors favored
26
retroactive application. Juzwin, 900 F.2d at 693-97. Pet.
App. 15a to 26a.
Petitioners apparently maintain that the Third Circuit erred
in applying the first Chevron factor” in finding that petition-
ers ‘‘could not have reasonably relied upon the statute in fail-
ing to bring suit earlier.’’ Pet. at 23.
Petitioners suggest that their reliance on the tolling statute
was reasonable since the previous version of the enactment
had been subject only ‘‘to several constitutional challenges
from 1983 to 1986.’’ Contrary to petitioners’ suggestion,
the predecessor tolling statute had been challenged on various
constitutional grounds since 1963,°' and was under almost
continuous attack from 1978 to 1986 in both federal and
state courts. Moreover, the predecessor statute had been
50 Petitioners do not expressly state which Chevron factors they are
addressing. See Pet. at 23-25.
$1 See Lemke v. Bailey, 41 N.J. 295, 196 A.2d 523 (1963) (upholding
statute against equal protection challenge).
$2 A chronological account of the Coons and Cohn litigations high-
lig’tts petitioners’ imprudence in delaying the filing of their action.
In 1978, the district court held that by denying the statute of limitations
defense to nonresident corporations subject to long-arm jurisdiction, the
predecessor tolling statute violated the Equal Protection Clause of the Four-
teenth Amendment. Cohn, 447 F. Supp. 903, 912 (D.N.J. 1978). In 1980, the
Third Circuit reversed. Sub nom. Hopkins v. Kelsey-Hayes, Inc., 628 F.2d
801 (3d Cir. 1980). (Although Searle raised the commerce clause issue in its
brief as a subsidiary argument, the Third Circuit declined to address it. See
Hopkins, 677 F.2d 301, 302 (3d Cir. 1982)).
In 1980 American Honda unsuccessfully argued in both the law and appel-
late divisions of New Jersey Superior Court that the predecessor tolling stat-
ute unduly burdened interstate commerce. See Coons v. American Honda
Motor Co., 176 N.J. Super, 575, 424 A.2d 446 (App. Div. 1980). American
Honda then sought leave to appeal the issue to the New Jersey Supreme
Court. See Coons I, 94 N.J. 307, 463 A.2d 921 (1983). When that court
refused to hear the case, American Honda appealed it to this Court. /d.
In February of 1982, this Court affirmed the Third Circwit’s 1980 equal
protection ruling in Hopkins, 628 F.2d 801, but remanded the case to the
court of appeals for consideration of Searle’s commerce clause argument.
Cohn, 455 U.S. 404, 414 (1982).
(footnute continued)
Ss wa ee dedanaesae
ee
27
under attack on commerce clause grounds beginning in
1980.°° As the opinion below so carefully explains, petition-
ers’ delay in filing suit in reliance on the tolling statute can-
not be justified. See Juzwin, 900 F.2d at 692-95. Pet. App.
18a-23a.
Petitioners also maintain that since the New Jersey legisla-
ture drafted the current tolling statute in 1984 specifically to
In March of 1982, this Court vacated the state court judgment in Coons,
176 N.J. Super. 575, 424 A.2d 446 (App. Div. 1980) (rejecting American
Honda’s commerce clause challenge to the tolling statute), and remanded the
case for reconsideration in light of the recent decision in Cohn, 455 U.S. 404.
Honda Motor Co. v. Coons, 455 U.S. 996 (1982). In response to this
remand, the New Jersey Supreme Court certified the cause on its own
motion. See Coons, 94 N.J. 307, 463 A.2d 921 (1983).
In April of 1982, the Third Circuit remanded Cohn (sub nom. Hopkins vy.
Kelsey Hayes, Inc., 677 F.2d 301 (3d Cir 1982)) to district court to develop a
record regarding commerce clause issues.
In August of 1982, plaintiff Stephen Juzwin learned of his alleged injury
when he was diagnosed as having an asbestos-related condition. In August
1983 the New Jersey Supreme Court held the predecessor tolling statute
unduly burdensome of interstate commerce and applied that ruling retroac-
tively. Coons I, 94 N.J. 307, 463 A.2d 921 (1983). In January of 1984 the
New Jersey Supreme Court heard argument as to whether it should recon-
sider its retroactivity ruling and in June of that year it issued a decision pro-
viding for prospective application. Coons II, 96 N.J. 419, 476 A.2d 763
(1984).
In response to Coons I, the New Jersey legislature hastily drafted, debated
and enacted into law—in August of 1984—a successor [the current] tolling
statute.
In December 1984, the district court held that the predecessor tolling stat-
ute violated the commerce clause and retroactively applied its decision.
Cohn, 598 F. Supp 965 (D.N.J. 1984). Like many, if not all significant devel-
opments regarding the tolling statute, the ruling was reported at length in the
legal trade press. See 115 N.J.L.J. 135 (1985). In 1986, the Third Circuit
reversed the district court’s decision only with respect to the retroactivity rul-
ing. Cohn, 784 F.2d 460, 467.
53 The opinion below states that the ‘‘first hint of a commerce clause
problem with the New Jersey tolling statute came early in 1982 with the
Supreme Court’s decision in G.D. Searle & Co. v. Cohn, 455 U.S. 404
(1982).’” Juzwin, 900 F.2d at 693. This respondent notes that the previous
tolling statute was challenged in state courts on commerce clause grounds as
early as 1980. See preceding footnote supra.
28
cure the constitutional defects of the predecessor tolling stat-
ute stricken by Coons I and Cohn v. G.D. Searle & Co.,”
plaintiff Juzwir.’s reliance on the current enactment was rea-
sonable. This argument is also unpersuasive.
As previously stated, following the New Jersey Supreme
Court’s decision in Coons J striking the tolling statute, the
New Jersey legislature rushed to enact a replacement. The
replacement (i.e., the current tolling statute), enacted in
effect under emergency conditions, was identical to the old
statute except for the final ‘‘designation of agent’’ provision
added to avoid the ‘‘forced licensure’’ defect identified in
Coons I. See Preliminary Statement supra. Since lawyers
practicing in common law jurisdictions inevitably reassert
legal theories which have prevailed in past cases, a commerce
clause challenge to the replacement tolling statute was to be
expected. The fact that the legislature merely repaired the one
defect identified in Coons IJ without considering whether the
revised statute could withstand commerce clause scrutiny
made that challenge all but inevitabie. The fact that the
Coons I court struck the ‘‘forced licensure’’ aspect of the
predecessor tolling statute does not give grounds for reliance
on a replacement statute hastily repaired by addition of an
untested ‘‘designation of agent’’ provision. In drafting the
current tolling statute, the 1984 New Jersey legislature simply
did not correct the long-standing ‘‘amenability to service’’
problem which required the holding below. Juzwin, 900 F.2d
at 695. Pet. App. 23a.
In support of their argument regarding the second Chevron
factor, petitioners suggest that Judge Seitz did not give due
consideration to the Third Circuit’s 1986 ruling requiring pro-
spective application of the district court decision striking the
tolling statute on commerce clause grounds. See Pet. at 24-
25. While it is true that Judge Seitz did not quote from his
opinion in Cohn v. G.D. Searle & Co. v. Cohn, 784 F.2d 460
(3d Cir. 1986) (Seitz, J., opinion of the court) in discussing
54 96N.J. 307, 463 A.2d 921 (1983).
55 598 F. Supp. 965 (D.N.J. 1984), reversed in part and remanded, 784
F.2d 460 (3d Cir.), cert. denied, 479 U.S. 883 ($986).
—
PE eed le Ite. cathe VERGO Se cle enema RE ON lai ley 8d:
a Nt ns PO
ee
Pemiet. De
a. AAP OS Reeth aly Rate. wath
29
the second Chevron factor, Carey Canada maintains that
Judge Seitz’ opinion below more than adequately explains
why the marked differences between Cohn and the case at
bar required retrospective application of the latter decision.*
Regarding the third Chevron factor, petitioners claim that
equitable considerations favor prospective application of the
decision below. Pet. at 25. This assertion ignores the reality
that prospective application of the decision striking the toll-
ing statute would cause great hardship to domestic, i.e., New
Jersey, corporations as weli as foreign corporations which
complied with the tolling statute. As the opinion below
briefly mentions, under New Jersey law’’ the right of a defen-
dant to seek contribution is not affected by the running of
the limitations period. Juzwin, 900 F.2d at 696. Pet. App.
25a. ‘‘Thus, even New Jersey corporations and foreign cor-
porations who have complied with the provisions of the toll-
ing statute would continue to be deprived of the protection of
the statute of limitations when they were joint tortfeasors
with a nonrepresented foreign corporation’’™® which will
implead them as third party defendants. Jd.
Also unpersuasive are petitioners’ arguments that equity
favors plaintiffs who delayed filing their actions in reliance
or the tolling statute,’ and that the Third Circuit improperly
56 See Juzwin, 900 F.2d 686, 692-697 (3d Cir. 1990) (Seitz, J., opinion
of the court) (retroactivity discussion). Pet. App. 15a-26a. Since application
of the Chevron retroactivity test requires a case-specific analysis, it would
have been improper for the Third Circuit to uncritically repeat its 1986 ruling
in Cohn.
$7 N.J. Stat. Ann. § 2A:53A-1, ef seg. (West 1987); McGlone v. Corbi,
59 N.J. 86, 279 A.2d 812 (1971) (defendant has right to implead unjoined,
joint tortfeasor for purposes of proving their common liability even after
limitations period on plaintiffs claim has run).
58 This is often the situation in asbestos and other toxic tort actions ia
which plaintiffs join a large number of defendants.
59 Equity certainly does not favor a plaintiff like Juzwin who, after
recovering Workers Compensation settlements, delays for years before filing
his action. See n.10 and accompanying text supra. The doctrine of laches ‘‘is
based upon the maxim that equity aids the vigilant and not those who slum-
ber on their rights.’ H. Black, Black's Law Dictionary at 787 (Sth ed. 1979).
30
ordered retrospective application without the benefits of fac-
tual determinations by the district court.”
CONCLUSION
For the foregoing reasons, the petition should be denied.
