Knocking at the Courthouse Door

Beneath this seemingly unambiguous language lurks a significant question: How does �804 affect claims that expired under Lampf before the new act became effective? In other words, does �804 permit a plaintiff – who was barred by the previous three-year statute of limitations as of the act’s effective date – to commence an action under the new five-year statute of limitations?

The Landgraf Test

Courts and commentators examining the scope of the new statute of limitations have analyzed the revival-of-claims issue under the Supreme Court’s retroactivity jurisprudence. The seminal case is Landgraf v. USI Film Products. 511 U.S. 244 (1993), which dealt with whether the plaintiff could recover compensatory and punitive damages for sexual harassment under a newly enacted statute.

The district court concluded that the plaintiff had been harassed but that she was not entitled to equitable relief – the only remedy available under the law existing at the time the harassment took place. While her appeal was pending, the Civil Rights Act of 1991 was enacted, creating for the first time a right to recover compensatory and punitive damages for employment discrimination.

The court, in determining that the new remedies under the Civil Rights Act were unavailable to the plaintiff, set forth a two-part test to interpret potentially retroactive effect of a statute enacted after the events at issue in a suit.

First, courts must “determine whether Congress has expressly prescribed the statute’s proper reach.” If so, the inquiry is over, and the law is applied as written.

Second, if Congress has provided no guidance, then courts must “determine whether the new statute . . . would impair rights a party possessed when he acted, increase a party’s liability for past conduct, or impose new duties with respect to transactions already completed.”

If the statute is deemed to have retroactive effect, then courts will construe the statute to avoid that retroactive affect absent a clear expression by Congress that it apply retroactively.

Although the applicable case law is not a model of clarity, the cases make one proposition abundantly clear: Courts do not favor retroactivity. As the Landgraf Court noted, the “presumption against retroactive legislation is deeply rooted in our jurisprudence . . . individuals should have an opportunity to know what the law is and to conform their conduct accordingly; settled expectations should not be lightly disrupted.”

While there is “no question that Congress holds the power to extend a ‘previously applicable limitation period that has already commenced running and to enact a new limitation rule so as to revive claims already barred under a prior rule,’” the question remains as to Congress’s choice to exercise that power when it passed �804. See Roberts v. Dean Witter Reynolds, Inc., No. 02-cv-2115-T-26EAJ, 2003 U.S. Dist. LEXIS 5676, 8 (M.D.Fla. Mar. 14, 2003).

Plaintiffs and defendants have waged a two-front war over the application of the Landgraf test to �804. First, they disagree over whether Congress expressed intent to revive stale claims in the language of the act. Second, plaintiffs argue that the act revives barred claims because statutes of limitations are merely procedural expedients that do not affect substantive rights; conversely, defendants argue that such an application would impinge upon defendants’ substantive rights.

The Case Against Retroactivity

Under the Landgraf test, there are two arguments against the ex post application of the act to revive stale claims.

First, defendants argue that Congress did evidence its intent to prohibit the revival of claims. Section 804(c) states that “[n]othing in this section shall create a new, private right of action.” Permitting the revival of previously barred claims arguably creates a new cause of action.

Proponents of this argument point to Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939 (1997), for support. Although not a statute of limitations case, Hughes concerned retroactive application of an amendment to the False Claim Act, lifting a prohibition of claims by private persons, brought on behalf of the government, if the government already possessed information on which the suit was based.

The Hughes Court concluded that the amendment should not be applied retroactively but, in doing so, dealt a potentially fatal blow to the retrospective application of �804. The Court stated in dicta that extending a statute of limitations to resuscitate a formerly barred claim is impermissible, apparently in part because such a revival creates a new cause of action. If revival of a “moribund” claim is a new cause of action, then such revival is expressly forbidden by �804 itself.

Second, even if a court determined that revival is not expressly forbidden, the statute arguably lacks any explicit language that evinces Congress’ intent to revive expired claims. In the absence of such express language, courts generally will not apply a statute retroactively. Indeed, in Resolution Trust Corp. v. Seale, 13 F.3d 850 (5th Cir. 1994), the Court of Appeals stated, “Subsequent extensions of a limitations period will not revive barred claims in the absence of a clear expression of contrary legislative intent.”

According to the defense bar, no such “clear expression” of congressional intent exists. Section 804(a) merely states that actions “may be brought not later than the earlier of” the 2- or 5-year period.” Similarly, �804(b), which provides that the new limitations period “shall apply to all proceedings addressed by this section that are commenced on or after the date of enactment of this act,” does not furnish a clear statement of retroactivity. In fact, the statute is devoid of any indication that Congress intended it to revive, or apply in any way to, previously barred claims. Had it meant for it to apply retrospectively, Congress could have easily inserted such language � as it has in the past.

Aside from the absence of any clear expression of congressional intent, the retrospective application of the act’s new limitations period would produce an absurd result. That is, such an interpretation would permit a plaintiff, although previously time-barred, to maintain an action if he had not yet filed suit, while barring identical claims by more diligent plaintiffs who had already filed before the act’s effective date.

For example, a plaintiff who filed a day, a month or a year before the act became effective, would remain barred by the previous period of limitations; however, a similarly situated plaintiff, who filed after the effective date, could maintain a claim.

Without more express language, proponents argue, this “gap” in the statute’s coverage strongly suggests that Congress did not intend to revive time-barred claims.

The Case for Broader Application

In contrast, the plaintiffs’ bar retorts that of course Congress meant for the new period to apply retrospectively. Their argument is twofold. First, the statute explicitly applies to previously barred claims. Far from limiting its applicability, Congress specifically directs courts to apply the act to all proceedings commenced on or after the act’s effective date. By its own terms, the statute “shall apply to all proceedings . . . that are commenced on or after the date of enactment of this Act.”

