CERCLA “Discovery Rule” Playing Important Role in Toxic Tort Cases

State statutes of limitations (SOL) establish the time period when an injured party may bring a lawsuit seeking compensation for damages. In general, the SOL “clock” will start when a claim “accrues” (e.g. when all of the required elements of the cause of action have been satisfied.

Because of the long latency period between exposure to hazardous substances and manifestation of illness as well as the delayed discovery of releases of hazardous substances that may have damaged real property, injured parties may not become aware of their damages until decades after the alleged wrongful conduct and well after the SOL has expired.  Some states have tried to minimize this harsh effect by crafting a “discovery rule” that tolls or suspends the SOL until the injured party has an opportunity to discover or with reasonable care should discover his injury.

One of the predecessor bills to CERCLA attempted to address the concern by creating a remedy for exposure to hazardous substances. This bill imposed liability against manufacturers, transporters, and disposers of hazardous substances for any loss of earnings and out-of-pocket medical expenses resulting from personal injury. Plaintiffs would have been allowed to file claims in federal court or file administrative claims when responsible parties were unknown or unavailable six years from the discovery of their injury.

This victim compensation plan proved contentious and not included in the final bill that became CERCLA. Indeed, as an interesting aside, the exclusion from the definition of releases for “any release which results in exposure to persons solely within a workplace” was a relic of this victim compensation remedy. It was intended to prevent workers from “double-dipping” by filing workers compensation claim and lawsuit for personal injuries. Apparently some congressional staffers inadvertently left the workplace exclusion in the definition of Release in the final version of CERCLA. Just one more installment in the infamous history of CERCLA’s last minute passage.

As a compromise, Congress authorized creation of a twelve-member study group under section 301(e) of CERCLA ( 42 U.S.C. 9651(e) to study the adequacy of existing common law and statutory remedies for harm caused by the release of hazardous substances into the environment. The so-called 301(e) Superfund study group published its report in August 1982.

In response to the study group, Congress added section 309 (42 U.S.C. 9658) to CERCLA as part of the 1986 Superfund Amendments and Reauthorization Act (SARA). This section creates a federally mandated discovery rule known as the Federal Required Commencement Date (FRCD) for the accrual of state law claims involving releases of hazardous substances, pollutants or contaminants that cause or contribute to personal injury or property damage. The FRCD provides that a SOL would begin to run when the plaintiff discovers, or should have reasonably discovered that the personal injury or property damages were caused or contributed to by the hazardous substance or pollutant or contaminant. The FRCD would pre-empt a state SOL when the FRCD would provide a more generous accrual date than available under state law.

Courts have also grappled with the scope of section 309. One early issue if 309 only applied where there was an underlying CERCLA claim for contribution or cost recovery. More recently, court have been struggling with the question if FRCD applies to statutes of response which are laws that provide an outside date for filing lawsuits regardless when the claim accrued. In Waldburger v. CTS Corp, 723 F.3d 434 (4th Cir. 2013), a federal appeals court reversed a ruling by a district court and held that the FRCD pre-empted the North Carolina statute of repose.

In Waldburger, defendant CTS had owned and operated the Mills Gap Road Electroplating Facility in Asheville from 1959 to 1985. In 1987, CTS sold the site to Mills Gap Road Associates (“MGRA”). As part of the transaction, CTS represented that that the property was in “an environmentally clean condition,” that to the best of its knowledge, no on-site disposal had occurred at the property and that as soon as “the existing inventory of materials contained in drums and other miscellaneous equipment within the plant [was] removed from the premises, no threat to human health or the environment [would] remain. In 1997, MGRA sold approximately forty-four acres of the property in 1997 to the plaintiffs. In 2009, the landowners learned that their well water was contaminated with volatile organic chemicals (VOCs).  The plaintiffs filed a lawsuit in 2011.

CTS moved to dismiss, maintaining that North Carolina’s ten-year statute of repose (SOR) barred the claim. The landowners countered that section 309 preempted the North Carolina SOR. The district court found that section 309 did not apply to the North Carolina SOR. Since the last act or omission of CTS occurred in 1987 when it sold the Facility to MGRA, the court dismissed the lawsuit.

The appeals court observed that courts and legal scholars have historically used the terms “statute of limitations” and “statute of repose” interchangeably. The court also found section 309 ambiguous because of internal inconsistencies. In one section the applicable limitations period was said to be that “specified in the State statute of limitations or under common law” while the definition of “applicable limitations period” and “commencement date” make no reference to common law. Thus, the court looked to the legislative history to determine Congressional intent for this section.

From this review, the court said that Congress enacted section 309 to remove barriers to legitimate causes of action relating to exposure to toxic substances. A narrow interpretation that would exclude the SOR, the court concluded would thwart this unmistakable Congressional goal. Moreover, the court noted that North Carolina SOR appeared in a section titled, “Limitations, Other than Real Property”. Accordingly, the appeals court held that the FRCD preempted North Carolina’s SOR and reversed the judgment of the district court.

[In June, the United States Supreme Court vacated the 4th Circuit ruling and held that CERCLA section 309 did not apply to the North Carolina Statute of Repose].

In Harris v. Bristol-Myers Squibb Co., 2013 U.S. Dist. LEXIS 137335 (D.N.J. 9/25/13), a federal district court held that the FRCD preempted a state wrongful death SOL There, current and prior residents filed a lawsuit against the current and former owners or operators of a manufacturing plant for exposure to toxic and hazardous substances that allegedly emanated from the plant. The defendants filing motions to dismiss a group wrongful death claims under the New Jersey Wrongful Death Act (WDA), N.J.S.A. 2A:31-1 et seq. The WDA contains a two-year limitations period that begins to accrue on the date of death. The court held that the FRCD had a more generous accrual date for wrongful death claims than the WDA. Accordingly, the court held that the WDA claims were tolled until Plaintiffs knew or reasonably should have known that the contamination conduct caused their deaths.

Discovery rules have become particularly important with the emergence of vapor intrusion. In many instances, homeowners may have been aware of regional plumes but there was little concern about health risks because groundwater was not used for drinking water or the area was connected to public water supply. If vapor intrusion later emerges as a concern, a number of courts have held that the vapor pathway is newly discovered contamination that either tolls the SOL or create a new time period for bringing claims.