Respectfully submitted,
ANDREW T. BERRY
Counsel of Record
KEVIN J. CONNELL
McCCARTER & ENGLISH
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
(201) 622-4444
Attorneys for Respondent
Carey Canada, Inc.
Andrew T. Berry
Of Counsel
Kevin J. Connell
On the Brief
September 10, 1990
60 See Pet. at 5S. Petitioners should have submitted all their proofs
when the retroactivity issue was litigated in district court. See Jt. App. at !6
(regarding Carey Canada’s argument to the district court in favor of retroac-
tive application).
TABLE OF CONTENTS
Transcript of Proceedings, Armenti v. Carey Canada,
Inc., No. L-45449-87 (N.J. Super. Ct. Law Div.
Middlesex County May 27, 1988) (Hon. John E.
PS MC ce bc ce wbadk aeeancstee0es en weed ces
Transcript of Proceedings, Armenti v. Carey Canada,
Inc., No. L-045449-87 (N.J. Super. Ct. Law Div.
Middlesex County September 16, 1988) (Hon.
SE Es I, Beta 6 6 606 6s 6 000 6504406
Order, DiFalco v. Subaru of America, Inc., Docket
No. AM-1642-89T3, (sic), Motion No. M-6197-89
(N.J. Super. Ct. App. Div. Aug. 6, 1990) (Hon.
James M. Havey, J.A.D.) (order granting motion for
Se I Socks bcc eee SuhAseuad bhab ues ceess.
Scheduling Order, DiFaico v. Subaru of America, Inc.,
No. A-6247-89T3F (N.J. Super. Ct. App. Div. Aug.
SS POPE eT TEES ETT CET TT TET TET TT CTTe
Affidavit of Paul E. Wermuth dated Nov. 8, 1988,
(with attached ‘‘Exhibit A’’), Robinson v. Visual
Packaging, Inc., No. 86-5059 (D.N.J. marked ‘‘orig-
inal filed Nov. 2, 1988’’) [Also filed in supplemental
appendix of intervenor, the State of New Jersey in
Juzwin v. Asbestos Corp., Litd., No. 89-5420 (3d
RUN. oR KCLEAKE CK SANE EAS OER EAR MADRE aL ERS KAS
Order, DiFalco v. Subaru of America, Inc., No. W-
019907-88 (N.J. Super. Ct. Law Div. Passaic County
PE es EE CECE ECLC Neb aha ceeadesentcnenaenes
PAGE
la
23a
Ala
43a
4Sa
OLE TOL LLORES FFE ARR BD
la
SUPERIOR COURT OF NEW JERSEY
LAW DIVISION
MIDDLESEX COUNTY
DOCKET No. L-45449-87
—
ARMENTI, ef ai.,
Plaintiffs,
—Vvs.—
CAREY CANADA, ef al.,
Defendants.
>
MOTIONS
Middlesex County Courthouse
New Brunswick, New Jersey
May 27, 1988
Before: Honorable John E. Keefe, J.S.C.
APPEARANCES: Wilentz, Goldman & Spitzer
By: Philip A. Tortoreti, Esq.,
Attorneys for the Plaintiffs
McCarier & English
By: Gita F. Rothschild, Esq.,
Attorneys for Carey Canada & Turner
& Newell
Goldfein & Joseph
By: Roseann Lynn Brenner, Esq.,
Attorneys for ACL & Bell
Harry Z. Haushalter, Esq.,
Deputy Attorney General
Attorney for the Intervenor
Stanley Grabon, C.S.R.
Official Court Reporter
2a
[2] (May 27, 1988.)
THE COURT: Armenti versus Carey Canada.
MR. ROTHSCHILD: Gita Rothschild; McCarter & English,
for Carey Canada and Turner & Newall.
Ms. BRENNER: Roseann Brenner for A. C. L. and Bell.
MR. HAUSHALTER: Harry Haushalter for the intervenor,
Attorney General of New Jersey.
Mr. TORTORETI: Philip Tortoreti for Wilentz, Goldman &
Spitzer, for the plaintiff.
THE CourRT: I assume no one has any opposition to the
Attorney General’s motion to intervene on this moticn; is
that correct?
Ms. ROTHSCHILD: That’s correct.
THE CourRT: Okay. That motion is granted.
MR. HAUSHALTER: Thank you, your Honor.
THE CouRT: Mr. Tortoreti, this is your motion.
MR. TORTORETI: Good moming, your Honor. As you
know, this is a motion addressing the—affecting the constitu-
tionality of the statute, the new tolling statute. I think that
we can say that it is not in dispute that the defendants here
do not have an agent designated for service of [3] process.
We can say that it is not disputed that if the tolling statute is
constitutional, that the statute of limitations has not run.
They do not dispute that the new tolling statute was made
effective law in 1984 and, therefore, there was no break
between the Coons-II decision and the tolling statute, the new
tolling statute.
What we have is a constitutional challenge.
THE CourT: Well, the relief that you seek specifically is to
strike the defense of statute of limitations.
MR. TORTORETI: That’s correct. The statute of limitations
has not even commenced running as of this date as against
these defendants because they do not have agents appointed
for service of process.
As regards the due process and equal protection challenges,
I don’t know that there’s anything that I have to say. I mean
that has been addressed thoroughly in prior decisions. 1 have
nothing to add that.
3a
As to the, as to the challenge which was effective in over-
turning the prior tolling statute, we start out that there has to
be a presumption in favor of constitutionality by the [4]
court. The case law is clear, that your Honor must presume
constitutionality, and further that your Honor, if you are
leaning toward an interpretation that might find the statute
unconstitutional, you must interpret it in a constitutional
manner, if you can reasonably.
Given that background, given the fact that there’s also a
presumption that the legislature acted with knowledge of the
constitution and in consideration of the constitution, and
given the fact that this legislative act, the amendment to the
tolling statute specifically states that the legislature was
addressing the constitutionality of the statute, I think it’s
clear that even if we say no more and don’t even address the
merits, that this statute is constitutional at least as regards
this court’s review of it.
Going to the merits of the argument, Coons-1 found the
prior tolling statute unconstitutional because it was silent on
designation of an agent for service of process by a foreign
corporation. That being the case, it looked to the other ave-
nues by which a foreign corporation could designate an
agent, and the majority, the four member majority as com-
pared to [5] the three member dissent found the only way
that could be done is by actually registering to do business.
They then characterized that as a forced licensure and it
was therefore a violation of the commerce clause. We do not
have that now. What we have now is a designation, a simple
designation for service of process. There is absolutely no
other baggage that goes along with it. Simply designated for
service of process. They can do this by a simple filing with
the Secretary of State’s office.
They have argued that subjects them to the jurisdiction of
this court and the courts of New Jersey and, therefore, they
are giving up jurisdictional defenses. Those jurisdictional
defenses have been unsuccessful as to these defendants in the
past. But even disregarding that, they offer absolutely no
indication whatsoever of one instance where designating an
agent for service of process pursuant to the new tolling stat-
4a
ute has resulted in a waiver of any jurisdictional defenses, in
personam jurisdictional defenses.
I would submit, your Honor, first of all, [6] that even if
they did, if it was a waiver, that does not render the statute
unconstitutional and that does not constitute a forced licen-
sure and you would be forced into a balancing test under the
applicable law, not a per se violation.
THE CouRT: Let me stop you for a second. You're saying
that there’s nothing in the statute that implicates or suggests
that someone who files and designates an agent for the ser-
vice of process is consenting to the jurisdiction of the court
in personam.
MR. TORTORETI: That’s correct.
THE Court: All right.
MR.- TORTORETI: Absolutely true.
THE CourT: So that they can come in and defend.
MR. TORTORETI: Absolutely.
THE CourRT: On due process.
MR. TORTORETI: That’s correct.
THE Court: All right.
MR. TORTORETI: They can say that this court or any court
in the State of New Jersey has no in personam jurisdiction.
Even if they did lose the in personam jurisdiction defense
as a result, I would submit [7] that the balancing test proce-
dure as compared to the per se violation procedure would be
in place. But I think, by the way, your Honor has to look at
the statute as constitutional.
What the tolling statute does by auowing appointment of
an agent for service of process is places the foreign corpora-
tion as regards service of process in exactly the same position
as the domestic corporation with respect to service of pro-
cess, that is, that a New Jersey plaintiff can serve process on
a putative or a potential defendant by serving somebody in
New Jersey.
Now these defendants argue that we have been able to
serve them in Canada, so that that’s ridiculous. First of all,
these are not the only foreign corporations that exist in the
world. There are lots of them. Number two, if we—it so hap-
pens that we are able to serve them with process, these defen-
Sa
dants, because they have been involved in asbestos litigation
in New Jersey for ten, “welve, fifteen years.
The court has to view this in the context of the general
law, the general situation. This is a constitutional challenge.
That’s pointed out in my papers, that at least Asbestos Cor-
poration [8] Limited at one point in time acknowledged that
the new tolling statute is constitutional and they were trying
to undermine the retroactive effect of the statute.
THE CourT: Mr. Tortoreti, now that you have got me
into the balancing test, let’s get to the critical issue. Tell me
what the difference between our statute and the Ohio statute
is. Distinguish, in other words, the Bendix case from—
MR. TORTORETI: The Ohio statute, your Honor, did not
carry with it an appointment for service of process clause.
The Ohio statute was the same as our old tolling statute. If
you read the opinion, the opinion is completly clear.
THE Court: I’ve read it.
MR. TORTORETI: All right. I’m not implying that you
didn’t, your Honor. You might have drawn that inference.
THE Court: Yes, I might have.
MR. TORTORETI: We are suggesting that maybe counsel
for A. C. L. and Bell didn’t read the opinion.
Ms. BRENNER: I object to that.
Ms. ROTHSCHILD: Thanks, Phil.
[9] MR. TORTORETI: You did get me off track. I’m sorry.
When the court in the federal court in Ohio indicated that
they were dealing with conjecture and speculation, it was
because there was conjecture and speculation as to whether
or not there could be a simple designation. We do not have
that here. We have an absolute designation provision.
