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Coons v. American Honda Motor Co.

Decided: June 13, 1984.

WALTER P. COONS, PLAINTIFF-PETITIONER,
v.
AMERICAN HONDA MOTOR CO., INC., A CORPORATION, ET AL., DEFENDANTS, AND HONDA MOTOR COMPANY, LTD. OF JAPAN, A CORPORATION, DEFENDANT-RESPONDENT, AND ATTORNEY GENERAL OF NEW JERSEY, INTERVENOR-RESPONDENT



On a rehearing of a portion of the judgment of this Court, dated August 3, 1983 and reported at 94 N.J. 307 (1983). See 95 N.J. 234 (1984).

For modification -- Chief Justice Wilentz, and Justices Clifford, Handler and O'Hern. Dissenting -- Justices Schreiber, Pollock and Garibaldi. The opinion of the Court was delivered by Clifford, J. Garibaldi, J., dissenting. Justice Schreiber and Justice Pollock join in Part I of this opinion.

Clifford

[96 NJ Page 421] In Coons v. American Honda Motor Co., 94 N.J. 307 (1983) (Coons I), this Court addressed the constitutionality of N.J.S.A. 2A:14-22 in the face of an attack under the commerce clause, U.S. Const. art. 1, ยง 8, cl. 3. That statute tolls the running of the statute of limitations in actions against foreign corporations not represented in this state. We ruled that in order to achieve representation under the tolling statute, a corporation not organized in New Jersey and not represented in this state by any person upon whom process may be served must obtain a certificate to do business in New Jersey, pursuant to N.J.S.A. 14A:13-4, and thereby submit to the jurisdiction of the forum. 94 N.J. at 309. We further held that to require an unrepresented foreign corporation to satisfy that provision before it could gain the benefit of the statute of limitations imposed on such a corporation so impermissible a burden as to amount to a violation of the commerce clause. Id. Finally, we stated that our decision was to be given retrospective effect, "consistent with the general rule applied in civil cases that a new ruling shall apply to all matters that have not reached final judgment." 94 N.J. at 319 (citing Fox v. Snow, 6 N.J. 12, 14 (1950)).

Following our decision in Coons I, plaintiff filed a petition for rehearing on all the issues that had been determined in that appeal. We directed defendant to respond solely on the question of retroactivity, and invited other counsel to address the same issue. The positions staked out in the supplemental briefs found plaintiff, supported by amici curiae Walter and Susan Cohn, Roy Hopkins, Karl Asch, P.A., and ATLA-NJ (The Association of Trial Lawyers of America, New Jersey Affiliate), arguing that our ruling should be prospective in application, a position shared by the Attorney General as intervenor-respondent. Defendant, who contends that Coons I should be applied retroactively, is joined by amici curiae G.D. Searle & Co., Kelsey-Hayes Company, and Brinco Mining Limited.*fn1

We granted the petition for rehearing, 95 N.J. 234 (January 3, 1984), limited to the retroactivity issue. We now hold as a matter of state law that Coons I is to be applied prospectively only, from the date of that decision, August 3, 1983.

I

In order that the issue may be set forth in the proper context, we advert to the significant facts and procedural history, borrowing at the outset from our recitation in Coons I, supra, 94 N.J. at 309.

Plaintiff commenced this suit in 1978 against defendant Honda Motor Co., Ltd. (Honda) and its wholly-owned American distributor, American Honda Motor Co., Inc. (American Honda). The action seeks damages for personal injuries and consequential losses occasioned by an accident on October 30, 1974, when plaintiff was thrown from a motorcycle manufactured by Honda and distributed by American Honda. At all relevant times American Honda was a California corporation that maintained facilities in New Jersey. In contrast, Honda is a Japanese corporation that has never been authorized to do business

in this or any other state and carries on no activities here or elsewhere in the United States.

Because plaintiff had started suit four years after the accident, both Honda and American Honda raised as a defense the two-year statute of limitations for personal injury actions, N.J.S.A. 2A:14-2, and moved for summary judgment. The trial court granted American Honda's motion but denied that of Honda, ruling that the two-year statute of limitations had been tolled by N.J.S.A. 2A:14-22 because Honda was a foreign corporation that was not "represented" in New Jersey by a person upon whom process could be served. In addition, the trial court held that there were sufficient bases for the exercise of in personam jurisdiction against Honda and that the tolling statute did not violate the equal protection clause of the federal Constitution.

