same hospital. Denis Henry was born with severe birth defects and anomalies, including malformed ears, deafness, left facial paralysis, bilateral cranial nerve palsy, micrognathia, psychic damage, and severe disfiguring cosmetic abnormalities, all of which are apparently permanent.
The complaint alleges that in 1961 defendant was engaged in testing, manufacturing, and marketing the drug thalidomide in the pill form of Kevadon. The complaint further alleges that Denis Henry's injuries and damages are a proximate result of defendant's "negligent, fraudulent, wilful, wanton and reckless conduct" in testing, manufacturing and marketing the drug Kevadon and its component ingredient thalidomide, a drug "unfit for the purpose intended, not fit for human consumption, not free of defects, and . . . not of merchantable quality."
ISSUE BEFORE THE COURT
Defendant, Richardson-Merrell, Inc., now moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Defendant contends: (a) this diversity action is initially governed by choice-of-law rules of New Jersey; (b) under all of the circumstances of this suit New Jersey choice-of-law rules require the application or "borrowing" of the statute of limitations of Quebec, Canada; (c) plaintiffs' claims for relief are, under Quebec law, absolutely barred and extinguished by a Quebec Civil Code prescription statute; and (d) by bringing their action to New Jersey plaintiffs are merely "forum-shopping" for a jurisdiction with a favorable statute of limitations in an effort to circumvent the law of Quebec, the jurisdiction most significantly connected with the parties, transactions, and alleged injuries involved in this law suit.
Plaintiffs argue that defendant's motion for summary judgment should be denied in that: (a) New Jersey's choice-of-law rules require that New Jersey's statute of limitations governs the timeliness of this action since this State has a substantial governmental interest in the matter, while Quebec has no legitimate governmental interest in having its limitations period applied; (b) New Jersey has significant contacts and ties with the subject matter of the litigation since defendant manufactured and clinically tested the drug thalidomide in New Jersey; and (c) even if the Quebec statute of limitations is applied to bar plaintiff's tort action in New Jersey, defendant's motion for summary judgment should still be denied because the facts alleged in the complaint make out a contract action under Quebec law which is not barred by the Quebec prescription statute.
Defendant's motion for summary judgment focuses on the issue of application of statutes of limitation in a conflict-of-laws context. Therefore, solely for the purposes of deciding this motion, defendant concedes and the Court will take as true most of the factual allegations recited in plaintiffs' complaint.
Mazzilli v. Accident, etc. Casualty Ins. Co., 26 N.J. 307, 139 A.2d 741 (1958).
The Court will commence its inquiry by taking judicial notice of several relevant statutory provisions contained in the Civil Code of Quebec, Canada.
First, Article 2262 of the Civil Code provides that an action for bodily injuries is "absolutely extinguished" after one year has elapsed from the date the cause of action accrues. Second, Article 2267 of the Civil Code provides that this one-year prescription period shall "run against minors."
Under these provisions the infant-plaintiff's tort action against defendant is clearly time-barred under Quebec law. McCormack v. Sherbrooke Hospital (1935) 39 P.R. 1; Plamondon v. Hill (1937) 43 R.L. 263; Remmelle v. Laporte (1967) P.R. 66.
The Court also takes judicial notice of the relevant laws of the State of New Jersey. First, New Jersey has a two-year statute of limitations period governing the timeliness of personal injury actions. Second, New Jersey, unlike Quebec, "tolls" this two-year period on behalf of infants until they reach the age of 21 years.
Therefore, the infant-plaintiff's tort action is not time-barred in New Jersey, provided that New Jersey's choice-of-law rules preclude application of the Quebec time-bar.
Since the infant-plaintiff's suit is a diversity action, and since defendant's motion for summary judgment raises a conflict-of-laws issue, this Court must apply whatever law would be applied by the courts of the forum state, New Jersey. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938); Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941); Mixing Equipment Co., Inc. v. Philadelphia Gear, Inc., 436 F.2d 1308 (3 Cir. 1971); Boase v. Lee Rubber & Tire Co., 437 F.2d 527 (3 Cir. 1970); Kieffer v. Blue Steel Chemical Co., 196 F.2d 614 (3 Cir. 1952). Specifically, this Court is bound to follow New Jersey's choice-of-law rules in determining whether New Jersey's statute of limitations or Quebec's prescription statute governs the timeliness of this action. Ramsay v. Boeing Co., 432 F.2d 592 (5 Cir. 1970).
