Shadburne-Vinton v. Dalkon Sheild Trust

60 F.3d 1071

• Court: Court of Appeals for the Fourth Circuit
• Decided: July 26, 1995
• Docket: No. 94-1820
• Status: Published

Opinions

Reversed by published opinion. Senior Judge CHAPMAN wrote the opinion, in which Judge RUSSELL joins. Judge WIDENER wrote a dissenting opinion.

OPINION

CHAPMAN, Senior Circuit Judge:

Appellant Susan Shadbume-Vinton (“Shadburne”) was injured by a Daikon Shield Intrauterine Device (“IUD”) manufactured by A.H. Robins Company (“Robins”) that she used from March, 1974 until December, 1976. She filed suit against Robins in January, 1983 in the United States District Court for the District of Maryland. Because Shadburne was an Oregon resident, Oregon law controlled, and the district court dismissed her suit under the Oregon statute of repose for failure to timely file. Shadburne appealed the dismissal; however, pending the appeal, Robins entered bankruptcy proceedings, and the bankruptcy court stayed all Daikon Shield litigation. During the pen-dency of the bankruptcy proceedings, the Oregon legislature amended the statute of repose to exclude IUD manufacturers as a protected class of defendants.

Following the conclusion of the Robins bankruptcy proceedings in 1989, Shadburne sought to reinstate her initial claim. The Daikon Shield Claimants Trust (“the Trust,” substituted for Robins pursuant to reorganization) agreed to reinstatement, but reserved the right to challenge the amendment to Oregon’s statute of repose. The Trust moved for judgment on the pleadings claiming that the amendment violated its due process rights and claiming that the original statute of repose governed Shadburne’s suit. On May 19, 1994, the district court granted the Trust’s motion, and Shadburne appeals.

For the reasons discussed below, we reverse the district court’s ruling.

I.

Shadburne received her first IUD in February, 1973 which was replaced by a second IUD in March, 1974. After an acute episode of pelvic inflammatory disease, the doctor surgically removed the IUD in December, 1976. Shadburne, along with many other plaintiffs, filed suit in Maryland district court¹ against Robins claiming that the IUD rendered her infertile and caused multiple sclerosis. Because Shadburne and the other plaintiffs were Oregon residents, Oregon’s substantive law controlled. Robins moved for judgment on the pleadings on the basis of Oregon’s original statute of repose which provided that “a product liability civil action shall be commenced not later than eight years after the date on which the product was first purchased for use or consumption.” Or.Rev.Stat. § 30.905(1) (1983) (current version at Or.Rev.Stat. § 30.905(1) (1993)). On December 20,1984, the district court granted Robins’s motion finding that Shadburne filed suit more than eight years after she purchased the IUD. Shadburne and 41 other dismissed plaintiffs appealed.

During the pendency of the appeal, Robins filed for bankruptcy, and the bankruptcy court stayed all Daikon Shield litigation. In 1987, while the bankruptcy proceedings continued, the Oregon legislature amended the statute of repose to exclude IUD manufacturers² as protected defendants. 1987 Or. Laws ch. 4 §§ 5-10. Section 5 applied a two year discovery rule statute of limitations without the eight year repose feature, and section 6 made this rule applicable to all causes of action tried after the statute’s effective date. Section 7 described a limitation of July 1, 1989, for filing such actions, and Sections 8 and 9 established a one year period for refiling actions that were dismissed based upon the prior statute, or to be first commenced within one year after the statute’s effective date. Because the Robins bankruptcy proceeding was still not resolved in 1989, the Oregon legislature extended the filing period set forth in the 1987 legislation to actions filed before July 1, 1995. 1989 Or.Laws ch. 642 § l.³ (The 1987 and 1989 statutes are referred to collectively as the “Special IUD Statute.”)⁴

When the Robins bankruptcy proceeding was not concluded by 1989, Shadburne and the Oregon plaintiffs secured a consent order from the bankruptcy court which tolled the time for filing suit under the Special IUD Statute until 30 days after the expiration or termination of the automatic stay.