The Appellate Division affirmed the judgment of the trial court. Coons v. Honda Motor Co., Ltd., of Japan, 176 N.J. Super. 575 (1980). After this Court denied cross-motions for leave to appeal, the parties sought review by the Supreme Court, which consented to hear only Honda's appeal. That Court vacated the judgment below and remanded to the Appellate Division. Honda Motor Co., Ltd. v. Coons, 455 U.S. 996, 102 S. Ct. 1625, 71 L. Ed. 2d 857 (1982). Thereafter we certified the cause on our own motion. R. 2:12-1.

[ Id., at 309-11 (footnote omitted).]

The Supreme Court's remand was designed to afford the state court the opportunity to reconsider its earlier determination in light of G.D. Searle & Co. v. Cohn, 455 U.S. 404, 102 S. Ct. 1137, 71 L. Ed. 2d 250 (1982). In Searle, Susan and Walter Cohn sought damages allegedly caused by Enovid, an oral contraceptive manufactured by Searle, a Delaware corporation not authorized to do business in New Jersey, with its principal place of business in Illinois. Upon plaintiffs' filing suit, more than ten years after the injury, in the Superior Court of New Jersey, later removed to the District Court, Searle set up as a defense the two-year statute of limitations. Judge Meanor found that the tolling provision relied on by the Cohns violated the equal protection clause. Cohn v. G.D. Searle & Co., 447 F. Supp. 903, 912 (D.N.J.1978).

Issues substantially identical to those raised in Searle surfaced some months later in Hopkins v. Kelsey-Hayes, Inc., 463 F. Supp. 539 (D.N.J.1978). In that case District Court Judge Brotman expressly rejected the reasoning of Judge Meanor in Searle and found that N.J.S.A. 2A:14-22 withstood constitutional scrutiny under the equal protection clause. Id. at 542.

Prior to a decision in the consolidated appeal of Hopkins and Searle in the United States Court of Appeals for the Third Circuit, Hopkins v. Kelsey-Hayes, Inc., 628 F.2d 801 (1980), this Court decided Velmohos v. Maren Eng'g Corp., 83 N.J. 282 (1980), in which we upheld the tolling provision in the face of equal protection and due process challenges. The Third Circuit then adopted the Velmohos rationale and rejected defendants' constitutional attacks, 628 F.2d at 811-12.

Both Searle and Kelsey-Hayes sought certiorari in the United States Supreme Court, which granted the petition of Searle, filed one day earlier than that of Kelsey-Hayes. The Court held that N.J.S.A. 2A:14-22 withstood constitutional scrutiny arising under equal protection and due process of law. Justice Blackmun, writing for the majority, did not, however, decide the issue raised by Searle's commerce clause argument. Because that issue was "clouded by an ambiguity in state law", 455 U.S. at 413, 102 S. Ct. at 1144, 71 L. Ed. 2d at 259, the Court instead remanded the case to the Third Circuit, along with Kelsey-Hayes after vacating the judgment in that case. 455 U.S. 985, 102 S. Ct. 1605, 71 L. Ed. 2d 844 (1981) (mem.). In a single decision the Third Circuit remanded both Searle and Kelsey-Hayes to the District Court for resolution of the commerce clause question. Hopkins v. Kelsey-Hayes, Inc., 677 F.2d 301, 302 (1982). When the Supreme Court remanded Coons to the state court for determination of the commerce clause issue in light of Searle, the District Court adjourned its consideration of the same question pending a binding interpretation on a question of state law, namely, the requirement of "representation" in our tolling statute, N.J.S.A. 2A:14-22. There followed our decision in Coons I.

II

As long ago as 1940 Chief Justice Charles Evans Hughes lamented that questions of retroactivity had for years been considered "among the most difficult" problems that engage

the attention of the courts, both state and federal. See Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 374, 60 S. Ct. 317, 319, 84 L. Ed. 329, 333. That the passage of time and a maturing of retroactivity law have not rendered those issues any the less vexatious is borne out by our experience in this case, in which after earnest reflection, aided by full briefing and argument, we now view as ill-considered our earlier statement (made without the benefit of an adversary hearing directed to the point) that gave Coons I retrospective effect. We are brought to that conclusion by application of principles drawn from our own state court decisions as well as from United States Supreme Court cases.