An examination of the relevant New Jersey case law reveals that in recent years the courts of this State have clearly departed from the traditional conflicts rule that automatically chooses the "substantive" law of the place of the wrong, or the lex loci delicti. Instead, New Jersey has adopted the more modern and flexible conflicts doctrine applying the substantive law of that jurisdiction having the most substantial governmental interest in, or the most significant relationship to, or the closest contacts with, the subject matter or the parties in an action. Heavner v. Uniroyal, Inc., 63 N.J. 130, 305 A.2d 412 (1973); Rose v. Port of New York Authority, 61 N.J. 129, 139-140, 293 A.2d 371 (1972); Pfau v. Trent Aluminum Co., 55 N.J. 511, 263 A.2d 129 (1970); Mellk v. Sarahson, 49 N.J. 226, 229 A.2d 625 (1964).
However, when New Jersey is the forum State for a foreign-based cause of action, New Jersey will apply its own "rules of procedure" in the action pending here, not the rules of procedure which the foreign State's courts would have applied if the action had been instituted there. See Marshall v. Geo. M. Brewster & Son, Inc., 37 N.J. 176, 180 A.2d 129 (1962), and the cases cited at 180, 180 A.2d 129.
Given the fact that statutes of limitation are ordinarily viewed as procedural in nature rather than substantive, New Jersey's courts have traditionally adhered to the settled common-law conflicts rule that "the forum applies only its own procedural statute of limitations and does not give effect to a statute of another state in which the cause of action arose -- unless [emphasis added] that statute has been held by the state which enacted it to be substantive in nature, operating as a condition terminating the existence of the right instead of merely barring the remedy." Gordon v. Loew's, Inc., 247 F.2d 451, 454 (3 Cir. 1957); Goodwin v. Townsend, 197 F.2d 970 (3 Cir. 1952); Marshall v. Geo. M. Brewster & Son, Inc., supra ; Restatement, Conflict of Laws 2d §§ 142-3 (1971); Leflar, American Conflicts Law § 127 (1968).
Citing this traditional rule, defendant in this action contends that although the limitations law of New Jersey will normally be applied in a suit based upon a foreign cause of action brought in New Jersey, a foreign cause of action will not be entertained by a New Jersey court if it is barred in the jurisdiction of the otherwise applicable law (Quebec) by a statute of limitations (C.C. arts. 2262, 2267) which bars the right and not merely the remedy.
To support its argument that the Quebec prescription statute is "substantive" rather than "procedural" in nature, the defendant has presented the Court with an exhaustive analysis of Quebec law. After reviewing the Quebec Civil Code provisions, considering the opinions of several Canadian law experts, and examining the relevant Canadian and American case law, I agree that the Quebec timebar is substantive.
Nonetheless, I also find that the "substantive nature" of the Quebec prescription statute is no longer a particularly relevant consideration in resolving the statute of limitations issue now before this Court, given the choice-of-law principles announced in the very recent decision by the Supreme Court of New Jersey in Heavner v. Uniroyal, Inc., supra, 63 N.J. 130, 305 A.2d 412.
Uniroyal announces a new choice-of-law rule in New Jersey regarding the application of statutes of limitation in foreign-based causes of action brought in the courts of this State, and clearly holds that New Jersey has now "discarded" the traditional law-of-the-forum rule. 63 N.J. at 140, 305 A.2d 412. Therefore, the decision must also be read as impliedly holding that New Jersey has also discarded the recognized "exception" of the law-of-the-forum rule, that a foreign statute of limitations should be applied in preference to that of the forum if it is characterized as "substantive" by the courts of the foreign jurisdiction.
As this Court interprets the Uniroyal decision, the case directs that for choice-of-law purposes statutes of limitation will be assumed to be substantive and are therefore to be applied in the same manner as any other substantive law issues -- by weighing the respective governmental "interests" of the forum State and the foreign jurisdiction.
The facts of Uniroyal are relatively uncomplicated. In October 1966 a resident of North Carolina, one Roy Heavner, purchased a truck trailer in Charlotte, North Carolina. While Heavner was driving the vehicle in April 1967, one of its tires blew out, causing the truck to crash into an abutment, seriously injuring Heavner.
In September 1970 Heavner and his wife instituted a products liability action in New Jersey for personal injuries, property damage, and loss of consortium. Since the action was brought more than three years after the accident, it would have been time-barred had it been brought in North Carolina. However, since the action was instituted less than four years from the date of delivery of the truck to the Heavners, they apparently hoped their action would not be time-barred under New Jersey law.