Many of the other Oregon plaintiffs settled their disputes with the Trust. When the lead appellant, Ada June Tolliver, settled her claim, the Fourth Circuit erroneously dismissed the entire appeal, intending only to dismiss Tolliver’s appeal. Shadburne did not file a motion for reconsideration to correct the clerical error and keep her case alive. Shadburne claims that she did not pursue the appeal of her earlier dismissal because she deemed the appeal mooted by the Special IUD Statute and the consent order.

Because the parties could not agree to a settlement, the bankruptcy court certified Shadbume’s claim, and she filed an amended complaint in the district court on October 27, 1992. The Trust filed a motion for judgment on the pleadings on June 25, 1993, claiming that the Special IUD Statute was unconstitutional, and that under the original statute of repose, Shadburne’s claim was properly dismissed. The district court granted the Trust’s motion finding that the Special IUD Statute violated the Trust’s due process rights under the Federal Constitution, and that the original statute of repose barred Shadburne’s claim. Shadburne appeals arguing that the Oregon statute does not violate the Federal Constitution.

We review questions of law de novo. Richmond, Fredericksburg & Potomac R.R. v. United States, 945 F.2d 765, 768-69 (4th Cir.1991), cert. denied, 503 U.S. 984, 112 S.Ct. 1667, 118 L.Ed.2d 388 (1992).

II.

The district court found that retroactive enlargement of a statute of limitation does not violate the Due Process Clause of the Constitution, Chase Sec. Corp. v. Donaldson, 325 U.S. 304, 65 S.Ct. 1137, 89 L.Ed. 1628 (1945), yet retroactive enlargement of a statute of repose does. William Danzer & Co. v. Gulf & Ship Island R.R., 268 U.S. 633, 45 S.Ct. 612, 69 L.Ed. 467 (1925). The district court relied primarily upon a Fourth Circuit case that distinguishes statutes of limitation from statutes of repose because the former involve only procedural rights, while the latter involve substantive rights. Goad v. Celotex Corp., 831 F.2d 508 (4th Cir.1987), cert. denied, 487 U.S. 1218, 108 S.Ct. 2871, 101 L.Ed.2d 906 (1988). We find Goad inapplicable because it separates statutes of limitation from statutes of repose for choice of law purposes, and this case presents a constitutional issue. We find that in analyzing the constitutionality of retroactive legislation, statutes of repose are now treated the same as statutes of limitation.

III.

The Trust relies primarily upon William Danzer & Co. v. Gulf & Ship Island R.R., 268 U.S. 633, 45 S.Ct. 612, 69 L.Ed. 467 (1925), in which the plaintiff failed to file suit against a railroad within the time prescribed by the Interstate Commerce Act, which both created and limited the plaintiffs cause of action. Congress then enacted the Transportation Act which, if applied retroactively, would revive the plaintiffs claim. The railroad argued that reviving the plaintiffs expired cause of action violated its due process rights. The Court found “that the lapse of time not only barred the remedy but also destroyed the liability of defendant to plaintiff.” William Danzer & Co., 268 U.S. at 636, 45 S.Ct. at 613 (citing Kansas City S. Ry. v. Wolf, 261 U.S. 133, 139, 43 S.Ct. 259, 260, 67 L.Ed. 571 (1923); U.S. ex rel. Louisville Cement Co. v. Interstate Commerce Comm’n, 246 U.S. 638, 642, 38 S.Ct. 408, 409, 62 L.Ed. 914 (1918); A.J. Phillips Co. v. Grand Trunk W. R.R., 236 U.S. 662, 666, 35 S.Ct. 444, 445, 59 L.Ed. 774 (1915)). The Court further noted that statutes are presumed to be prospective unless the statute expressly states otherwise,⁵ and that it had recently held that the Transportation Act would not apply to causes of action which were barred by a state statute of limitations before the passage of the Act. Id. (citing Fullerton-Krueger Lumber Co. v. Northern Pac. Ry., 266 U.S. 435, 437, 45 S.Ct. 143, 143-44, 69 L.Ed. 367 (1925)). The Court held that sometimes a statute both creates a cause of action and places a limitation period on its existence, and the limitation period in such statutes serve as a limitation upon liability. The Court concluded that the expiration of the time period extinguished the defendant’s liability, and to revive that liability would deprive the defendant of its property without due process of law. Id. at 637, 45 S.Ct. at 613.

