G. D. Searle & Co. v. Cohn

455 U.S. 404, 102 S. Ct. 1137, 71 L. Ed. 2d 250, 1982 U.S. LEXIS 74, 50 U.S.L.W. 4243

Opinions

Justice Blackmun

delivered the opinion of the Court.

A New Jersey statute, N. J. Stat. Ann. §2A:14-22 (West 1952), tolls the limitation period for an action against a foreign corporation that is amenable to jurisdiction in New Jersey courts but that has in New Jersey no person or officer upon whom process may be served. The United States, Court of Appeals for the Third Circuit in this case held that the statute does not violate the Equal Protection and Due Process Clauses of the Fourteenth Amendment. We agree, but we vacate the Court of Appeals’ judgment and remand the case for consideration of petitioner’s Commerce Clause challenge to the statute.

I

Respondents, Susan and Walter Cohn, are husband and wife. In 1963, Susan Cohn suffered a stroke. Eleven years later, in 1974, the Cohns sued petitioner, G. D. Searle & Co., in the Superior Court of New Jersey, Essex County, alleging that Susan Cohn’s stroke was caused by her use of an oral contraceptive manufactured by petitioner.¹ Petitioner was served under New Jersey’s long-arm rule, N. J. Ct. Rule 4:4-4(c)(l) (1969). Petitioner removed the suit to federal court and thereafter moved for summary judgment based upon New Jersey’s 2-year statute of limitation, N. J. Stat. Ann. §2A:14-2 (West 1952), governing an “action at law for an injury to the person caused by . . . wrongful act.” Respondents countered with § 2A: 14-22. That section tolls the statute of limitation for a cause of action against a foreign corporation that “is not represented” in New Jersey “by any person or officer upon whom summons or other original process may be served.”²

The District Court ruled that petitioner was not repre-sénted in New Jersey for the purposes of the tolling provision.³ 447 F. Supp. 903, 907-909 (NJ 1978). Nevertheless, it held that respondents’ suit was barred. According to the District Court, the tolling provision had operated to preserve only causes of action against corporate defendants that were not subject to in personam jurisdiction in New Jersey. With the enactment of New Jersey’s long-arm rule, now N. J. Ct. Rule 4:4-4(c),⁴ the rationale for the pre-existing tolling provision ceased to exist. On this reasoning, the court held that the tolling provision served no logical purpose, found it invalid under the Equal Protection Clause, and ruled that the 2-year statute of limitation therefore barred respondents’ suit. 447 F. Supp., at 911-913.

Respondents appealed. Before the Court of Appeals reached a decision, however, the Supreme Court of New Jersey decided Velmohos v. Maren Engineering Corp., 83 N. J. 282, 416 A. 2d 372 (1980), appeal pending, No. 80-629. That court ruled, as a matter of New Jersey law, that the tolling provision continued in force despite the advent of long-arm jurisdiction. In addition, the court concluded that the tolling provision did not violate the Equal Protection or Due Process Clauses of the Fourteenth Amendment, because the increased difficulty of out-of-state service provided a rational basis for tolling the statute of limitation in a suit against an unrepresented foreign corporation.

The Court of Appeals then followed the New Jersey Supreme Court’s lead and reversed the District Court.⁵ Summing up what it felt to be the rational basis for the tolling provision, the Court of Appeals explained:

“Since service of process under the long-arm statute is more difficult and time-consuming to achieve than service within the state, and since out-of-state, non-represented corporate defendants may be difficult to locate let alone serve, tolling the statute of limitations protects New Jersey plaintiffs and facilitates their lawsuits against such defendants.” Hopkins v. Kelsey-Hayes, Inc., 628 F. 2d 801, 811 (CA3 1980).

Because of the novel and substantial character of the federal issue involved, we granted certiorari, 451 U. S. 905 (1981).

II

Like the Court of Appeals, we conclude that the New Jersey statute does not violate the Equal Protection Clause. In the absence of a classification that is inherently invidious or that impinges upon fundamental rights, a state statute is to be upheld against equal protection attack if it is rationally related to the achievement of legitimate governmental ends. Schweiker v. Wilson, 450 U. S. 221, 230 (1981). The New Jersey tolling provision need satisfy only this constitutional minimum. As the Court explained in Chase Securities Corp. v. Donaldson, 325 U. S. 304, 314 (1945):

“[Statutes of limitation] represent a public policy about the privilege to litigate. Their shelter has never been regarded as what now is called a ‘fundamental’ right or what used to be called a ‘natural’ right of the individual. He may, of course, have the protection of the policy while it exists, but the history of pleas of limitation shows them to be good only by legislative grace and to be subject to a relatively large degree of legislative control.”