The named defendants in the action were the seller of the truck-trailer, Pullman, Inc. and the manufacturer of the allegedly defective tire, Uniroyal, Inc. Both defendants were subject to service of process in New Jersey, Pullman being a Delaware corporation doing a nationwide business retailing trailers equipped with Uniroyal tires, and Uniroyal being a New Jersey corporation doing a nationwide business manufacturing, selling, and distributing its tires.
The Superior Court, Law Division, dismissed the action, and the Superior Court, Appellate Division, affirmed, 118 N.J. Super. 116, 286 A.2d 718 (1972). The Supreme Court of New Jersey granted certification, 60 N.J. 317, 288 A.2d 579 (1972), and the Court centered its inquiry on the following issues:
"This product liability case presents two important questions concerning the statute of limitations. The first, a choice-of-law question, is whether New Jersey, as the forum state, should apply its limitations statute or that of North Carolina -- the state where all the parties are and where the cause of action arose and all preceding incidents occurred. The second question is whether, in any product liability case in this state in which our limitations law is applicable, the appropriate period is governed by our general statutes of limitations or is four years after the tender of delivery of the defective product as provided in the sales chapter of the Uniform Commercial Code, N.J.S.A. 12A:2-725." 63 N.J. at 132, 305 A.2d at 413.
The Court began its analysis of these issues by noting that New Jersey had consistently followed, "although not without some recent criticism," the common law conflicts rule "that the statute of limitations is ordinarily a matter of procedure, affecting the remedy and not the right, and is therefore, like other procedural attributes, controlled by the law of the forum rather than that of the state whose law otherwise governs the cause of action." 63 N.J. at 135, 305 A.2d at 415. However, the particular factual context of the Uniroyal case raised serious doubts in the Court's mind as to whether New Jersey had any real interest in the litigation which would justify the automatic application of New Jersey rather than North Carolina limitations law. Given the facts that all of the parties were subject to the jurisdiction of the North Carolina courts, North Carolina was the situs of the accident, "all preceding incidents occurred" in North Carolina, and the Heavners offered the Court "no explanation why a timely action was not begun in North Carolina," especially since North Carolina would have been a far more convenient forum in which to try the action than New Jersey, the Court concluded that plaintiffs were clearly "forum-shopping" in New Jersey in an effort to avoid the consequences of the less favorable statute of limitations of North Carolina. 63 N.J. at 132-135 and fn. 3, 305 A.2d 412.
In view of these factual circumstances, the Court decided to "reexamine" New Jersey's traditional law-of-the-forum policy regarding the application of statutes of limitation. In conducting its inquiry into the historical and legal basis for the law-of-the-forum rule, the Court found that in some instances application of the rule was contrary to "justice and good sense," and often encouraged litigants to "forum-shop" for jurisdictions with favorable statutes of limitation. 63 N.J. at 135-139, 305 A.2d 412.
"General dissatisfaction" with the law-of-the-forum rule, the Court noted, had led some States to implement certain "counteracting" measures. In New Jersey, for example, the judge-made exception to the law-of-the-forum rule developed "that the foreign limitations period will be applicable where a statute creating the cause of action bars the right and not merely the remedy." 63 N.J. at 139, 305 A.2d at 417. In New York and other States "borrowing statutes" had been enacted to curb forum-shopping and bar an action in the forum State "if it is barred by the state where the defendant, or both of the parties, resided or of the place where the cause of action arose." 63 N.J. at 140, 305 A.2d at 417. The Court in Uniroyal did note, however, that "counteracting" measures were not completely satisfactory alternatives to the law-of-the-forum rule. 63 N.J. at 139-140, 305 A.2d 412.
The Court's factual and legal inquiry caused it to hold in Uniroyal that the North Carolina statute of limitations should be applied to bar the plaintiffs' action in New Jersey.
Justice Hall, speaking for a unanimous Court, commented:
"We are convinced the time has come, for the reasons previously outlined, to discard the mechanical rule that the limitations law of this state must be employed in every suit on a foreign cause of action. We need go no further now than to say that when the cause of action arises in another state, the parties are all present in and amenable to the jurisdiction of that state, New Jersey has no substantial interest in the matter, the substantive law of the foreign state is to be applied, and its limitation period has expired at the time suit is commenced here, New Jersey will hold the suit barred. In essence, we will 'borrow ' the limitations law of the foreign state. We presently restrict our conclusion to the factual pattern identical with or akin to that in the case before us, for there may well be situations involving significant interests of this state where it would be inequitable or unjust to apply the concept we here espouse." 63 N.J. at 140-141, 305 A.2d at 418.