By Eric Jones

On March 2, 2016, the Fourth Circuit issued a published opinion in the civil case Stahle v. CTS Corporation.  The District Court for the Western District of North Carolina had dismissed Kent Stahle’s complaint with prejudice, finding it was barred by the statute of repose in North Carolina General Statutes Section 1-52(16).  Relying on its own precedent and precedent in North Carolina Supreme Court cases, the Fourth Circuit reversed and remanded.

The Alleged Toxic Contaminants

CTS is a Delaware corporation which operated CTS of Asheville, a now-dissolved North Carolina corporation, in Buncombe County, NC.  As part of its manufacturing, CTS used a variety of toxic solvents from 1959 until it dissolved in 1983.  CTS of Asheville allegedly dumped large quantities of these toxic contaminants, including trichloroethylene, onto its property and into a stream known as Dingle Creek.

From 1959 until 1968, Stahle lived on Dingle Creek downstream of CTS of Asheville’s manufacturing plant.  During this period, Stahle was exposed to the waters of Dingle Creek, including contaminants allegedly placed there by CTS of Asheville.  Stahle was diagnosed with leukemia many years later, and filed suit against CTS alleging that its negligence in dumping toxic contaminants into Dingle Creek caused his leukemia.

The District Court Proceedings

Before the district court, CTS moved to dismiss Stahle’s complaint, arguing it was time-barred by North Carolina General Statutes Section 1-52(16).  In pertinent part, that section reads “for personal injury . . . the cause of action . . . shall not accrue until bodily harm to the claimant . . . becomes apparent . . . . Except as provided . . . no cause of action shall accrue more than 10 years from the last act or omission of the defendant giving rise to the cause of action.”  CTS asserted that its last possible act or omission affecting Stahle occurred in 1968, when Stahle moved away from Dingle Creek, thus barring any claims brought by Stahle after 1978.

Despite Stahle’s arguments that the Fourth Circuit and the North Carolina Supreme Court do not apply Section 1-52(16) to claims arising from disease, the district court concluded that Section 1-52(16) was unambiguous on its face and contained no exception for disease.  Thus, because Stahle’s disease was not discovered until well after the ten-year statute of repose, the district court dismissed his complaint.

The Standard of Review

As the Fourth Circuit explained, a district court’s grant of a motion to dismiss is reviewed de novo, as are all questions of statutory interpretation.  Because jurisdiction in federal court was premised on diversity, the Fourth Circuit was bound to apply North Carolina state law.  Unfortunately, the North Carolina Supreme Court has never directly addressed the proper interpretation of Section 1-52(16), forcing the Fourth Circuit to “anticipate whether the Supreme Court of North Carolina would rule that North Carolina General Statutes Section 1-52(16) bars Stahle’s action.”

Fourth Circuit Precedent

In its holding, the Circuit Court emphasized several Fourth Circuit decisions which “anticipated North Carolina law on the subject of disease claims and personal injury statutes of repose.”  First and foremost, the Circuit relied on the 1986 case Hyer v. Pittsburgh Corning Corp., where the Court concluded that the North Carolina Supreme Court “does not consider disease to be included within a statute of repose directed at personal injury claims unless the Legislature expressly expands the language to include it.”  In reaching that holding, the Hyer Court relied heavily on a North Carolina Supreme Court decision, Wilder v. Amatex Corp., which held that “the legislature intended [a latent injury statute of repose in another section] to have no application to claims arising from disease.”  In the case at bar, the Fourth Circuit reaffirmed its prior analysis of North Carolina Supreme Court precedent, holding that “unlike latent injury claims, ‘disease presents an intrinsically different kind of claim’ and … that ‘North Carolina has always recognized” the distinction.’”

The Fourth Circuit also took “a small measure of comfort in the fact that although [the Hyer decision and other related holdings] have been on the books and applied for several decades, neither the North Carolina General Assembly nor the North Carolina courts have taken exception to our expressed understanding of North Carolina law.”  In particular, the Circuit noted that “the General Assembly has acted at least eight times since Wilder to amend various statutes of repose and limitations without undoing any judicial application of the law relating to claims arising from disease.”  During one amendment, in fact, the Court noted that the General Assembly had specifically provided that “[n]othing in this act is intended to change existing law relating to product liability actions based upon disease.”

North Carolina Precedent

To strengthen its holding, the Fourth Circuit next discussed the scope of Section 1-52(16) using only North Carolina Supreme Court precedents in the absence of any Fourth Circuit precedent.  The Court explained that the district court had erred by reading the statutory section in isolation, when the North Carolina Supreme Court “does not read segments of a statute in isolation.”  In context, the Court held that “Section 1-52(16) appears plainly to apply to some—but not all—personal injury claims.”  Specifically, it applies to “latent injuries,” or personal injuries for which bodily harm to the claimant becomes apparent only at some point after the injury.  Thus, “because North Carolina law clearly establishes that a disease is not a latent injury,” the Fourth Circuit concluded again that the Supreme Court of North Carolina would not consider Section 1-52(16) to be applicable to Stahle’s disease claim.

The Lack of a Certified Question Procedure in North Carolina

In an early footnote, the Circuit noted in passing that North Carolina does not have any certification procedures, which allow a federal court to certify questions of state law to the state supreme court in order to get a concrete and indisputable interpretation.  In a concurring opinion, Judge Thacker noted that if North Carolina had certified question procedures, the case would have been much simpler.  In fact, Thacker noted that North Carolina is “the only state in the Fourth Circuit” without such procedures, and remains “the only state in the nation never to have enacted some form of certification procedure.”  Thacker further noted that “four circuits [including the Fourth Circuit] have addressed this state law in question, all with different views of the statute’s scope.”  Thacker ended her concurrence with a hope that North Carolina would “act swiftly to create a certified question mechanism, giving its own state courts a chance to influence the interpretation of the laws operating within its borders, rather than leaving it to the federal courts to divine how North Carolina should operate.”

The Fourth Circuit Reversed and Remanded

Despite the increased complexity and decreased certainty because of a lack of certified questions in North Carolina, the Fourth Circuit reversed the district court’s interpretation of North Carolina state law.  Because the Fourth Circuit concluded that Section 1-52(16) applies only to latent injuries, which North Carolina law clearly distinguishes from disease, the Circuit held that Stahle’s claim was not barred by the ten-year statute of repose.  The Court supported the holding not only with decades of precedent from the North Carolina Supreme Court and the Fourth Circuit, but also with statutory interpretation principals.