I have the opinion—! do not have the opinion here, your
Honor, but I quoted it in my brief.
THE COURT: What are you looking for?
MR. TORTORETI: At page 189 of the opinion they charac-
terize it, the argument made by the party trying to toll the
Statute, as highly speculative and void of any statutory sup-
port. The statutory support that they are referring to, if you
read that clause in pari materia with the rest of the decision,
is that there is no provision in that statute for appointment
6a
of service of process, of an agent for service of process. We
have that here.
I think that it’s a distinguishable statute. It’s really more
akin to the tolling statute that was found unconstitutional.
{10} THE CouRT: Okay. Thank you. Mr. Haushalter?
Mr. HAUSHALTER: Thank you, your Honor. Let me con-
cur with Mr. Tortoreti’s argument, and he is correct with
regard to the Bendix decision. I think that page 189 the court
said with regard to Bendix’s suggestion that the corporation
may merely notify the Secretary of State of it’s designated
representative, we note simply here that this argument is
highly speculative and devoid of any statutory support.
That’s the Coons-1. And the Ohio court simply indicated
there was no statutory support for a foreign corporation to
merely designate an agent. It must actually register to do
business. The forced licensure.
We have here an argument of forced representation. That
seems to be the argument that in order for a foreign corpora-
tion to avoid the tolling it must designate an agent, and by
doing so it exposes itself to suit from any plaintiff, from any-
where. We disagree. That is not, in fact, the case.
We pointed out first of all that the designation that can be
filed with the Secretary [11] of State clearly can be limited so
that the in personam defense is not destroyed, that the for-
eign corporation can still defend on the basis of no in per-
sonam jurisdiction.
THE CourRT: Of course that’s not provided for in the stat-
ute, though, is it?
Ms. HAUSHALTER: This is part of the jurisdictional right
of the Secretary of State to accept these types of designations
and he, in fact, is doing that or she is doing that. That in
fact is the way that many of these foreign corporations are
designating agents.
THE CouRT: That’s exactly what the Sixth Circuit found
wrong with the Ohio statute in that it did not provide for
that exception.
MR. HAUSHALTER: Well, we feel our statute does provide
for it.
7a
THE CouRT: Why would you have to? I guess the point
that I am getting to is why does the Secretary of State really
have to do that? Why would the Secretary of State have to
affirm in some way that a person who files and names an
agent in this state would have the right to contest in per-
sonam jurisdiction? It’s a constitutional right anyway.
[12] MR. HAUSHALTER: The Secretary of State is just
accepting filings. I don’t think that it’s up to the Secretary of
State to gauge whether the filings are proper or not. She is
accepting these filings. Whether those filings are valid,
whether in fact the limited designation has validity, would
have to be argued in individual cases. We maintain that it’s a
proper method for dealing with this situation.
THE Court: I think that you think that I am fighting with
you, but actually I think that I am agreeing with you. Justice
Stevens in his dissent in the Coons case points out the fact
that one can—no state legislation can ever void a party's
right to come into a jurisdiction and contest on the due pro-
cess clause jurisdiction over the person. | think that I am
agreeing with you.
MR. HAUSHALTER: We subscribe to your Honor’s posi-
tion. I think that Mr. Tortoreti appropriately noted that we
had three justices in Coons-1, and they dissented, but they
dissented with regard to the very issue that was decided in
that Bendix case, namely that you do have, or they felt that
the Secretary of State could accept the [13] designations with-
out having these foreign corporations actually file to do busi-
ness. The point being once having reached that result, those
three justices said that that kind of a designation is constitu-
tional unaer a balancing test.
And the critical quote is on page 328 of 94 N.J., where the
court is saying, ‘“‘the message they send to the’’—this is the
foreign corporations—‘‘message they send to the New Jersey
consumer is clear and forceful. The legislature has asked
manufacturers to send one little brief message about where
they can be found if anything goes wrong with the motorcy-
cle. Again, this is Honda, the defendant here.’’
If this kind of an argument, the forced representation is
sustained, then we have no tolling statute. There is just no
8a
tolling statute. This destroys the very heart of the toliing stat-
ute, which means that a foreign corporation which cannot be
reached can wait two years, or whatever the appropriate stat-
ute of limitations is, and then come into the state and not be
concerned about ever being sued. Forget about the long arm,
of course.
[14] This is really the critical aspect of this case, judge,
because if this kind of an argument is sustained, there’s no
tolling statute, and the New Jersey plaintiffs are not going to
be protected and this is the critical issue that was decided in
Coons-II decision, and in the Searle case where we had very
clear statements by the U.S. Supreme Court about the impor-
tance of this policy of sustaining causes of action for New
Jersey plaintiffs.
And if you don’t have a tolling statute you can’t protect
those plaintiffs, and I think that’s ultimately what has to be
decided in this case and that is what the balancing test is all
about.
Thank you, judge.
THE Court: Isn’t that basically the issue here? If I knock
out this statute, there’s no tolling statute that can ever be
passed and not violate the interstate commerce clause. How
less minimal can the intrusion be than the New Jersey legisla-
ture has made it in this amended statute?
MS. BRENNER: Well, your Honor, I have a different inter-
pretation of the Bendix case than counsel.
THE CourRT: That’s not my question. That’s [15] not my
question. My question is what I’ve just asked you. How less
intrusive could a statute be, a tolling statute be than the New
Jersey statute already is?
MS. BRENNER: The statute that would contain a provision
that would protect a foreign corporation’s right to object to
in personam jurisdiction.
THE CourRT: I just made that point before. Do you dis-
agree with the point that you have that right regardless of
what a statute says or doesn’t say? How can a statute ever
preserve for you a right that you have? It’s pari of the
organic law.
9a
Ms. BRENNER: It’s our position, your Honor, that it’s
quite possible that by designating an agent we could possibly
be waiving that right.
THE CoOuRT: Under what theory?
Ms. BRENNER: Under the theory that then there is a resi-
dent agent of the state who is accessible to be served with suit
by any New Jersey claimant on any cause of action filed in
any state or federal court in New Jersey, and it’s a position
of A. C. L. and Bell that they always [16] object to in per-
sonam jurisdiction.
THE COURT: Let me give you a hypothetical, okay? Let’s
assume that Bell Asbestos Mines delivered its fiber into the
United States but not to the State of New Jersey. Your driver
went from Canada, around the State of New Jersey, to Dela-
ware, left off his fiber, and instead of going back the same
route to Canada, came up the New Jersey Turnpike, and
someone—and Mr. Tortoreti happened to see him going up
the Turnpike and hit him with process. There’s no question
that he was served, right?
Ms. BRENNER: Yes, your Honor.
THE Court: Are you telling me that you can’t come in to
court and raise the question of jurisdiction over the person of
Bell Asbestos based upon that service?
Ms. BRENNER: No, your Honor.
THE Court: All right. Service is a separate issue from
jurisdiction, isn’t it?
MS. BRENNER: Yes, your Honor.
THE CouRT: Okay.
Ms. BRENNER: Your Honor, if I may address the Bendix
case, I think what’s important that everybody is overlooking
is the fact that the [17] Sixth Circuit found that the imper-
missible burden, irrespective of what is required of the defen-
dant, was the fact that they had to, which your Honor just
nullified my argument about waiving jurisdiction, whether
they have to choose to be exposed to suit ad infinitim or sub-
ject themselves possibly to service of process of claims that
may not otherwise meet minimal contacts.
THE CourT: I’m not making any holding now. I’m asking
you questions and I think that’s an interesting question that
10a
we have to address, and I guess what I’m suggesting is the
Sixth Circuit didn’t have to say that much. That’s all that I
am saying. I’m not bound by the Sixth Circuit.
Ms. BRENNER: That’s correct.
THE CourRT: But in terms of analyzing the law, I’m just
wondering whether they had to say that much. Is the Ohio
statute different from our prior statute, or is it basically iden-
tical?
MS. BRENNER: It’s similar statute, your Honor.
THE CourRT: Okay. Getting back to my original question
then. If you are in a jurisdiction that’s governed by the Sixth
Circuit opinion and you are a legislator, what kind of a [18]
tolling statute can you pass that would meet the constitu-
tional muster of Bendix? The answer is none, right?
Ms. BRENNER: Well, one that provides for preserving that
_ right, your Honor
THE Court: All right.
Ms. BRENNER: Which your Honor has stated to me you
believe that is an organic right under the due process clause.
THE COURT: Well, do you disagree with me?
MS. BRENNER: I would debate it, your Honor.
THE COURT: Well, you’re a good advocate. I would expect
you to debate it, but now I want you to tell me why you dis-
agree with me legally. What’s wrong with that analysis?
Ms. BRENNER: I’m at a loss, your Honor.
THE CouRT: Okay. You have raised the defense of laches.
Ms. BRENNER: Yes, I have, your Honor.
THE Court: In the event that I should find that the stat-
ute is constitutional, you say that, nonetheless, the plaintiff’s
claim is barred by the doctrine of laches.
Ms. BRENNER: That’s correct, your Honor. [19] I believe
that if you take the intent of the tolling statute, which has
been stated by counsel and your Honor to protect claims of
New Jersey plaintiffs, and you look to the doctrine of laches
which states that a plaintiff who has inexcusably delayed
bringing a claim, the only excusable delay for a plaintiff to
bring a claim under—I believe Searle and Velmohos implicitly
state if a plaintiff was unable to serve a foreign, unrepre-
sented foreign corporation due to the fact that they do not
lla
have a designated agent or haven’t registered to do business
in the State of New Jersey, Velmohos stated flatly in clear
language in the footnote that if an unrepresented foreign cor-
poration does not have the defense of the statute of limita-
tions and the plaintiff has waited until it expired to bring
suit, that defendant is permitted to raise the defense of
laches.
Searle—and the United States Supreme Court quoted that
language and stated flatly a defendant has that right to raise
that defense. Implicit in that statement along with the state-
ment of the court as to the interests sought to be protected
by the tolling statute, the interests to be [20] protected is a
plaintiff who can’t find the defendant who has run out of
time because of that difficulty.