See also Campbell v. Holt, 115 U. S. 620 (1885).⁶

Petitioner insists that the tolling statute no longer is rationally related to a legitimate state objective. Repeating the argument it made below, petitioner claims that the statute’s only purpose was to preserve causes of action for those New Jersey plaintiffs unable to obtain in personam jurisdiction over unrepresented foreign corporations. With the presence now of long-arm jurisdiction, petitioner contends, there is no longer a valid reason for tolling the limitation period for a suit against an amenable foreign corporation without a New Jersey representative.

We note at the outset, and in passing, that petitioner’s argument fails as a matter of state law. The New Jersey Supreme Court disagreed with petitioner’s interpretation of the statute. That court observed that the State’s original tolling provision did not mention corporations and thus treated them like all other defendants. In 1949, the state legislature amended the statute and exempted corporations except those foreign corporations “not represented” in New Jersey. The legislature, the New Jersey Supreme Court emphasized, did not limit the tolling provision to corporations “not amenable to service” in New Jersey. Consequently, the court reasoned, the tolling provision was not rendered meaningless by the subsequent acceptance of long-arm jurisdiction. Velmohos v. Maren Engineering Corp., 83 N. J., at 288-293, 416 A. 2d, at 376-379. As construed by the highest judicial authority on New Jersey law, the meaning of the tolling statute cannot be confined as narrowly as petitioner would like.

When the statute is examined under the Equal Protection Clause, it survives petitioner’s constitutional challenge because rational reasons support tolling the limitation period for unrepresented foreign corporations despite the institution of long-arm jurisdiction in New Jersey. First, the unrepresented foreign corporation remains potentially difficult to locate. Long-arm jurisdiction does not alleviate this problem, since a New Jersey plaintiff must find the unrepresented foreign corporation before it can be served. See id., at 296, 416 A. 2d, at 380. It is true, of course, that respondents had little or no trouble locating this particular, well-known defendant-petitioner, but the tolling provision is premised on a reasonable assumption that unrepresented foreign corporations, as a general rule, may not be so easy to find and serve. See Weinberger v. Salfi, 422 U. S. 749, 780-785 (1975).

Second, the institution of long-arm jurisdiction in New Jersey has not made service upon an unrepresented foreign corporation the equivalent of service upon a corporation with a New Jerséy representative. The long-arm rule, N. J. Ct. Rule 4:4-4(c)(l) (1969), prescribes conditions upon extraterritorial service to ensure that New Jersey’s long-arm jurisdiction has been properly invoked. In Velmohos, the New Jersey Supreme Court explained:

“Under our rules, extra-territorial service is not simply an alternative to service within the State. Plaintiffs may not resort to out-of-state service unless proper efforts to effect service in New Jersey have failed. The rule imposes a further burden on a plaintiff by requiring him to gather sufficient information to satisfy a court that service is ‘consistent with due process of law.’ ” 83 N. J., at 296, 416 A. 2d, at 381.

Thus, there are burdens a plaintiff must bear when he sues a foreign corporation lacking a New Jersey representative that he would not bear if the defendant were a domestic corporation or a foreign corporation with a New Jersey representative.

In response to these rationales for treating unrepresented foreign corporations differently from other corporations, petitioner argues that the tolling provision is unnecessary. Petitioner cites N. J. Ct. Rule 4:2-2 and contends that a plaintiff can preserve his cause of action against a hard-to-locate corporate defendant by filing a complaint and thereby halting the running of the limitation period. But this is not an adequate substitute for the tolling provision. A court may dismiss a case if it has not been prosecuted after six months, N. J. Ct. Rule 1:13-7, or if summons is not issued within 10 days of the filing of the complaint, N. J. Ct. Rule 4:4-1. In any event, a State may provide more than one solution for a perceived problem. The Court of Appeals appropriately commented: “Nothing in law or logic prevents the New Jersey legislature from providing New Jersey plaintiffs with a mechanism for relief from the burdens of suits against non-represented foreign corporations which is additional to any mechanism found in the Court Rules.” 628 F. 2d, at 811.

