The state's arguments favoring upholding N.J. Stat. Ann. § 2A:14-22 do not overcome the Bendix holding. The state argues first that the legislative intent of the New Jersey legislature in amending § 2A:14-22 shortly after the initial Coons decision suggests that this court should uphold the constitutionality of the statute. The court agrees that legislative intent is, as the state argues, a "critical question" in determining the constitutionality of a statute. State Brief at 11. However, the New Jersey legislature, in responding to Coons I, addressed a very different Commerce Clause issue, namely the "forced licensure" with the New Jersey Secretary of State. The amended statute places a lesser burden on foreign corporations than a "forced licensure," but it is a burden that was held unconstitutional in Bendix nonetheless. Legislative intent does not, therefore, preserve the constitutionality of § 2A:14-22.
The state also argues that an affidavit filed by Paul Wermuth, an attorney for the Secretary of State of New Jersey, shows that the New Jersey Secretary of State permits the filing of designations of representatives for service of process by unregistered foreign corporations only with respect to causes of action where minimal contacts for due process purposes exist in New Jersey. Attached as Exhibit A to the affidavit is one such filing by Cassiar Mining Corporation, where a representative is designated "to accept service of process in those suits, and only those suits, where Cassiar is properly subject to in personam jurisdiction under New Jersey's long-arm rule, R. 4:4-4." (Emphasis added) The state argues that the court should uphold § 2A:14-22 by interpreting the statute to include this administrative practice.
The court rejects this argument. First, the State's alleged practice is not discernible from the wording of § 2A:14-22; it is impossible from the statute's wording for a foreign corporation to know that the Secretary of State allows a limited filing to be submitted. Second, the Supreme Court in Bendix rejected the argument that the foreign corporations enjoyed the "simple alternatives of designating an agent for service of process in Ohio or tendering an agency appointment to the Ohio Secretary of State," noting that "there is no statutory support for either option, and it is speculative that either device would have satisfied the Ohio requirements for the continued running of the limitations period." Bendix, 108 S. Ct. at 2222. This court is bound by the reasoning of the Supreme Court and will not read into the statute what is not in its language.
Prospective Application of this Court's Holding
The State argues that should the court find the statute to be unconstitutional, it should apply the determination prospectively only. State Brief at 14-18. This issue was addressed to the Supreme Court in Bendix, but was not considered because it was not raised until the case reached the Sixth Circuit. Bendix, 108 S. Ct. at 2222-23. The court, after careful consideration, concludes that today's holding must be applied prospectively.
At common law, a finding that a statute was unconstitutional was applied retroactively under the reasoning that the statute "was inoperative as though it had never passed." Norton v. Shelby County, 118 U.S. 425, 442, 30 L. Ed. 178, 6 S. Ct. 1121 (1886). Recently, however, the federal courts have recognized the massive relitigation and confusion that could arise if decisions were applied retroactively. Balanced with this concern, however, is the reality that prospective application of a court's decision would result in a Pyrrhic victory for the party or parties challenging the constitutionality of the statute. In light of these countervailing concerns the Supreme Court enunciated a three-part test to determine whether a decision is to be applied retroactively:
First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it has been stressed that "we must . . . weigh the merits and demerits of each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective application would further or retard its operation." Finally, we have weighed the inequity imposed by retroactive application, for "where a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the "injustice of hardship by a holding of nonretroactivity."
Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 30 L. Ed. 2d 296, 92 S. Ct. 349 (1971) (citations omitted). In Lemon v. Kurtzman, 411 U.S. 192, 199, 36 L. Ed. 2d 151, 93 S. Ct. 1463 (1973), the Court noted: "However appealing the logic of Norton may have been in the abstract, its abandonment reflected our recognition that statutory or even judge-made rules of law are hard facts on which people must rely in making decisions and in shaping their conduct. This fact of legal life underpins our modern decisions recognizing a doctrine of nonretroactivity."
Applying the Huson test in this case, the court must first inquire whether its holding either overruled past precedent on which litigants may have relied or decided an issue of first impression whose resolution was not clearly foreshadowed. As the New Jersey Supreme Court in Coons II stated, "We must look to the law as it was at the time plaintiff contemplated starting suit."