The Supreme Court subsequently held in Chase Securities Corp. v. Donaldson, 325 U.S. 304, 65 S.Ct. 1137, 89 L.Ed. 1628 (1945), that retroactive application of a statute of limitation does not violate the Due Process Clause of the Fourteenth Amendment. The Chase Court distinguished Danzer in a footnote by noting that the statute in that case affected the defendant’s liability; whereas, in Chase the statutes merely affected the plaintiffs remedy. The challenged statute of limitation neither conferred on plaintiff a new right nor subjected defendant to a new liability. Chase Sec. Corp., 325 U.S. at 312 n.8, 65 S.Ct. at 1141 n.8. The Court relied primarily upon its previous decision in Campbell v. Holt, 115 U.S. 620, 6 S.Ct. 209, 29 L.Ed. 483 (1885), in which it held that

where lapse of time has not invested a party with title to real or personal property, a state legislature, consistently with the Fourteenth Amendment, may repeal or extend a statute of limitations, even after right of action is barred thereby, restore to the plaintiff his remedy, and divest the defendant of the statutory bar.

Chase Sec. Corp., 325 U.S. at 311-12, 65 S.Ct. at 1141. The Court noted that Campbell established “that statutes of limitation go to matters of remedy, not to destruction of fundamental rights.” Id. at 314, 65 S.Ct. at 1142.

The district court found the Oregon statute of repose unconstitutional based upon Dan-zer, Chase, Campbell, and the Fourth Circuit’s decision in Goad. The Goad court examined the differences between statutes of limitation and statutes of repose.

Statutes of limitation ... are primarily instruments of public policy and of court management, and do not confer upon defendants any right to be free from liability, although this may be their effect.

In contrast to statutes of limitation, statutes of repose serve primarily to relieve potential defendants from anxiety over liability for acts committed long ago. Statutes of repose make the filing of suit within a specified time a substantive part of plaintiffs cause of action. In other words, where a statute of repose has been enacted, the time for filing suit is engrafted onto a substantive right created by law. The distinction between statutes of limitation and statues of repose corresponds to the distinction between procedural and substantive laws.

Goad, 831 F.2d at 510-11 (footnotes and citation omitted). Although Goad delineates the differences between statutes of limitation and statutes of repose, those distinctions are not relevant for purposes of our inquiry in the present case because Goad involved choice of law principles, and in that context the distinction between procedural and substantive laws is critical in determining which state’s law applies. However, in the present case we are called upon to determine the constitutionality of a state statute, and we must employ a different analysis.

While Danzer and the line of cases discussed above analyzed the constitutionality of retroactive time bar statutes by drawing the substance versus procedure distinction, a more recent line of Supreme Court cases commands us to employ a different analysis. First, in Usery v. Turner Elkhom Mining Co., 428 U.S. 1, 96 S.Ct. 2882, 49 L.Ed.2d 752 (1976), the Court rejected appellant’s due process challenge to legislation creating a new liability upon coal mine operators for illnesses to miners for work done long before the legislation. The Court recognized:

It is by now well established that legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality, and that the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way.

... [Ojur cases are clear that legislation readjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations. This is true even though the effect of the legislation is to impose a new duty or liability based on past acts.

Id. at 15-16, 96 S.Ct. at 2892-93 (citations omitted). The Usery Court concluded that the retroactive legislation comported with the requirements of due process.

Next, in Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984), the Supreme Court upheld a statute imposing liability on employers for withdrawal from pension plans even though the statute applied to employers who withdrew before the enactment of the statute. Relying upon Usery, the Court held that legislation imposing liabilities retroactively must only be supported by a rational legislative purpose. Id. at 728-30, 104 S.Ct. at 2717-18.

