On Aug. 1, Minnesota will lose its dubious distinction as a forum shopper's Shangri-La. Minnesota Statute § 541.31 will at long last shut the courthouse doors on claims—by nonresidents—which arise under the laws of other states and are barred as untimely in those states, yet which remained viable under Minnesota's generous six-year limitations period. See Minn. Stat. § 541.31 (2009).
Section 541.31, also known as the "borrowing statute," provides, in pertinent part:
(a) ... if a claim is substantively based:
(1) upon the law of one other state, the limitation period of that state applies; or
(2) upon the law of more than one state, the limitation period of one of those states chosen by the law of conflict of laws of this state applies.
(b) The limitation period of this state applies to all other claims.
The borrowing statute expressly applies to "claims arising from incidents occurring on or after Aug. 1, 2004." Minn. Stat. § 541.34 (2009). Therefore, as of Aug. 1 of this year, the longest of Minnesota's civil limitations periods applicable to torts will have run. All claims arising from incidents occurring before Aug. 1, 2004, will be time-barred if not served by July 31. See Minn. Stat. § 541.05, subd. 1 (2009) (establishing six-year limitations period for negligence, fraud, and statutory claims).
Carveout for Minnesota Residents
By requiring application of the limitations period of the jurisdiction in which the nonresident's claims are substantively based, Section 541.31 is expected to strike the final blow to the perverse forum shopping incentive created by Minnesota's long-standing treatment of limitations periods as procedural, rather than part of the substantive law applicable to the underlying claim. So as not to penalize Minnesota residents filing claims in Minnesota courts arising under the laws of another jurisdiction, the statute contains a carveout. Thus, where the plaintiff is a Minnesota resident and the cause of action arises outside of the state, but is time-barred under the foreign jurisdiction's limitations period, the action may be brought in Minnesota if (1) the plaintiff has owned the cause of action since it accrued and (2) the cause of action is not time-barred under the applicable Minnesota limitations period. Id.
Departure from the Uniform Act
The Minnesota borrowing statute, as proposed in the original bill, H.F. 2444, followed the Uniform Conflict of Laws-Limitations Act to the letter, with the exception of the provision that protected Minnesota residents from the act's reach where their claims were governed, and barred as untimely, by other states' limitations periods.
In the course of the May 5, 2004, Minnesota House floor session debate on H.F. 2444, Minnesota Rep. Joe Atkins introduced an amendment to the bill. Minnesota House Floor Session Archives, May 5, 2004, H.F. 2444 (statement of Rep. Atkins).
The amendment sought to change the language of Section 541.34, titled "Existing and Future Claims." The Uniform Act and H.F. 2444 expressly applied to claims "accruing after the effective date [of the Act] or ... asserted in a civil action or proceeding more than one year after the effective date of [the Act], but ... [did] not revive a claim barred before the effective date of sections 541.30 to 541.35."
The comment to the Uniform Act noted that this section was designed "to avoid any unfairness that might occur because of reliance on prior conflicts law." Thus, in its unamended form, H.F. 2444 contained a 12-month "grace" period for claims arising before Aug. 1, 2004, which were still timely under Minnesota's limitations periods.
Atkins's amendment, however, modified the bill in two ways. First, it changed the language of Section 541.34, subd. 1 so that the bill applied to claims "arising from incidents occurring on or after Aug. 1, 2004" rather than to claims accruing after Aug. 1, 2004.
Second, the amendment removed the "grace" period altogether. The amendment's proponent expressed concern that the bill as originally drafted would change the rules "in the middle of the game" for plaintiffs, whom Atkins described as having invested large sums in pursuing litigation in Minnesota courts. Atkins also stated he wanted to ensure that the bill was "truly forward-looking." Minnesota House Floor Session Archives, May 5, 2004, H.F. 2444 (statement of Rep. Atkins).
Thus, it appears Atkins wanted to preserve the status quo for nonresident plaintiffs (and their counsel) who were in the process of litigating their claims or whose claims had accrued but who had yet to file suit in Minnesota at the time the new law went into effect. Indeed, Atkins rejected an amendment, proffered during the floor debate, to his amendment that sought to have the act apply to "causes of action filed on or after Aug. 1, 2004." Id.