Well, if a plaintiff waits eight, nine, ten years and a defen-
dant is as easily served as A. C. L. and Bell within twenty-
two days after they file suit, we don’t see—I can’t find the
inexcusable, I mean the excusable delay. It’s our position that
it’s inexcusable. Plaintiff has averred nothing to explain why
he waited eight years to bring this suit after he was diagnosed
in 1980. The suit was filed in ’87.
7HE COURT: Let me ask you a question. What is laches?
Ms. BRENNER: That’s an equitable doctrine, your Honor.
THE Court: It’s a defense, right?
Ms. BRENNER: That’s correct.
THE COURT: Who has the burden of proof on the
defense?
MS. BRENNER: I do, your Honor.
THE CourRT: Okay. And it’s clear, isn’t it, that laches is
something that—as applied where the claim is not barred by
the statute of limitations, correct?
[21] MS. BRENNER: Excuse me. I’m sorry.
THE COURT: Laches is a defense that can be used only
where the claim is not barred by the statute of limitations.
You don’t need it otherwise.
MS. BRENNER: Right.
THE CourRT: Okay: So the question of delay in filing suit
has to be linked up with another element which you forgot to
discuss, right? There’s two elements to it.
12a
Ms. BRENNER: Prejudice, your Honor.
THE CouRT: Right.
Ms. BRENNER: It’s obvious that a defendant sued eight
years later in that witnesses, evidences, each year passes, it’s
either lost, misplaced, destroyed.
THE CourT: That’s the problem with asbestos litigation in
general, isn’t it?
MS. BRENNER: That’s correct, your Honor, and that’s
why you can’t let stale claims be coming into court for no
other reason than the plaintiff just didn’t want to be coming
into court until eight years later, and they are well aware of
the situation, and this is well publicized litigation. A. C. L.
and Bell have been involved [22] in this for years.
THE Court: Tell me specifically how your client is preju-
diced in this case.
Ms. BRENNER: The man worked and was diagnosed in
1980. I have no information, I don’t have any information in
the papers as to his, how long he was employed and where he
was employed.
THE COURT: You know where he was employed. You
know from the complaint where he was employed, don’t
you?
MS. BRENNER: I’m not sure, your Honor.
THE Court: I know from reading the briefs where he was
employed.
MR. TORTORETI: Only because of your Honer’s order
which requires that we plead it.
THE CcuRT: All right. I also know that your client has
been involved in litigation out of this plant for at least the
last nine years that I have been sitting on asbestos litigation.
Now I want to know how specifically in this case your client
was prejudiced by the fact that he didn’t file suit earlier.
What witnesses have been lost because of his delay? Not
because of the latency of the disease, which is a problem in
and of itself, but because of his delay. What witnesses [23]
have been lost?
13a
Ms. BRENNER: As a practical matter, your Honor, there’s
another area that has to be looked at. The only people that
are, because of the tolling statute, the only defendants, viable
defendants in this case, if the tolling statute is declared con-
stitutional, is the unrepresented foreign corporation.
THE CoOuRT: Not true.
MS. BRENNER: Unless the unrepresented foreign corpora-
tion now turns around and brings in the domestic or resident
defendants.
THE COURT: What’s wrong with that?
Ms. BRENNER: That’s a whiplash effect. The represented
defendants in the state, they lose the benefit of the statute of
limitations as well.
THE CourRT: That’s the way it goes. The statute of limita-
tions on a claim for contribution doesn’t arise until the judg-
ment is entered against you.
Ms. BRENNER: That’s correct, your Honor.
THE COURT: Thei’s to protect you, right? That protects
you.
Ms. BRENNER: Minimally, your Honor. If it never comes
to judgment, if you never get a [24] judgment, then obviously
you are not going to be hit for contribution or indemnity.
THE Court: Exactly.
Ms. BRENNER: Defendants originally have the benefit of
that statute of limitations. The statute effectively eliminates
the statute of limitations in asbestos or any litigation, actu-
ally, for resident as well as non resident defendants.
THE Court: I’m still looking for prejudice. Show me
prejudice and maybe they don’t get the benefit of the statute.
I’m still looking for it. Tell me where it is.
Ms. BRENNER: Well, your Honor, I still think it’s because
the only viable defendants now are the unrepresented foreign
corporations. Whether or not there’s indemnification or con-
tribution, they are still going through the cost of litigation;
that’s prejudice. Cost of litigation is awfully high. A lot of
these cases obviously never come to trial. A lot do, but a lot
don’t come to trial.
I think that there’s extreme prejudice in situations such as
this where the statutes run on the resident defendants, I’ll call
l4a
them, as [25] opposed to the unrepresented foreign corpora-
tions.
THE CourRT: Okay. Thank you. Ms. Rothschild?
Ms. ROTHSCHILD: Your Honor, you directed a question
which asked if this telling statute is declared unconstitutional,
what less intrusive statute could be drawn? And | think that
there is an answer to that, your Honor, because I think that I
disagree with Mr. Tortoreti that this statute must be viewed
only in the context of all of those foreign corporations who
are not defendants in this case. I think quite the contrary.
The statute ought to be viewed in this case in the context of
these defendants, in the context of defendants who have been
accepting service, appearing in this court, and defending
cases, paying settlements and judgments for the last eight
years.
And I think a statute could be drawn which excepts from
its provisions defendants like these, defendants who do
accept service and who do come in and defend and who
behave in New Jersey just like domestic corporations in the
context of responding to lawsuits.
THE Court: But the Supreme Court of the [26] United
States in the Searle case said that is not a legitimate argument
when you’re talking about the constitutionality of a statute,
at least from the point of view of equal protection.
Ms. ROTHSCHILD: I don’t think that Searle made a dis-
tinction between defendants who have an agent for service of
process and defendants who, although they don’t have an
agent for service of process, are amenable to service, accept
service and come in and defend.
THE Court: I think that they do.
Ms. ROTHSCHILD: I think that they do not view in the
context of a, of this situation, I don’t think that they declare
such a statute as the type that I have hypothesized to be
unconstitutional.
THE CourRT: Justice Blackmun’s opinion says as follows.
“It is true, of course, that respondents had little or no trou-
ble locating this particular, well known defendant-petitioner,
but the tolling provision is premised on a reasonable assump-
1Sa
tion that unrepresented foreign corporations, as a general
rule, may not be so easy to find and serve.”’
MS. ROTHSCHILD: Well, I don’t think that [27] statement
means that if you drew a statute which provided for the
unrepresented foreign corporation who is not easy to find
and serve, such as the statute as it exists now, but excepted
and gave the benefit of the statute of limitations to those
who not only are easy to serve but who voluntarily come in
and defend, then that would not be unconstitutional under
any decision of the Supreme Court.
THE CouRT: How does a plaintiff do that? How do you
draft a statute like that in the first place and, secondly, how
do you put a plaintiff in a position where they have to know
whether they are dealing with someone that’s easy to serve or
someone that’s difficult to serve?
Ms. ROTHSCHILD: Doesn’t the plaintiff have an obligation
to, with reasonable speed and diligence, after discovering that
he has a cause of action, to file a complaint? Isn’t that the
basis of the statute of limitations, to protect against the prej-
udice that may occur generally, as a general matter, by the
disappearance of witnesses and staleness of evidence?
THE Court: All the legislature is trying to do here is to
put the plaintiff and the [28] defendants on the same playing
field, and it has to be level. It can’t be uneven. And what
they’re trying to do is saying let’s make it a level playing field
and let the plaintiff have the same chance of suing a foreign
tort-feasor as they do a resident tort-feasor.
Ms. ROTHSCHILD: That’s right, but this statute doesn’t do
that. What this statute does is give the plaintiff, balances it in
favor of the plaintiff because the plaintiff here can sit on his
cause of action, vis-a-vis a foreign corporation that is well
known to him, that has been in this state defending cases, the
same kinds of cases, and playing settlements and judgments
for the last eight or ten years, can sit on that cause of action
simply because that foreign corporation has not designated
an agent, has not done a ministerial act of designating a
agent for service of process.
l6a
THE CourRT: That’s an argument that has been raised and
found wanting in two cases, Velmohos, and in the Searle
case.
Ms. ROTHSCHILD: But no, because those two cases were
challenged under equal protection and due process grounds.
But the Supreme Court found [29] under commerce clause
constraints that the argument which wasn’t advanced in those
two cases and which would have succeeded was sufficient.
Your Honor has argued that there is a difference
between—
THE CourRT: I’m not arguing anything. I’m asking ques-
tions.
MS. ROTHSCHILD: Your Honor last posited that there may
be a difference between service of process and acceptance of
jurisdiction.
THE Court: Sure.
Ms. ROTHSCHILD: And that there is nothing in the statute
which specifically waives a defendant by appointing an agent
to—waives the claim that there’s no personal jurisdiction. It
seems to me that that argument is as highly speculative and
devoid of statutory support as the argument that was
addressed by the Sixth Circuit, and while we have the repre-
sentation of the Attorney General’s office that that is in fact
what he or she does, there certainly is no statutory support
one way or the other to say that.
And although your Honor has suggested that perhaps by
designation of an agent you don’t waive [30] your right to
assert lack of in personam jurisdiction, the very nature of the
agency concept is that the Secretary of State or whomever it
is that you appoint is your alter ego for accepting service of
process, and by accepting service of process it is at least evi-
dence of, if not a waiver, and I don’t necessarily concede
that it’s not a waiver, that you accept.
That’s not like being slapped with a summons as you drive
up the New Jersey Turnpike. That is your agent and alter ego
to accept service of process. Even if it’s not a waiver, it’s cer-
tainly evidence of a submission to the jurisdiction of this
state whether or not you would be subject to the jurisdiction
17a
of this state under the minimum contacts theory had you
been served under the long arm statute somewhere else.
So I think that there is an intrusion, if there’s a choice that
the defendant must make, and that really in most cases the
way that you come in and contest personal jurisdiction is that
you are served under the long arm statute and make a special
appearance for the purpose of contesting jurisdiction, and so
it permits you to come into court and not waive, by coming
into this state, [31] any defenses that you have, but for the
ability to make a special appearance you would have to come
in, and once you come in, I think historically it has been
been the rule that you have submitted to the jurisdiction of
the court.