Petitioner also argues that a New Jersey plaintiff’s burdens do not justify leaving a defendant open to suit without any time limit. In Velmohos, however, the New Jersey Supreme Court expressly authorized an unrepresented foreign corporation to plead another defense in response to a tardy suit. While the tolling provision denies an unrepresented foreign corporation the benefit of the statute of limitation, the corporation, the court stated flatly, remains free to plead laches. “If a plaintiffs delay is inexcusable and has resulted in prejudice to the defendant, the latter may raise the equitable defense of laches to bar the claim.” 83 N. J., at 293, n. 10,416 A. 2d, at378, n. 10. Thus, under New Jersey law, an amenable, unrepresented foreign corporation may successfully raise a bar to a plaintiffs suit if the plaintiffs delay cannot be excused and the corporation has suffered “prejudice.”

In sum, because of the burdens connected with serving unrepresented foreign corporations, we agree with the Court of Appeals and the New Jersey Supreme Court that the tolling provision does not deprive an unrepresented foreign corporation of the equal protection of the laws.⁷ See Dew v. Appleberry, 23 Cal. 3d 630, 591 P. 2d 509 (1979) (holding similar tolling provision rationally related to a valid governmental interest); Vaughn v. Deitz, 430 S. W. 2d 487, 490 (Tex. 1968) (holding that absence from the State may, consistent with equal protection, support suspension of the statute of limitation). Cf. Bauserman v. Blunt, 147 U. S. 647 (1893) (applying Kansas statute tolling limitation period for out-of-state defendant subject to service, without discussing the constitutional issue).

HH HH ► — H

Petitioner, however, raises another constitutional challenge. The tolling provision as interpreted by the New Jersey Supreme Court, petitioner argues, violates the Commerce Clause. Petitioner insists that, in order to obtain the benefit of the statute of limitation, it must obtain a certificate of authority by registering to do business in New Jersey. See N. J. Stat. Ann. § 14A:13-2 (West 1969). As a result, it will subject itself to all the duties and liabilities imposed on a domestic New Jersey corporation. Petitioner points out that it is engaged solely in interstate commerce in New Jersey, and, relying on cases such as Allenberg Cotton Co. v. Pittman, 419 U. S. 20 (1974), and Sioux Remedy Co. v. Cope, 235 U. S. 197 (1914), petitioner contends that New Jersey violates the Commerce Clause by requiring it to register to do business in New Jersey in order to gain the benefit of the statute of limitation. For two reasons, we decline to resolve this issue.

First, neither the District Court nor the Court of Appeals addressed the question directly. There is no mention of the Commerce Clause in the opinion of the Court of Appeals. In a footnote, the District Court suggested that the tolling provision would violate the Commerce Clause. 447 F. Supp., at 911, n. 17. But the District Court there was answering respondents’ contention that the tolling provision was enacted as a penalty to induce corporations to register to do business in New Jersey, an argument respondents no longer make.⁸ Thus, neither court considered the Commerce Clause argument in its present form.

Second, the Commerce Clause issue is clouded by an ambiguity in state law. The dispute over the Commerce Clause centers in what seems to us to be an opaque footnote in the New Jersey Supreme Court’s majority opinion in Velmohos. That court, without citation, commented: “We note that whatever hardship on foreign corporations might be caused by continued exposure to suit can be easily eliminated by the designation of an agent for service of process within the State.” 83 N. J., at 293, n. 10, 416 A. 2d, at 378, n. 10. Petitioner, contending that there is no procedure in New Jersey for simply appointing an agent, interprets this sentence as requiring it to register to do business in New Jersey pursuant to N. J. Stat. Ann. § 14A:13-2 (West 1969) in order to obtain the benefit of the statute of limitation. Respondents, on the other hand, read the footnote as referring to the mere appointment of an agent, to be accomplished in some manner unexplained to us.

The lone sentence in the Velmohos footnote by itself does not clearly demonstrate the correctness of either view or lucidly inform us as to what the state law is. We consider it unwise for us to pass upon the constitutionality of this aspect of New Jersey law when we are uncertain of the critical footnote’s meaning, particularly in light of the fact that the lower courts in this case did not address the Commerce Clause or the state-law issues. Consequently, we vacate the Court of Appeals’ judgment and remand the case, so that the Court of Appeals may determine whether petitioner’s Commerce Clause argument, if it was properly raised below, has merit.

It is so ordered.

1 Petitioner is a Delaware corporation with principal place of business in Illinois. At all times pertinent to this case, petitioner was engaged in the business of manufacturing and selling pharmaceutical products.