When plaintiff was first injured and contemplated filing suit, Coons I had already invalidated the earlier version of § 2A:14-22, and the New Jersey legislature had amended the statute in an effort to preserve its constitutionality. This scenario was still in effect when plaintiff first learned of the presence of Hub Plastics, Polytop, and Unocal on August 26, 1987. Bendix reached the Supreme Court on November 2, 1987, Bendix Autolite Corp. v. Midwesco Enterprises, Inc., 484 U.S. 923, 108 S. Ct. 283, 98 L. Ed. 2d 244 (1987), was argued on March 23, 1988, and decided on June 17, 1988. Bendix affirmed the holding of the district court for the Northern District of Ohio. The only opinions in the Third Circuit ruling on the constitutionality of § 2A:14-22 found the predecessor version unconstitutional under the Commerce Clause, but held, as did Coons II, that this holding was to be applied prospectively only. Love v. Johns-Manville Canada, Inc., 609 F. Supp. 1457 (D.N.J. 1985); Cohn v. G. D. Searle & Co., 598 F. Supp. 965 (D.N.J. 1984), vacated in part in Cohn v. G. D. Searle and Co., 784 F.2d 460 (3d Cir. 1986), cert. denied, 479 U.S. 883, 93 L. Ed. 2d 248, 107 S. Ct. 272 (1986); Hopkins v. Kelsey-Hayes, No. 78-1646 (unpublished opinion June 21, 1984).
Thus, the scenario facing plaintiff as late as August 26, 1987, gave him no reason to doubt the validity of § 2A:14-22. The 1984 amendment to § 2A:14-22 following Coons I gave plaintiff every reason to believe that the statute of limitations would not bar amending the complaint to include as defendants foreign corporations that had not designated agents for service of process in New Jersey. The first part of the Huson test favors prospective application of today's holding.
Under the second part of the Huson test the court must assess the merits and demerits of the prior history of § 2A:14-22 to determine whether retroactive application of today's decision would further or retard the operation of the decision. The court concludes that the merits and demerits of the prior history of § 2A:14-22 show a desire by the New Jersey legislature to preserve the constitutionality of the statute, while both the state and federal courts have found that case law and pragmatic concerns dictate applying the invalidation of § 2A:14-22 prospectively. See, e.g., Cohn, 784 F.2d at 465 ("Although it is possible that prospective invalidation will permit maintenance of some suits that would not have been timely filed absent the tolling statute, we do not think that this slight marginal burden, if any, does violence to the Commerce Clause."); Love, 609 F. Supp. at 1464 ("[Defendants] ignore the stark reality that in several cases involving civil statutes invalidated on constitutional grounds federal courts have opted for non-retroactivity."). Coons II, 96 N.J. at 433 ("To be sure, it would be most difficult, if not impossible, to forecast the number of claimants who might be affected by a holding that Coons I should be applied retroactively or, as the Attorney General points out, to measure 'the extent and nature of the prejudice to be suffered by those potential plaintiffs who justifiably relied on the validity of the tolling statute.'"). The only cases to apply the invalidation of § 2A:14-22 retroactively, Coons I and the district court opinion in Cohn, were modified on rehearing and reversed, respectively, to impose prospective applications of the invalidation of § 2A:14-22. The second part of the Huson test thus favors prospective application of today's decision.
Weighing the equities imposed by retroactive application is a closer issue. Prospective application of today's holding imposes some inequity upon Hub Plastics and Polytop, for their efforts in persuading this court to invalidate § 2A:14-22 would benefit future foreign corporate defendants in New Jersey, not Hub Plastics and Polytop in the instant case. However, the court finds the concerns described in Coons II, the Third Circuit in Cohn, and the district court in Love to be persuasive in this case. The possible damage to plaintiffs in other cases, state and federal, who relied on § 2A:14-22 would indeed be great if this court applied its decision retroactively. In addition, today's holding does help Hub Plastics and Polytop in future cases as it does for other foreign corporate defendants in New Jersey. Accord, Coons II, 96 N.J. at 434-35. Finally, prospective application of today's decision will allow the New Jersey legislature to amend § 2A:14-22 in light of Bendix, hopefully as readily as it amended that statute in light of Coons I, with a minimal effect upon cases pending in New Jersey state and federal courts. For these reasons, today's decision will not be applied retroactively and summary judgment is denied as to defendants Hub Plastics and Polytop.
The motions by Visual Packaging and Polytop to file third-party complaints are unopposed, and are granted. Plaintiff's motion to file a Third Amended Complaint is granted only to the extent that it is consistent with the limitations expressed in this court's holding today.
An order accompanies this opinion.
Plaintiff moves to file a Third Amended Complaint. Defendant Polytop moves for summary judgment and to file a third party complaint. Defendant Hub Plastics moves to dismiss the complaint. Defendant Unocal moves for summary judgment. Defendant Visual Packaging moves to file a third party complaint. The State of New Jersey intervenes in favor of upholding the constitutionality of N.J. Stat. Ann. 2A:14-22.
For the reasons set forth in the accompanying opinion, IT IS on this 25th day of January, 1989, ORDERED that the motion of Hub Plastics to dismiss is DENIED; that the motion of Polytop for summary judgment is DENIED; that the motion of Unocal for summary judgment is GRANTED; that the motions of Polytop and Visual Packaging to file a third party complaint are GRANTED; and that plaintiff's motion to file a Third Amended Complaint is GRANTED consistent with the limitations expressed in today's opinion.