By appointing an agent, your agent to accept service of
process, I think that there is a reasonable argument that can
be made that you have done that there too. I don’t suggest
that the defendants I represent necessarily have a good argu-
ment regarding minimum contacts. But if we are to view the
statute as it applies generally, I am virtually certain that there
are defendants out there who do. But in the context of these
defendants, I think that there is a statute that can be drawn
that would not infringe on commerce clause considerations
and would be sustainable under the protection and due pro-
cess clauses. ‘
As some of us have recently learned, it doesn’t take much
to sustain a statute or a court made rule under the equal pro-
tection and due process clauses, and I don’t think that there
would be anything in the less intrusive statute that I described
that would change that.
The last point that I would like to address [32] is that I
think that the phrase highly speculative and devoid of statu-
tory support in the Sixth Circuit case is equally susceptible to
the interpretation that what is highly speculative and devoid
of statutory support is the assertion that the defendants may
do this, that is, appoint an agent for service of process and
thereby avoid that Catch 22
THE CourT: Can I just read to you a footnote from Jus-
tice Steven’s dissent in the Searle case?.Mind you, he’s dis-
senting.
18a
**] do not understand the court to be holding that New Jer-
sey has a legitimate interest in attempting to require all cor-
porations to submit in all cases to the jurisdiction of its
courts, and that discrimination against unregistered foreign
corporations is justified by the state’s desire to accomplish
this purpose. Since a state may not enact a law that prohibits
a foreign corporation from asserting a due process defense to
an exercise of personal jurisdiction by a state court, I do not
believe that the state may justify a classification that disfav-
ors unregistered foreign corporations on the ground that they
refused to take action that would [33] accomplish the same
purpose.’’
Ms. ROTHSCHILD: As your Honor correctly pointed out,
we now have dicta in a dissent, and I am not sure how per-
suasive that would be in the face of a challenge to a statute
which—
THE CouRT: Weil, that’s what he’s saying the majority is
saying. He is saying that the majority is saying that they are
not construing the tolling statute by denying a foreign corpo-
ration the right to contest in personam jurisdiction. That’s
the whole court. He’s merely making an observation as to
what the entire court seems to agree on.
Ms. ROTHSCHILD: But that’s not in the context of a stat-
ute which requires you to appoint an agent for service of pro-
cess in order to take advantage of the statute of limitations. |
don’t know that he would say that when we’re dealing with
that type of a statute.
THE CourRT: Thank you. I’m going to decide the motion
today, although I reserve the right to file a formal opinion in
the event of an appeal.
It is my view that the Bendix case is not binding on the
courts of this state. I find that the facts of that case are dis-
tinguishable from [34] the facts of the current case. The Ohio
statute seems to be very similar to the first statute promul-
gated in the state which the Coons-1 opinion found to be
wanting under the interstate commerce clause, that is, the
Ohio statute in effect required licensure as well as the regis-
tration of an agent to effect service of process in order to toll
19a
the Ohio statute of limitations. That, in effect, was the prob-
lem with our first statute in New Jersey.
The first analysis I suppose is whether this statute inter-
feres with interstate commerce to the point that it is unconsti-
tutional. And we are recommended by case law to apply
either the per se test or the balancing test to that question. It
is suggested, I think, even in the Bendix case, that the per se
rule should not be applied where it is clear on the face of the
statute that the legislature has not intended to prefer its state
economically over that of another state, or where the unde-
clared intent of a statute is not to prefer the home state eco-
nomically over a foreign state.
And I think the tolling statute, although it clearly has
impact on out of state [35] corporations, is not designed to
favor either defendants or plaintiffs within the state over out
of state defendants. First of all, it affects out of state per-
sons, that is individuals, and out of state corporations. So
it’s not aimed simply at commerce conduct.
Secondly, it doesn’t favor either defendants or plaintiffs in
the forum state. As I indicated before, it’s my view that this
statute simply places all the parties on the same level playing
field and gives the plaintiff the opportunity to serve a tort-
feasor who is a resident of New Jersey the same way that he
would serve a non-resident defendant, that is, it simplifies the
service of process only and makes everyone equal in that
respect.
The question then is, and I think that the legitimate state
interest involved in this statute has been so well addressed
and decided by Velmohos and by the Cohn versus Searle case
that I’m just going to jump right over it and go to the ques-
tion of whether under the balancing test, since we have legiti-
mate state interests that are being advanced by the statute,
whether there is a less intrusive way of impacting on inter-
state commerce but [36] accomplishing the same state goals
and results.
It would appear to me that this amendment to the statute
was obviously taken from the legislative point of view of
meeting the constitutional infirmities of the prior statute, and
20a
the legislature was attempting to find the least intrusive way
of doing it.
And all a foreign corporation need do in order to gain the
benefit of our statute of limitations is to designate an agent
for the service of process by filing a paper. I believe that if
this court were to adopt the Bendix opinion to this current
statute there would be no way a legislature in the United
States could pass a tolling statute that would comply with the
interstate commerce clause.
In my view, it is incorrect to make the observation that by
requiring someone to file a piece of paper designating an
agent for the purposes of service you are consenting to the in
personam jurisdiction of the forum state. That I think is a
fatal analysis of the Sixth Circuit. Service of process and in
personam jurisdiction are distinct questions, and I think
clearly the organic law permits a defendant to come before
the [37] forum court and say you don’t have jurisdiction over
me on the typical due process grounds that are always
advanced in questions of jurisdiction. And I think that’s
clearly suggested by the Supreme Court of the United States
in the Cohn versus Searle case, not only by the majority, but
also by the dissent.
And I think that it’s unnecessary to require a state legisla-
ture to say to get the benefit of our statute of limitations you
have to file a piece of paper designating an agent tor service
of process and, by the way, just to remind you, you do have
a constitutional right to contest in personam jurisdiction
under the due process clause of the United States Constitu-
tion. I just think that’s unnecessary, and that is, as I perceive
this argument, to be the only criticism of the New Jersey stat-
ute, save the fact that no tolling statute whatsoever will meet
constitutional muster in the United States, and I find it diffi-
cult to believe in view of the fact that the United States
Supreme Court in the Cohn versus Searle case has enumier-
ated several reasons why they think the states have a legiti-
mate interest in protecting their citizens by passing a [38]
tolling statute. So it seems to me by reading the Cohn deci-
sion that the United States Supreme Court was not saying
2la
there is no tolling statute that can ever be passed that would
not meet constitutional muster.
For those reasons I find the New Jersey tolling statute not
be a burden on interstate commerce and not to be a violation
of the United States Constitution.
On the collateral issue of laches, I agree that the Cohn case
seems to suggest that in order to pass the equal protection
clause muster, laches would have to be an affordable defense
in order for foreign defendants to be treated fairly in terms
of the possibly prolonged time between accrual of the cause
of action and institution of suit. But laches is an affirmative
defense. The defendant has the burden of proving not only
an undue delay in terms of filing the complaint, but also the
presence of real prejudice by reason of the delay, and you
have to differentiate in toxic tort cases the real problems that
result because of the latency of asbestos related diseases from
the prejudice that results by reason of the plaintiff waiting
seven years from the time of [39] diagnosis until the filing of
suit. There has to be some affirmative showing by the defen-
dant that there is real factual prejudice. I see none in this rec-
ord and, therefore, I cannot grant the defendant's motion
which is a partial summary judgment motion. I deny the
motion on laches without prejudice to explore it further fac-
tually at the time of trial or before, but night now I have no
record to base any finding of prejudice.
Any questions?
MR. TORTORETI: Your Honor, I’m assuming that our
motion for summary judgment on the statute of limitations
grounds is granted.
THE CouRT: The motion is granted.
MR. TORTORETI: And the cross motion in all regards is
denied because you think the cross motion also addressed the
statute of limitations.
THE Court: Yes.
MR. TORTORETI: Thank you.
Ms. ROTHSCHILD: Thank you, your Honor.
THE COURT: The Order, however, should reflect that |
have simply denied the motion on the defense of laches with-
out prejudice.
MR. TORTORETI: I understand that.
22a
[40] CERTIFICATE
I, STANLEY GRABON, C.S.R. # X100377, an Official Court
Reporter of the State of New Jersey do hereby acknowledge
that the foregoing is a true and accurate transcript of my
stenographic notes of the within proceedings to the best of
my ability.
/s/ STANLEY GRABON
STANLEY GRABON, C.S.R.
OFFICIAL COURT REPORTER
23a
[1] SUPERIOR COURT OF NEW JERSEY
LAW DIVISION—MIDDLESEX COUNTY
DOCKET No. L-045449-87
—~<—
DOMINICK ARMENTI and THERESA ARMENTI,
his wife, ef al.,
Plaintiffs,
—
CAREY CANADA, INC., ef al.,
>
TRANSCRIPT OF MOTION
Middlesex County Courthouse
New Brunswick, New Jersey
Friday, September 16, 1988
TRANSCRIPT ORDERED BY:
Roseann Lynn Brenner, Esq.
APPEARANCES: WILENTZ, GOLDMAN & SPITZER, ESQS.
By: ALAN M. DARNELL, ESQ., -
For the Plaintiffs.
[2] MCCARTER & ENGLISH, ESQS.
By: GITA F. ROTHSCHILD, EsQ.,
For the Asbestos Claims
Facility Defendants.
GOLDFEIN & JOSEPH, ESQS.
By: ROSEANN L. BRENNER, EsqQ.,
For the Defendants A.C.L. & Bell.
CARY EDWARDS, ATTORNEY GENERAL
OF N.J.
By: HARRY HAUSHALTER, ESQ.,
Deputy Attorney General,
For the Intervener.
24a
June Andrian, C.S.R.
License X100362
Middlesex County Courthouse
P.O. Box 964
New Brunswick, N.J. 08903
ao
[2] THE CouRT: Armenti versus Carey Canada, Inc. et al.,
docket number L-45449-87.
