G. D. Searle & Co. v. Cohn
455 U.S. 404, 102 S. Ct. 1137, 1982 U.S. LEXIS 74 (1982)
Rule of Law:
A state statute of limitations tolling provision for unrepresented foreign corporations does not violate the Equal Protection or Due Process Clauses of the Fourteenth Amendment if it is rationally related to legitimate governmental objectives, even with the advent of long-arm jurisdiction.
Facts:
- In 1963, Susan Cohn suffered a stroke.
- In 1974, Susan and Walter Cohn sued G. D. Searle & Co.
- The Cohns alleged that Susan's stroke was caused by her use of an oral contraceptive manufactured by G. D. Searle & Co.
- G. D. Searle & Co. is a Delaware corporation with its principal place of business in Illinois, engaged in manufacturing and selling pharmaceutical products.
- At all times pertinent to the case, G. D. Searle & Co. did not have any person or officer in New Jersey upon whom process could be served, for the purposes of the state's tolling provision.
Procedural Posture:
- Susan and Walter Cohn sued G. D. Searle & Co. in the Superior Court of New Jersey, Essex County, alleging injury from a contraceptive.
- G. D. Searle & Co. removed the suit to federal court (District Court of New Jersey).
- G. D. Searle & Co. moved for summary judgment based on New Jersey’s 2-year statute of limitation.
- The District Court ruled that G. D. Searle & Co. was not represented in New Jersey for the purposes of the tolling provision but held the tolling provision invalid under the Equal Protection Clause, thus barring the Cohns' suit.
- The Cohns appealed to the U.S. Court of Appeals for the Third Circuit.
- Before the Court of Appeals reached a decision, the Supreme Court of New Jersey ruled in Velmohos v. Maren Engineering Corp. that the tolling provision remained in force and did not violate the Equal Protection or Due Process Clauses.
- The Court of Appeals then reversed the District Court's judgment, holding the tolling provision consistent with the Equal Protection and Due Process Clauses.
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Issue:
Does a New Jersey statute, which tolls the statute of limitations against a foreign corporation amenable to long-arm jurisdiction but lacking an in-state representative for service, violate the Equal Protection or Due Process Clauses of the Fourteenth Amendment?
Opinions:
Majority - Justice Blackmun
Yes, the New Jersey statute does not violate the Equal Protection or Due Process Clauses because it is rationally related to legitimate governmental ends. The Court applied the rational basis standard, noting that statutes of limitation are matters of legislative grace, not fundamental rights. The Court found two rational reasons for the tolling provision despite the existence of long-arm jurisdiction: (1) unrepresented foreign corporations are still potentially difficult to locate and serve, as plaintiffs must first find them, and (2) long-arm service is more burdensome and time-consuming for plaintiffs than service on an in-state representative, requiring initial efforts at in-state service and judicial approval. Furthermore, the New Jersey Supreme Court clarified that such corporations can still plead the equitable defense of laches if a plaintiff's delay is inexcusable and causes prejudice. The Court declined to address the Commerce Clause challenge due to the lower courts not directly addressing it and an ambiguity in New Jersey state law regarding how foreign corporations might designate an agent without full registration.
Dissenting - Justice Stevens
No, the New Jersey statute violates the Equal Protection Clause. Justice Stevens agreed there might be a rational basis for some differential treatment of unrepresented foreign corporations (e.g., a longer limitations period), but argued that it does not logically follow that any differential treatment, such as denying the benefit of any statute of limitations, is permissible. He contended that the Constitution requires a rational basis for the specific burden imposed on the disfavored class, and the availability of a laches defense does not eliminate or justify the significant differential treatment. He found no legitimate state purpose to justify the special burden of indefinite exposure to suit.
Concurring-in-part-and-dissenting-in-part - Justice Powell
Justice Powell concurred with the majority's decision on the Equal Protection and Due Process issues. However, he dissented from the Court's decision to remand the case on the Commerce Clause issue. He argued that the Commerce Clause question was properly before the Supreme Court, having been argued to the Court of Appeals (though ignored) and extensively briefed for the Supreme Court. He also stated that there was no genuine ambiguity in New Jersey law, contending that the only way for a foreign corporation to designate an agent for service and gain the benefit of the statute of limitations was to obtain a certificate of authority to transact business in the state, which imposes substantial burdens that could unconstitutionally burden interstate commerce.
Analysis:
This case reinforces the broad latitude states have in defining statutes of limitation and the high bar for challenging such laws under the Equal Protection Clause, particularly when no suspect classification or fundamental right is involved. It clarifies that even with the advent of modern long-arm statutes, states can differentiate between corporations with and without in-state representatives due to the residual practical difficulties and burdens associated with out-of-state service. The Court’s decision to defer the Commerce Clause question highlights the importance of thorough lower court review and clear state law interpretation for federal constitutional questions, leaving a significant constitutional challenge unresolved in this instance.