2 Section 2A: 14-22 reads in pertinent part:

“If any person against whom there is any of the causes of action specified in sections 2A:14-1 to 2A:14-5 and 2A:14-8 ... is not a resident of this state when such cause of action accrues, ... or if any corporation . . . not organized under the laws of this state, against whom there is such a cause of action, is not represented in this state by any person or officer upon whom summons or other original process may be served, when such cause of action accrues or at any time before the expiration of the times so limited, the time or times during which such person ... is not residing within this state or such corporation ... is not so represented within this state shall not be computed as part of the periods of time within which such an action is required to be commenced by the section. The person entitled to any such action may commence the same after the accrual of the cause therefor, within the period of time limited therefor by said section, exclusive of such time or times of nonresidence or nonrepresentation.”

3 Petitioner had so-called “detailmen” in New Jersey. These were employees who promoted its products among New Jersey physicians. The District Court, contrary to petitioner’s urging, held that the detailmen were not “persons” or “officers” for the purpose of the tolling provision, 447 F. Supp. 903, 906-907 (NJ 1978), and the Court of Appeals agreed, Hopkins v. Kelsey-Hayes, Inc., 628 F. 2d 801, 808 (CA3 1980). That holding is not disputed in this Court.

4 New Jersey’s long-arm service rule was promulgated in 1958 as N. J. Ct; R. R. 4:4-4(d). In 1971, the New Jersey Supreme Court interpreted the rale to permit extraterritorial service to the full extent allowed by the United States Constitution. Avdel Corp. v. Mecure, 58 N. J. 264, 277 A. 2d 207. See generally Velmohos v. Maren Engineering Corp., 83 N. J. 282, 289-292, 416 A. 2d 372, 376-378 (1980), appeal pending, No. 80-629.

5 The Court of Appeals’ decision was on consolidated appeals of the instant case and Hopkins v. Kelsey-Hayes, Inc., 463 F. Supp. 539 (NJ 1978), aff'd, 628 F. 2d 801 (CA3 1980), cert. pending, No. 80-663. In Hopkins, a different New Jersey Federal District Judge had held the tolling provision to be consistent with the Equal Protection and Due Process Clauses.

6 Before the Court of Appeals, petitioner conceded that the tolling provision does not implicate a suspect classification. See 628 F. 2d, at . Before this Court, petitioner argues for a heightened level of scrutiny because it is a corporation not doing business in New Jersey and therefore is without a voice in the New Jersey Legislature. Only a rational basis, however, is required to support a distinction between foreign and domestic corporations. Western & Southern Life Ins. Co. v. State Board of Equalization of California, 451 U. S. 648, 668 (1981). The same is true here where the tolling provision treats an unrepresented foreign corporation differently from a domestic corporation and from a foreign corporation having a New Jersey representative.

7 Petitioner also presses a due process claim. In the Court of Appeals, petitioner argued that the tolling statute violates due process “by unfairly and irrationally denying certain foreign corporations the benefit of the Statute of Limitations without furthering any legitimate societal interest.” Brief for Defendant-Appellee and Cross-Appellant in Nos. 79-2406 and 79-2605 (CA3), p. 29. The Court of Appeals rejected petitioner’s due process challenge to the statute at the same time that it rejected petitioner’s equal protection contention. See 628 F. 2d, at 808-809. Indeed, this due process argument is nothing more than a restatement of petitioner’s equal protection claim. See Velmohos, 83 N. J., at 297, 416 A. 2d, at 381.

In this Court, petitioner has attempted to put forward a new due process argument. Petitioner notes that it can obtain the benefit of the statute of limitation by appointing an agent to accept service. See Velmohos, 83 N. J., at 293, n. 10, 416 A. 2d, at 378, n. 10; see also infra, at 413-414. Fearing that appointment of an agent might subject it to suit in New Jersey when there otherwise would not be the minimum contacts required for suit in that State under the Due Process Clause, see International Shoe Co. v. Washington, 326 U. S. 310 (1945), petitioner insists that New Jersey law violates due process by conditioning the benefit of the limitation period upon the appointment of a New Jersey agent. Because petitioner did not present this argument to the Court of Appeals, we do not address it. See United States v. Ortiz, 422 U. S. 891, 898 (1975).

8 At that time, respondents were seeking to supply a rational basis for the tolling provision by arguing that it was intended as a penalty to induce foreign corporations to obtain New Jersey licenses. The District Court rejected that interpretation of the tolling provision before suggesting that respondents’ reading of the statute would violate the Commerce Clause. 447 F. Supp., at 911, n. 17. It seems to us that the District Court was on sound ground when it rejected this theory of the statute’s origin, since there is no hint in Velmohos that the tolling provision was designed to be a penalty for failure to obtain a New Jersey license.