Finally, in General Motors Corp. v. Romein, the Court held that in order for retroactive state legislation to comport with the requirements of due process under the Fifth Amendment, it must serve a legitimate legislative purpose that is furthered by rational means. 503 U.S. 181, 191, 112 S.Ct. 1105, 1112, 117 L.Ed.2d 328 (1992) (citing Pension Benefit Guar. Corp., 467 U.S. at 730, 104 S.Ct. at 2718).

Turner Elkhorn and Pension Benefit both involved federal statutes, and Romein involved a state statute. Thus, the three cases together stand for the proposition that the Due Process Clause of the Fifth Amendment allows retroactive application of either federal or state statutes as long as the statute serves a legitimate legislative purpose that is furthered by rational means. We reject the district court’s inference that Turner Elk-hom and Pension Benefit only apply to federal statutes involving national economic policy. While courts might accord a stronger deference to legislation affecting national economic policy, that does not suggest that a different constitutional analysis applies to non-economic legislation. Courts apply the rational basis test when reviewing the constitutionality of retroactive legislation in general, but the legislative deference may vary.

In light of this more recent Supreme Court precedent, we find that the analysis used by the Court in Danzer, Chase, and Campbell is outdated and no longer valid for purposes of analysing the constitutionality of retroactive legislation. The relevant inquiry is whether or not the legislation serves a legitimate legislative purpose that is furthered by rational means. In fact, the Fourth Circuit applied the reasoning of Turner Elkhom in United States v. Monsanto Go., 858 F.2d 160, 174 (4th Cir.1988), cert. denied, 490 U.S. 1106, 109 S.Ct. 3156, 104 L.Ed.2d 1019 (1989), in determining that retroactive application of CERCLA’s liability provisions does not run afoul of the Supreme Court’s test for due process validity.

Our sister circuit recently considered whether retroactive application of a statute of repose violates a defendant’s due process rights in Wesley Theological Seminary v. United States Gypsum Co., 876 F.2d 119 (D.C.Cir.1989), cert. denied, 494 U.S. 1003, 110 S.Ct. 1296, 108 L.Ed.2d 473 (1990), and we follow the reasoning of the Wesley court. In that case, the defendant claimed that the ten year statute of repose barred the plaintiffs suit; however, while the case was pending, the legislature amended the statute making it inapplicable to manufacturers such as the defendant. The defendant arg-ued that the earlier statute conferred upon it a substantive right not to be sued, and that retroactive application of the amended statute of repose violated its due process rights.

Relying upon Turner Elkhom and Pension Benefit, the D.C. Circuit reasoned that retroactive application of the amended statute did not violate the defendant’s due process rights if it served a rational legislative purpose. Id. at 122-23. The Wesley court noted that “any substance/proeedure dichotomy suggested by Chase is either completely defunct or, at the very most, establishes procedural rules as a safe harbor within which a legislature may freely make retroactive changes.” Id. at 122. The Wesley court stated that Turner Elkhom and Pension Benefit followed Justice Holmes’s view that legislative bodies are vested with a certain amount of leeway in establishing laws. As Chief Justice of Massachusetts, Justice Holmes wrote:

[Multitudes of cases have recognized the power of the Legislature to call a liability into being where there was none before, if the circumstances were such as to appeal with some strength to the prevailing views of justice, and if the obstacle in the way of the creation seemed small.

Danforth v. Groton Water Co., 178 Mass. 472, 59 N.E. 1033, 1034 (1901), quoted in Wesley, 876 F.2d at 121.

In predicting that the Fourth Circuit would not follow the D.C. Circuit’s opinion in Wesley, the district court relied upon Link v. Receivers of Seaboard Air Line Railway, 73 F.2d 149 (4th Cir.1934), and Dinh v. Rust International Corp., 974 F.2d 500 (4th Cir.1992). We find both of these cases inapplicable in resolving the constitutional issue before us.