There are four common approaches to retroactivity that have emerged from our case law. A court may:

(1) make the new rule of law purely prospective, applying it only to cases whose operative facts arise after the new rule is announced; (2) apply the new rule to future cases and to the parties in the case announcing the new rule, while applying the old rule to all other pending and past litigation; (3) grant the new rule limited retroactivity, applying it to cases in (1) and (2) as well as to pending cases where the parties have not yet exhausted all avenues of direct review; and, finally, (4) give the new rule complete retroactive effect, applying it to all cases, even those where final judgments have been entered and all avenues of direct review exhausted.

[ State v. Burstein, 85 N.J. 394, 402-03 (citing State v. Nash, 64 N.J. 464, 468-70 (1974)).]

Which of these approaches is taken depends largely on "the court's view of what is just and consonant with public policy in the particular situation presented." State v. Nash, 64 N.J. 464, 469 (1974). Most frequently "a weighing of the various policies involved [has] called for retrospectivity", Darrow v. Hanover Twp., 58 N.J. 410, 413-14 (1971). Consequently, retrospectivity is acknowledged to be the "traditional" rule, see, e.g., Mirza v. Filmore Corp., 92 N.J. 390, 396 (1983); hence our reference in Coons I to the "general rule" of retrospectivity as adverted to in Fox v. Snow, 6 N.J. 12, 14 (1950). 94 N.J. at 319.

However, as suggested by Nash, supra, 64 N.J. at 469, sound policy reasons may persuade a court to accord a judicial decision prospective application. Under the rubric of Nash, followed

in numerous cases since then, "sound policy grounds" may justify limiting the retroactive effect of overruling precedent. See id. at 471. They are (1) justifiable reliance by the parties and the community as a whole on prior decisions, (2) a determination that the purpose of the new rule will not be advanced by retroactive application, and (3) a potentially adverse effect retrospectivity may have on the administration of justice. Mirza v. Filmore Corp., supra, 92 N.J. at 397; see, e.g., State v. Catania, 85 N.J. 418, 447 (1981); State v. Burstein, supra, 85 N.J. at 406; State v. Carpentieri, 82 N.J. 546, 549 (1980).

Although more than one retroactivity analysis is available -- in fact, as one scholar has recently pointed out, "there are several, with the precise number unclear and possibly changing", Carr, "Retroactivity: A Study in Supreme Court Doctrine 'As Applied'," 61 N.C.L.Rev. 745, 761 (1983) -- it appears that New Jersey retroactivity law has been inspired by the same considerations that underlie retroactivity theory as developed by the Supreme Court. See State v. Gervasio, 94 N.J. 23 (1983); Salorio v. Glaser, 93 N.J. 447 (1983). On the specific issue before us -- whether a civil statute's invalidity is to be applied prospectively or retroactively -- the Supreme Court has developed an equitable balancing test, perhaps best typified by Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S. Ct. 349, 30 L. Ed. 2d 296 (1971), and Lemon v. Kurtzman, 411 U.S. 192, 93 S. Ct. 1463, 36 L. Ed. 2d 151 (1973) (Lemon II).

Chevron involved a claim for personal injuries sustained while plaintiff was working on defendant's drilling rig located on the Outer Continental Shelf off the Gulf Coast of Louisiana. The suit was filed more than two years after plaintiff's accident. Louisiana had a one year statute of limitations governing personal injury suits. Originally, defendant did not raise a statute of limitations defense because the parties assumed, on the basis of a long line of federal decisions, that admiralty law -- including the doctrine of laches -- applied to the case. During discovery, however, the Supreme Court announced its

decision in Rodrigue v. Aetna Casualty & Sur. Co., 395 U.S. 352, 89 S. Ct. 1835, 23 L. Ed. 2d 360 (1969), that state law, including state statutes of limitations, rather than admiralty law applied to personal injury actions brought under the Outer Continental Shelf Lands Act, relating to fixed structures on the Outer Continental Shelf. The District Court in Chevron, relying on Rodrigue, applied the Louisiana one-year limitations period and dismissed the case. The Circuit Court reversed and remanded for trial. In affirming that result ...


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