Counsel, enter your appearances. 7
Ms. BRENNER: Roseann Brenner for A.C.L. and Bell.
Ms. ROTHSCHILD: Gita Rothschild for the Asbestos
Claims Facility defendants.
Mr. DARNELL: Alan Darnell for the plaintiff Armenti.
Mr. HAUSHALTER: Attorney General’s Office, intervener.
THE Court: As indicated on the card that has been pro-
vided to me by my staff, this is a motion granting defendants
relief from the Court’s order of June 2, 1988, granting plain-
tiff’s motion for partial summary judgment and denying
defense’ cross motion for summary judgment.
MS. BRENNER: That’s correct, your Honor.
THE Court: Basically what was the order that was
granted at that time?
Ms. BRENNER: Judge Keefe entered an order granting
plaintiff’s motion for partial summary judgment in effect
striking defendants’ defense of statute of limitations to the
claim brought by a Dominick Cortese.
Defendants had cross claimed to plaintiff’s motion because
plaintiff had initiated the question of the constitutionality of
the New Jersey tolling statute in their moving brief and the
defendants picked up the ball [3] obviously and ran with it,
and we challenge the constitutionality of N.J.S.A. 2A:14-22
which is the New Jersey Tolling Statute which tolls the Stat-
ute of Limitations to defendants and unrepresented foreign
corporations who are not present in the State and cannot be
served in the State, and provides for a designation of an
agent to make them represented in the State. In other words,
25a
all they have to do is file a designation with the Secretary of
State to be considered present in the State.
THE Court: All right. As I understand it, the basis for
the rehearing so to speak of that motion is defense counsel’s
position that U.S. Supreme Court case of Bendix held the
similar Ohio statute unconstitutional.
MS. BRENNER: That’s correct.
THE CouRT: The New Jersey statute should be unconstitu-
tional.
Ms. BRENNER: Your Honor, this case was initiated in 1987
under the title captioned Armenti, but Dominick Cortese is a
plaintiff in this case. He brought this in 1987 for asbestos
related which was diagnosed and freely admits in ’80. That’s
the defense of the statute of limitations that he waited seven
years to bring a suit. Therefore, that’s the basis of our
defense for the statute of limitations. Defendants submit
plaintiffs had filed their motion for partial summary judg-
ment to strike that [4] defense based on the New Jersey toll-
ing statute.
If I may, in the process of giving procedure, I think it’s
important to give the Court just a brief history of the statute
itself because there was a prececessor to this statute which
the New Jersey Supreme Court declared unconstitutional
because it did not provide for the designation of an agent. In
order to designate an agent you had to register to do busi-
ness. They considered that a forced licensor provision and
therefore an impermissible burden on interstate commerce.
THE Court: That’s Coons !.
Ms. BRENNER: That’s Coons 1. The burden was found to
be to enable a defendant to get the benefit of the statute of
limtations you were forced to register to do business and they
considered that an impermissible burden for a foreign corpo-
ration to undergo. Now, there was also Coons 2 which held
that was prospective and not retroactive in effect.
Defendants contest the constitutionality or contested before
Judge Keefe on the basis that the current amended statute
because the legislature after Coons 1 amended the New Jersey
tolling statute to provide for a designation procedure where
they didn’t have to register to do business. They responded
26a
directly to what the New Jersey Supreme Court did. The
looked at the decision and [5] said okay, this is unconstitu-
tional because we’re making them registered business. Let
them file notice with the Secretary of State to designate an
agent. Therefore, it takes that burden from them, so the leg-
islature did that. That brought in the current tolling statute.
Defendants then came and contested the constitutionality
of that statute before Judge Keefe on the basis that statute is
unconstitutional because it requires a defendant, an unrepre-
sented foreign corporation who does not intend to be bound
to the general jurisdiction or consent to the general jurisdic-
tion of New Jersey, to designate an agent to accept service of
process in New Jersey thereby consenting to the general juris-
diction. We contend that that was, in fact, a violation of the
commerce clause. We also contend it violated equal protec-
tion and due process, and the crux of the argument and what
the Sixth Circuit Bendix opinion and the United States
Supreme Court opinion dealt with was the commerce clause.
What I’m going to address only today is obviously the com-
merce clause.
We contended before Judge Keefe that, in fact, was not
constitutional because it forced the defendant to choose
between being liable forever to any claim brought by a New
Jersey resident or waive personal jurisdiction in New Jersey
which is something that A.C.L. and Bell do not want [6] to
consent to the personal jurisdiction of New Jersey, and they
find that an impermissible burden on interstate commerce
since they are exclusively foreign corporations engaged in
such.
Now, we relied also on the Bendix opinion which is a Sixth
Circuit opinion. The Court in Bendix had ruled that an Ohio
statute which stated that the statute of limitations was tolled
as to defendants of corporations who were not present in the
State it was tolled until they did become present in the State.
It was a tolling provision for the statuie of limitations if
you’re not present. To be present in Ohio you had to desig-
nate an agent.
The Sixth Circuit determined that that, in fact, was a viola-
tion of the commerce clause in that we essentially argued the
27a
same thing to Judge Keefe in that they forced a foreign cor-
poration to decide between being liable forever and not get-
ting the benefit of the statute of limitations or submitting to
get that benefit they would just have to waive personal juris-
diction, the right to contest personal jurisdiction.
Judge Keefe—this is obviously prior to the United States
Supreme Court decision—Judge Keefe determined that the
Bendix decision was not, in fact, binding upon himself or
New Jersey Courts because the Ohio statute and New Jersey
statute were distinguishable in that the Ohio [7] statute
required in order to appoint an agent you would have a
licensing procedure as the original New Jersey Statute had,
and he stated that since the current New Jersey tolling statute
allowed you to designate an agent, that they were distinguish-
able and that therefore he was not bound by what the Sixth
Circuit said in Bendix.
He went a little further and stated that he considered the
fatal flaw in Bendix—another reason why he wouldn’t follow
Bendix—the Bendix Court held that by designating an agent
you waive the right to contest in personam jurisdiction. He
felt that that was incorrect. He stated that one can’t waive
the right to contest personal jurisdiction. That was an organic
right. We disagreed then and we still disagree with that.
THE Court: Is there anything new by way of argument
that you have that you didn’t have before Judge Keefe?
Ms. BRENNER: Yes. It all interchanges. That’s why I’m
giving you everything.
THE COURT: Okay.
Ms. BRENNAN: If that’s permissible to the Court.
THE COURT: Go ahead.
Ms. BRENNAN: The Court has the papers. The Court is
aware Judge Keefe also held that the statute did not apply to
commerce because it affects individuals as well as foreign
corporations. Therefore, he stated that he looked [8] to the
Supreme court holdings in Velhmohos, New Jersey Supreme
Court, and G.D. Searle, United States Supreme Court, where
they challenged due process.
The Supreme Court stated that the prior New Jersey Stat-
ute was constitutional even though it required a license or
28a
provision because the State had legitimate interest in protect-
ing claims of its interest in locating hard to reach defendants
and so he stated the Supreme Court found a legitimate State
interest. I adopt that legitimate State interest. The current
statute is simply trying to put everybody on the same
ballfield. Therefore, there’s no discrimination in in versus out
of State people or corporations.
He went forward. He felt there was no other statute that
could pass constitutional muster but for New Jersey’s current
tolling statute. Our motion for a cross summary judgment
was denied and plaintiff’s was granted. He upheld the consti-
tutionality. Shortly thereafter, a matter of two or three
weeks, the United States Supreme Court ruled on the Bendix
decision, affirmed the Sixth Circuit. They found the Ohio
statute which required the designation or appointment of an
agent to be an impermissible burden on interstate commerce
in that it forced by appointing an agent, it forced an unrepre-
sented foreign corporation to submit to the general jurisdic-
tion of the [9] States Courts for all actions.
The Court went further to discuss how a State statute
which requires or conditions an ordinary legal defense such
as the statute of limitations, which we all know is not a right
but an ordinary legal defense, that if they condition that or
take it away from an out of State defendant as opposed to an
in State defendant, and that defendant was involved in com-
merce, then that statute would be reviewed under the com-
merce clause. They also stated that a statute which requires a
corporation to appoint an agent...
(There is a pause.)
THE COURT: May I suggest you confer with counsel for a
moment on that point?
Ms. ROTHSCHILD: If I may be heard briefly.
THE COURT: Why don’t you confer for a moment.
(There is a pause.)
Ms. BRENNER: Excuse me. I| apologize for the momentary
blank on my part.
THE CourRT: That’s all right.
29a
MS. BRENNER: The Court stated that any State statute
that requires a foreign corporation to designate it agent, to
accept service, and the corporation—excuse me.
(There is a pause.)
THE Court: All right. You want to pause at this moment
and let someone else speak or do you want to come [10] back
to that point?
Ms. BRENNER: If I can have one second to bring my
thoughts together. I do believe this is a rather complicated
issue because it involves so many different aspects and it’s
causing some difficulty in relating it to the Court.
THE COURT: You want me to take a short break?
MSs. BRENNER: Could we? Would that be permissible,
your Honor?
THE Court: I'll do that.
(There is a recess.)
Ms. BRENNER: If I could resume, your Honor. The
Supreme Court in Bendix examined the Ohio statute. They
stated that a statute that is acceptable or State interests that
are acceptable under equal protection and due process clause,
those interests may not be acceptable under the commerce
clause or sufficient under the commerce clause to attain con-
stitutionality for a particular statute. They did, in fact, refer
to G.D. Searle in their opinion in Bendix. They stated yes,
it’s true a State has a definite interest in protecting a plain-
tiff, in trying to alleviate the burden on a plaintiff who must
go the extra measure to serve an unrepresented defendant in
an action in a given State, and that for those reasons a stat-
ute which would deny an ordinary defense or take away
someone’s [11] limitation period would, in fact, be constitu-
tional. It passes equal protection, your Honor, because
there’s sufficient interest in the State.