The statute in Link provided that personal injury judgments against railroads took priority over any mortgage payments owed by the railroad as long as the personal injury plaintiff filed suit within twelve months of the injury. Link filed his suit eighteen months after his injury; however, while his appeal was pending, the legislature amended the statute to allow personal injury plaintiffs two years in which to file suit. Link argued that the amended statute applied in his case giving his judgment priority. The court held that application of the amendment to pending suits violated the railroad’s due process rights because once the twelve month period expired, the plaintiffs personal injury judgment lost priority over the railroad’s mortgages. The court determined that the legislature could not revive a substantive right already lost by the plaintiff. Link, 73 F.2d at 152. The court also noted that the legislature did not intend for the amendment to apply retroactively. Id. at 151.

We find Link inapplicable in the present case because the Fourth Circuit decided that ease in 1934 and, as discussed above, the Supreme Court has since made substantial changes in this area of the law. Link is based upon the same outdated principles upon which Danzer is based.

The district court’s reliance upon Dinh is misplaced because in that case the appellant agreed that the statute of repose created substantive rights in the defendant which once vested could not be legislatively destroyed. Dinh, 974 F.2d at 501. Because the issue was not contested, it was not before the court.

The Trust relies upon School Board of Norfolk v. United States Gypsum Co., 234 Va. 32, 360 S.E.2d 325 (1987), in which the court found that retroactive application of a statute of repose violated the defendant’s due process rights under the Virginia Constitution. Because the court decided United States Gypsum Co. under Virginia’s Constitution, not the Federal Constitution, and because states are free to interpret their constitutions under a stricter standard than the federal courts interpret the Federal Constitution, we find United States Gypsum Co. inapplicable here.

The Trust also relies upon Colony Hill Condominium I Ass’n v. Colony Co., 70 N.C.App. 390, 320 S.E.2d 273 (1984), review denied, 312 N.C. 796, 325 S.E.2d 485 (1985), in which the court held that a statute of repose provided the defendant with a vested right not to be sued and reviving a liability already extinguished violated the defendant’s due process rights. As a state appellate decision, Colony Hill is not binding authority on this court, and we decline to follow it because it does not recognize the recent changes in this area of the law triggered by the Supreme Court’s decisions in Turner Elkhorn and Pension Benefit.

The recent developments in the law require us to apply the rational basis test in determining whether retroactive legislation violates the Due Process Clause of the Fifth Amendment. For purposes of constitutional analysis, the same test applies regardless of whether the statute at issue is one of repose or one of limitation.

Next, we must determine whether the Oregon statute of repose, which expressly states that it applies retroactively, serves a legitimate legislative purpose that is furthered by rational means. After extensive hearings on the legislation, the Oregon legislature determined that retroactive application of the Special IUD Statute was fair and equitable to all parties involved. Because many of the women suffered injuries from the IUD in the early to mid 1970s, and the link between the IUD and the injuries it caused was not discovered until the early 1980s, the unamended statute of repose barred the claims of many women. The Oregon Legislature determined that the Special IUD Statute was necessary to provide these claimants with a fair opportunity to litigate their claims. We find that the Special IUD statute does not violate the Due Process Clause of the Fifth Amendment because it is rationally related to a legitimate legislative purpose.

For the foregoing reasons, the opinion of the district court is

REVERSED.

1 . Shadburne filed suit in Maryland rather than Oregon because she also sued the Daikon Shield's inventor, and he was not subject to suit in Oregon.

2 . The Oregon legislature excluded asbestos manufacturers in an earlier amendment, Or.Rev.Stat. § 30.907 (1993), and has since excluded breast implant manufacturers, Or.Rev.Stat. § 30.908 (1993).

3 . The 1989 amendments made several other minor changes to the 1987 act that are not relevant here. See 1989 Or.Rev.Stat. ch. 642.

4 . The Special IUD Statute does not have a code section in the Oregon Code; however, it does appear in the Oregon Code immediately preceding § 30.900 under the title "ACTION AGAINST MANUFACTURER OF INTRAUTERINE DEVICE.”

5 . The Oregon statute at issue in the present case expressly states that it applies retroactively.