In Landgraf, the Court stated that “[h]ad Congress wished [the statute] to have such a determinate meaning, it surely would have used language,” such as “the new provisions ‘shall apply to all proceedings pending on or commenced after the date of enactment of this Act.’”

Applying Landgraf to the language of �804(b), plaintiffs argue, it seems clear that Congress intended such a “determinate meaning.”

Further support for this interpretation can be found in the decisions construing the new burden of proof imposed by the Civil Asset Forfeiture Reform Act. The Landgraf Court found that new standard applied to “any forfeiture proceeding commenced on or after [Aug. 23, 2000].”

Courts construing this provision, which contains language nearly identical to �804, have concluded that Congress intended it to apply retrospectively. See, e.g., United States v. One “Piper” Aztec, 321 F.3d 355 (3d Cir. 2003), and United States v. All Funds, 255 F.Supp. 56 (E.D.N.Y. 2003). Not only have these courts found that CAFRA applies retrospectively: They have declared that congressional intent is clear.

Second, even if �804 is ambiguous, proponents of retroactivity contend that the legislative history clearly indicates intent to apply the statute retrospectively. They point to remarks by Senator Patrick Leahy, D-Vt., in the Congressional Record that the act “by its plain terms, applies to any and all cases filed after the effective date of the act, regardless of when the underlying conduct occurred.” 148 Cong. Rec. S7418 (July 26, 2002) (Add. 62). Although opponents contend that courts should not rely on this statement, it was nevertheless approved by unanimous consent and seems to indicate that Congress meant for the provision to have retrospective effect.

Defendants raise two objections to Leahy’s remarks. First, it is not necessarily a clear statement of revival. That is, the statement is consistent with the opposite interpretation that the act applies to conduct that occurred prior to its enactment, but not necessarily prior conduct that is time-barred.

Second, the statement � although technically voted on and included in the Congressional Record the day the act was passed � was not actually presented to Congress until the subsequent day, eliminating any chance for other senators to debate its meaning.

Procedure or Substance?

In determining whether �804 has retroactive effect under Landgraf, the critical question is whether the statute is merely a rule of procedure or whether it affects substantive rights. The Landgraf prohibition usually does not apply to procedural rules because the concerns normally associated with retroactivity are largely absent in that context.

Procedural rules may be applied retrospectively, even without express legislative authorization. For example, a provision concerning attorney’s fees will not implicate the presumption against retroactivity because it is “collateral to the main cause of action” and “uniquely separable from the cause of action to be proved at trial.”

In large part, then, questions of retroactivity can be resolved by determining whether the provision is procedural, and therefore collateral to the main cause of action, or substantive.

Defendants, not surprisingly, view �804 as impinging on substantive rights. In this regard, they may have the more straightforward argument: the Supreme Court has already suggested, in at least two cases, that revival of claims may implicate retroactivity concerns.

In Danzer & Co. v. Gulf & Ship Island Railroad Co., 268 U.S. 633 (1925), the Court concluded that the lapse of a two-year statute of limitations eliminated the defendant’s liability. The Interstate Commerce Act, which was at the heart of the controversy, imposed liability for injuries caused by the breach of a common carrier’s duties, but only if a claimant filed a complaint within two years of the injury.

More than two years after the plaintiff’s injury, the Transportation Act was enacted, allowing claimants to exclude from the period of limitations any period of federal control. Holding that the Act did not revive the plaintiff’s claim, the Court stated:

This court applying the rule of construction that all statutes are to be considered prospective unless the language is express to the contrary or there is a necessary implication to that effect, recently has held that �206 (f) does not apply to causes of action which were barred by a state statute of limitations before the passage of the Transportation Act.

Given the Court’s explicit instruction that, absent evidence to the contrary, statutes of limitation are applied prospectively, defense counsel seem to have a strong argument against revival of claims under section �804.

The other case, Hughes, discussed in detail above, likewise appears to adopt the notion that statutes of limitation involve questions of substance and, thus, cannot be retroactively applied. Although Hughes dealt with an entirely different matter (the FCA), the Court made a statement that may ultimately doom the revival of claims under �804: that “extending a statute of limitations after the pre-existing period of limitations has expired impermissibly revives a moribund cause of action.”

Moreover, as support for this proposition, the Court cited Chenault v. U.S. Postal Service, 37 F.3d 535 (9th Cir. 1994), inferring that this result was due, at least in part, to the fact that such a statute would “alter the substantive rights of a party and increase a party’s liability.” For opponents of claims revival under �804, the Court’s mandate in Hughes is clear: Retroactive revival, absent express Congressional authorization, is prohibited.

Limitations Statutes Are Procedural

While proponents of revival disagree that Danzer and Hughes mandate such a prohibition, no court has yet articulated why these cases do not bar revival of claims. Notwithstanding the lack of clarity in the case law, a cogent argument exists for why �804 is procedural in nature.

Although Danzer and Hughes provide the opponents of revival with a seemingly airtight argument, that argument, upon further examination, rests on a foundation riddled with uncertainties. Take the Hughes dicta and its reliance on Chenault, for instance. Chenault cites a case for the proposition that “[a] newly enacted statute that shortens the applicable statute of limitations may not be applied retroactively to bar a plaintiff’s claim that might otherwise be brought under the old statutory scheme because to do so would be manifestly unjust.” Relying on this proposition, and without any further citation, the Chenault court held:

Conversely . . . a newly enacted statute that lengthens the applicable statute of limitations may not be applied retroactively to revive a plaintiff’s claim that was otherwise barred under the old statutory scheme because to do so would ‘alter the substantive rights’ of a party and ‘increase a party’s liability.