They stated in this particular Bendix case that a State can-
not justify a statute which takes away an ordinary legal
defense or conditions it on a waiver of a right such as per-
sonal jurisdiction cannot be justified when you can, in fact,
reach the foreign defendant, the unrepresented foreign defen-
dant, by a long arm statute. They said this is not an accept-
able State interest or sufficient State interest to permit the
30a
deprivation or the withdrawal of an ordinary legal defense
and condition that defense on a right that the party would
otherwise have, an individual liberty interest that they would
have.
The Court went further to say that when a statute requires
an unrepresented foreign defendant to designate an agent to
accept service of process or lose the statute of limitation, they
are in effect making that defendant who designates an agent
subject to the general jurisdiction of that particular State.
They said, as they concluded throughout this entire opinion,
this is an unacceptable and impermissible burden, totally
unreasonable, and doesn’t pass under the commerce clause.
It’s unconstitutional.
Now, I do believe that when Judge Keefe distinguished
Bendix, he was distinguishing it on the basis that we had a
[12] provision where you designate an agent by notice, and
Ohio had a provision where you designate that agent because
you had to register to do business and appoint an agent. The
Supreme Court in Bendix is clear and reiterates throughout
the entire opinion that if you designate or appoint an agent
you are consenting to the general jurisdiction of that State
and that is an unreasonable burden on commerce.
Now, plaintiff claims that the Supreme Court found the
Ohio statute unconstitutional because it had no provision for
the designation of an agent for service of process, for the
sole and exclusive purpose of extricating a punitive defendant
from the tolling provision.
We submit respectfully to the Court that the Supreme
Court found the designation of an agent which subjects a
foreign corporation to the general jurisdiction of the State,
that was unreasonable. They made it clear the statute which
requires foreign corporations to designate an agent to accept
service would fall under the commerce clause because the act
of designation of an agent itself, regardless of the method,
whether it’s by notice, whether it’s by licensing, by registering
to do business, regardless, that notice in and of itself results
in the submission to the general jurisdiction of the forum. As
I stated, and I don’t want to repeat myself, the Court didn’t
3la
distinguish the forum in which you designate that [13] agent,
whether it be by notice or by registering.
Plaintiff contends further that the New Jersey tolling stat-
ute allows for the foreign corporation to file a notice to des-
ignate an agent as opposed to the licensor in provision of
Coons | to gain the benefit of the statute of limitation and
that this provision makes it unconstitutional. Again that’s not
what the Supreme Court has ruled and the Supreme Court
never even addressed remotely any distinction as to how you
designate an agent. They state it clearly, just plain and sim-
ply, you designate that agent, you’ve consented to jurisdic-
tion.
There are abundant Supreme Court opinions that speak to
ihe issue of waiving or consenting to the general jurisdiction
of the Court. One such opinion is the Insurance Corporation
of Ireland, Ltd. v Campaign DES Beuxite, cite 456 United
States 694. It was argued in the Third Circuit. Certiori was
granted. It was decided on June °82, wherein the Supreme
Court stated a defendant who takes advantage of certain
State procedures can, in fact, consent by taking advantage of
those procedures to the general jurisdiction of that State’s
Courts.
lt went further to state that plaintiffs can take behavior or
historic fact of a defendant’s behavior and argue that they
have consented to the jurisdiction of the Court by their
behavior whether it be voluntary or in-[14]voluntary. There-
fore, I throw that in to buttress my argument that the
Supreme Court considers any designation of any agent of a
foreign corporation to accept service of process to submit
that foreign corporation to the general jurisdiction of a par-
ticular forum.
THE CourRT: Let me just ask you this while you’re pausing
there a moment. If the statute were to say or were to be
interpreted to say that designating or naming an agent sub-
mitted the defendant to jurisdiction of the Court but that the
defendant could then argue that the Court did not have in
personam jurisdiction, would that change things at all?
MR. BRENNER: Under the Supreme Court’s ruling, which
is Bendix, I don’t believe it would. I believe by the mere vir-
32a
tue of your appointing that agent, whether or not you can go
in and argue later, you’ve already put someone there to
accept your service and consent to the jurisdiction of that
State, the Supreme Court, and also there’s no statutory pro-
vision which permits the Secretary of State to accept such a
designation number one. Number two, we don’t know that
that’s proper. Number three, it’s my feeling that your Honor
is looking to the law which calls on the Court to interpret a
statute constitutionally if it is at all possible, and this is one
of the reasons why I gave you all that history about Coons 1.
[15] The legislature did, in fact, intend for the statute to be
constitutional. There’s no question about that. What they
tried to cure in their amendment was the burden of register-
ing of every foreign corporation registering to do business,
not the burden that the Supreme Court has found in a similar
statute of consenting to the general jurisdiction of the State.
We submit and we firmly urge the Court that no matter
what kind of designation you file, you have just created your
consent to the general jurisdiction of the State and any suit
can go and pick up a piece of paper and regardless of your
designation say here, they filed this. They’ve consented to the
jurisdiction. I have a cause against them. You have jurisdic-
tion. I do believe the Supreme Court rulings, the Insurance
Corporation of Ireland case, state that defendant’s action,
regardless if you try to limit it, is only a piece of paper, and
the Secretary of State accepts it without statutory support, I
might add, that you still consent to the general jurisdiction of
the Court.
THE CourRT: Miss Rothschild, is there anything you
wanted to add to the argument?
Ms. ROTHSCHILD: I'll be very brief, your Honor. Stated
very simply, the reason we’re back in court talking about this
statute is because the Supreme Court in Bendix [16] said that
Judge Keefe was wrong when he said that a tolling statute
which merely required the appointment of an agent for ser-
vice of process was constitutional.
Your Honor has now asked whether if the statute were
interpreted to permit a party to come in later and argue that
there was no in personam jurisdiction would it then be con-
33a
stitutional and I believe your Honor is alluding to the Attor-
ney General’s argument that they. in fact, have been
permitted in the case of Cassiar Asbestos Company a limited
designation. I believe he attached a copy of that limited des-
ignation to his papers and the limited designation saying they
are only designating an agent for service of process in order
to receive process but that they in no way consent to the
jurisdiction of the Court.
THE Court: Let me stop you right there. Actually I had
asked the question if the statute actually said that, or the
Court interpreted the statute that way, what would the Ben-
dix effect be?
Ms. ROTHSCHILD: I think if the statute actually said that,
we might be on weaker ground under Bendix because Bendix
itself says the suggestion that Midwesco had the simple alter-
native of designating an agent for service of process in its
contract with Bendix or tendering an agency appointment to
the Ohio Secretary of State is not persuasive. Initially there is
no statutory support for either [17] option and so the
Supreme Court is troubled by the fact that the statute itself
does not provide for a limited designation and so | think it
would make a difference here were such statutory support for
a limited designation. 1 would feel more comfortable repre-
senting my clients and advising them to file such a limited
designation if I could point to the tolling statute and say, you
see, it really is okay. The legislature says so. You are not
submitting to the general jurisdiction of the Court.
Now the Attorney General says there is no statutory sup-
port but we have done it and look here. Here’s the case of
Cassiar. And I say, number one, Cassiar apparently is taking
its chances as to how that limited designation will be inter-
preted by the many Courts in New Jersey. Number two, that
hasn’t been tested yet. I don’t believe that Cassiar has come
forward on a motion for summary judgment asserting the
statute of limitations where they have said, listen, we filed
this designation so that we could take advantage of the stat-
ute and here we are, we want to take advantage of the stat-
ute, and there hasn’t been any kind of a legal determination
about whether or not that, in fact, operated to exclude them
34a
from the provisions of the tolling statute whicn I think is the
reason why the Supreme Court was looking for statutory sup-
port, so I think, yes, there would be a difference.
[18] THE CourRT: Okay.
Mr. HAUSHALTER: May it please the Court, I think we
have an issue that for us, one, attempting to decide what the
Supreme Court in Bendix really says, I don’t think the
Supreme Court in Bendix really dealt with our statute. |
don’t think the Supreme Court in Bendix is telling your
Honor how to rule in this case.
We have a statute. It’s a different statute than what we
have in Ohio. Our statute does not require the designation of
an agent as part of the process of registering to do business.
The Chio statute did and that’s why in the Ohio statute you
had no limitation with regard to the nature of representation.
When you register to do business you have to go through the
entire routine that is involved with that procedure, including
the representation or designating of an agent fer general
jurisdiction. We don’t have that requirement.
Our statute was amended after Coons 1 specifically to
allow unregistered corporations to designate an agent for pur-
poses of service of process. The statute does not say that
that’s for purposes of designating an agent for general juris-
diction. It is silent on that. We maintain that we have a pol-
icy, the Secretary of State has a policy of accepting the
designations which are limited, namely, to the point where
the foreign corporation is saying to New [19] Jersey and to
New Jersey plaintiffs for service of process this is our agent
but only with regard to those types of actions where there is
due process minimial contact. That is the way our statute
now has to be interpreted in order to make it constitutional.
There’s no question about that. That is one thing that Bendix
does tell us.
We maintain that is, in fact, an appropriate viable way of
interpreting our statute and that’s the way the statute must be
interpreted. If it is not we have no tolling statute. We have
no tolling statute unless our position is sustained by the
Court because there is nothing else the legislature can do. If
our interpretation, the way we are indicating the statute
35a
should be interpreted is unconstitutional, then the fundamen-
tal right of a legislature to enact a tolling statute is lost, but
there is nowhere in Bendix where that is said. In fact, the
Court in Bendix tried to indicate very clearly that if we have
a system where the designation is limited and oniy establishes
the designation for purposes of those actions which are based
on the long arm aspect, then we have a constitutional desig-
nation, and that’s all we are saying here today. That is the
exact way we are indicating to the Court that statute should
be interpreted, and so again we have nothing from Bendix
that tells this Court that under our interpretation our statute
is unconstitutional.
[20] Judge Keefe was absolutely correct. That is exactly
what Judge Keefe said. He says he must interpret our statute
so that the designation of the agent is limited only with
regard to causes of action which have minimum contact in
this State. There’s nothing that Bendix said that indicates
Judge Keefe is wrong. Judge Keefe is absolutely right. We
agree with Judge Keefe. His position is even stronger now
because, in fact, what he has indicated is the way the statute
must be interpreted in order for it to be constitutional.
We've indicated in our brief, your Honor, the established
principles of construction that our Courts have utilized,
namely, to attempt to interpret statutes so that they have a
constitutional result, and clearly had our legislature known
about Bendix would have made that statute clear. After
Coons | our legislature came and very quickly enacted an
amendment in order to make our statute constitutional.
The policy of the State is very, very clear and that’s noted
also in the Coons 2 decision and in the Searle decision by the
Third Circuit. The policy that this State has with regard to
attempting to have a viable tolling statute and all of that sup-
ports an interpretation that we are seeking this Court to sus-
tain.
Mr. DARNELL: Your Honor, I'll do my best to be [21]
brief. 1 agree with everything Mr. Haushalter has said to the
Court. I'd like to add in Coons 1 our Supreme Court of New
Jersey said that the old tolling statute violated the commerce
clause because it required a waiver of one’s jurisdictional
36a
defenses as part of the licensor provisions and therefore
exacted too much of a burden and therefore violated the
commerce clause. Bendix doesn’t say much different. It says
the Ohio statute they interpreted requires the same thing.
What we’re faced with is a question of statutory interpreta-
tion. We are not in Ohio. We are in New Jersey. In New Jer-
sey we’ve already gone through the process that was alluded
to in Bendix of statutory support. The first statute was said
to be unconstitutional in Coons 1. Our legislature passed a
new statute in response to that.
In response to the statement by the Supreme Court of New
Jersey that you cannot constitutionally have a statute that
requires a waiver of jurisdictional defenses as a condition of
appointing an agent for service of process, it was clearly the
intent of the legislature who was invited by the Supreme
Court to give it another try. It is set forth in the statutory
history that is at one point set forth at page 5S of the Attor-
ney General’s brief. There was no doubt, there can be no
doubt, that the legislature [22] intended to pass a constitu-
tional statute. If passing a constitutional statute means it
must be interpreted so as not to require a waiver of jurisdic-
tion then sobeit. That’s what the legislature wanted as set
forth in the legislative history.
Had the statute said by appointing stich service of process
a corporation hereby expressly waives any jurisdictional
defenses and expressly subjects itself to jurisdiction, we might
be in a different situation though even then this Court could
do judicial surgery on the statute as is aliowed as was done
by the Supreme Court of New Jersey in the Chamber of
Commerce case that’s referred to in the briefs. In any event,
as I said before, we’re not in Ohio. We’re in New Jersey.
The change bave been made to the statute, and to interpret
the statute as the defendants request would require this Court
to look for a way to find it unconstitutional which would be
completely contrary to the mandates of our Supreme Court
which is you look for a way to find the statute to be constitu-
tional.
Because we’re basically dealing with statutory reconstruc-
tion and interpretation, I don’t believe that the Bendix case
37a
restricts this Court in any way, shape or form from constru-
ing a New Jersey statute, which statute has never been con-
strued by the Supreme Court of the United States. To the
contrary, in Velmohos the Supreme Court [23] sent it back to
the Supreme Court of New Jersey to construe what they
found to be—maybe they sent it back to the Third Circuit—
an opaque comment in Velmohos as to whether or not our
previous statute required a waiver of jurisdictional defenses;
that by some fortuitous path of appellate history ended up in
the Coons | case.
So, I think that based on what I’ve said it’s clear as could
be that the legislature intended to pass a constitutional stat-
ute; that they passed the new statute, the statute under attack
here, in response to the statement of Coons that you can’t
have a statute that requires waiver of defenses. And to read
this statute to require such a waiver is to go against the well-
established rules of statutory construction and would be in
direct disagreement with the way that Judge Keefe interpreted
this very same statute in June of 1988. Thank you, your
Honor.
THE Court: Is there anything you wanted to say further?
Ms. ROTHSCHILD: Yes. I think that the Attorney General
and Mr. Darnell both concede that but for the Attorney Gen-
eral’s statement that a limited designation will be accepted.
Bendix requires the New Jersey statute to be declared uncon-
stitutional because Bendix says whatever the difference is
between the Ohio statute and the New Jersey statute, even if
the mere appointment of an [24] agent for service of process
was the only thing that a foreign corporation had to do, it
would be unconstitutional because it would be a submission
to the general jurisdiction of the Court.
Mr. Haushalter has said we understand that Bendix
requires that we accept limited designations so there’s nothing
more the legislature could do in passing a statute. We’re
accepting limited designations and that makes it okay under
Bendix. The answer is there is more the legislature could do.
It could provide the statutory support that the United States
Supreme Court was looking for for that kind of an act, and
the Supreme Court was unhappy that it wasn’t in the Ohio
38a
statute, that kind of assurance, and it would be equally
unhappy that it’s not in the New Jersey statute.
THE Court: I think I’ve heard sufficient argument unless
somebody has a new point to raise.
Ms. ROTHSCHILD: Your Honor, it is actually new. I would
like to respond to Mr. Darnell’s comments about Coons 1
and the basis upon which the New Jersey Supreme Court did
evaluate the original New Jersey statute as unconstitutional. |
have the opinion right here, page 318. The question is
whether the denial of the statute of limitations defense to an
unlicensed foreign corporation forces that corporation to
obtain a license. That was the burden [25] that the Court
found. The New Jersey Supreme Court found the burden to
be forcing them in order to get the benefit of the statute of
limitations to register to do business. They tried to do indi-
rectly what they couldn’t do directly, number one.
Number two, I think it’s important for the Court to note
the Supreme Court stated quite clearly in the third paragraph
from the end of its opinion that a State interest to protect the
plaintiffs to have viable claims against unrepresented foreign
corporations isn’t sufficient, period, where you have a long
arm statute and you can reach that defendant.
It’s clear they reached A.C.L. and Bell within days of fil-
ing the Complaint through the long arm service. There’s no
question but that they could have in 1980 obtained service on
these defendants. The Supreme Court says you can’t have a
tolling statute that takes away ordinary defenses unless you
give up a right. I think the Supreme Court is saying you can’t
do that. That’s unconstitutional, and no matter what you do
to a statute, whether you let them file a paper, yes, you
notice the designation as opposed to licensing, it’s unconstitu-
tional, period. That’s all I wanted to say.
MR. HAUSHALTER: May I respond to that because I think
that’s a twist that was not initially noted. That [26] statement
is somewhat inaccurate and misleading with all due respect to
counsel. The Supreme Court made a balancing analysis and
said that this public policy that the State has to allow plain-
tiffs to file suit against these unrepresented foreign corpora-
tions is outweighed when the tolling statute requires the
39a
foreign corporations to submit to the general jurisdiction of
the State. That’s the key. The balancing under that factual
analysis goes for the defendants and goes against the tolling
statute. What we’re saying is we have a new balancing
approach, your Honor. Our balancing approach is the policy
of the State versus forcing these foreign corporations to come
in and only submit to limited jurisdiction. Under that balanc-
ing approach, your Honor, the statute should be sustained
and I think that’s where Bendix is not applicable because
Bendix doesn’t deal with that analysis. Thank you, Judge.
Ms. BRENNER: If I may, there is no statutory support in
New Jersey statutes for any limited designations. Thank you.
THE Court: All right. On this motion the issue really is
what the effect of the Supreme Court Bendix opinion has on
our statute of limitations which is N.J.S.A. 2A:14-22 which
reads in pertinent part, where a person is not represented in
this State by any person or officer upon whom summons or
other original process may be served, [27] therefore they shall
not be computed as part of the time period within which a
statute can be started. And in the final paragraph it states,
‘*A corporation shall be deemed represented for purposes of
this section if the corporation has filed with the Secretary of
State a notice designating a representative to accept service of
process.”’
The Court finds that this statute was amended in response
to the Coons | decision which held that the prior statute was
unconstitutional because it required the foreign corporation
to submit to the jurisdiction of the court. I believe that the
Attorney General, Mr. Haushalter, has correctly stated the
law when he says the Court, when deciding constitutionality
of the statute, has the right and the duty to interpret it in
such a manner that would remain constitutional if that is the
intended purpose of the legislature. He argues further in
effect that the legislature’s quick response to the Coons 1
decision indicates that they, the legislature, were attempting
to pass a statute that would be constitutional. I accept that
argument also. -
The question then remains does the naming or designating
of a representative by the notice required by Statute N.J.S.A.
40a
14-22 to accept service of process eliminate the right of a
defendant to contest to personal jurisdiction. The statute
doesn’t say it does. The [28] Court has a right to perform
judicial surgery so to speak. I will avail myself of that right
and I will interpret the statute to read that there is no waiver
by the foreign corporation in providing the notice under the
statute. There is no waiver of the right of that foreign corpo-
ration to contest service of process and to contest in per-
sonam jurisdiction. In view of that I find the statute to be
constitutional and therefore the motion is denied.
I hereby certify that the foregoing is a true and accurate
transcript of proceedings as taken stenographically by
me at the date and at the place hereinbefore set forth.
/s/ JUNE _ANDRIAN, C.S.R.
June Andrian, C.S.R.
OFFICIAL COURT REPORTER
4la
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET No. AM-1642-89T3
MOTION No. M-6197-89
Before Part: Q
Judges: HAVEY AND STEIN
—
CHERYL A. DIFALCO
—vs.—
SUBARU OF AMERICA, INC. et al.
>
ORDER ON MOTION
MOTION FILED: July 6, 1990
ANSWER FILED: July 18, 1990 By: Attorney General
SUBMITTED TO CourRT: July 30, 1990
ORDER
This matter having been duly presented to the court, it is
on this 3lst day of July, 1990, hereby ordered as follows:
Motion by appellant Takata Corporation for Leave to
Appeal is GRANTED.
SUPPLEMENTAL:
[STAMP FILED
Illegible) APPELLATE DIVISION
AUG 6 1990
[Ilegible]
Clerk
42a
FOR THE COURT:
JAMES M. HAVEY
James M. Havey J.A.D.
43a
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET No. A-6247-89T3F
>
‘CHERYL A. DIFALCO
—VvVs.—
SUBARU
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