H.F. 2444, as amended, was signed into law on May 18, 2004. The House floor debate on the amendment to H.F. 2444 focused almost entirely on the change in the statutory language from claims "accruing after Aug. 1, 2004" to claims "arising from incidents occurring on or after Aug. 1, 2004." No one debated the wholesale deletion of the 12-month grace period nor the impact of that change. Indeed, by removing the grace period, the Atkins amendment extended by another five years the forum shopping incentive that the act sought to eliminate.
Minnesota courts have yet to address the practical application of the language of Section 541.34. And while the legislation was enacted "to make uniform the law with respect to the subject of sections 541.30 to 541.34 among the states enacting them", the text of the Minnesota borrowing statute does not mirror that of the Uniform Conflict of Laws-Limitations Act nor any of the six other states that have adopted it. Whereas the Uniform Limitations Act applies to claims "accruing after the effective date" of the act, the Minnesota statute applies to claims "arising from incidents occurring on or after Aug. 1, 2004." Minn. Stat. § 541.34.
By tinkering with the statutory language, Atkins's amendment may well have unanticipated and perhaps unintended effects. Under Minnesota law, a cause of action generally accrues at the time of injury. Molloy v. Meier, 679 N.W.2d 711, 720-21 (Minn. 2004) (quoting Dalton v. Dow Chem. Co., 158 N.W.2d 580, 583-84 (Minn. 1968)). Thus, H.F. 2444, as originally drafted, applied to claims arising from injuries occurring on or after Aug. 1, 2004, and to all claims filed more than one year after Aug. 1, 2004.
By eliminating the "grace" period and changing the focus of the statutory language from accrual—a term of art under Minnesota's jurisprudence — to "arising from incidents occurring on or after Aug. 1, 2004," the statute arguably has been made vulnerable to an even broader reading. Notably, as well, the term "incidents" is not defined under the act.
Thus, one could anticipate a nonresident plaintiff asserting that, while her injury occurred after Aug. 1, 2004, the "incidents" giving rise to her claim, e.g.¸ allegedly tortious acts by defendant, ingestion of an allegedly harmful prescription drug or implantation of a defective medical device, occurred before Aug. 1, 2004.
Because the incidents giving rise to her claim pre-dated Aug. 1, 2004, yet her injury occurred sometime thereafter, she could argue that the borrowing statute does not apply and therefore that she could proceed with her claim—sidestepping the borrowing statute and reaping the benefits of Minnesota's generous limitations periods.
A Distinction Without a Difference
While published cases interpreting Minnesota's borrowing statute are slim, the state's Supreme Court had opportunity to consider the act in Fleeger v. Wyeth, 771 N.W.2d 524 (Minn. 2009). In Fleeger, Minnesota's highest court answered a question certified to it by the U.S. District Court for the Eastern District of Arkansas, the court in which federal hormone therapy cases were coordinated by the U.S. Judicial Panel on Multidistrict Litigation. Id. at 525.
The certified question in Fleeger asked whether, in a case commenced in Minnesota (as thousands of hormone therapy cases were), the Minnesota limitations periods apply to personal injury claims where the plaintiffs and defendants are nonresidents and where the events giving rise to the claims did not occur in Minnesota and took place before Aug. 1, 2004.
Minnesota's treatment of limitations periods as procedural law rather than substantive, combined with its notably long six-year limitations period for negligence and fraud, had had the effect of inviting and reviving otherwise stale, foreign claims of thousands of nonresident mass tort plaintiffs.
The Fleeger plaintiff argued that, as to causes of action accruing before Aug. 1, 2004, the Minnesota limitations periods should apply—as had been the state of the law in Minnesota since 1977, when the Legislature repealed the predecessor borrowing statute. (Brief on Certified Question of Plaintiff Rachel Fleeger at 13, Fleeger v. Wyeth, 771 N.W.2d 524 (Minn. 2009) (No. A08-2124)).
Defendants argued, among other things, that in 1977 the Legislature repealed Minnesota's borrowing statute in order to create the opportunity for Minnesota courts to apply the modern judicial approach to statutes of limitations, i.e., answer "no" to the certified question. (Brief on Certified Question of Defendants Wyeth and Greenstone, Ltd. at 11, Fleeger v. Wyeth, 771 N.W.2d 524 (Minn. 2009) (No. A08-2124)).
While the Fleeger decision did not turn on Minn. Stat. § 541.31, et seq., both parties argued that the new statute should inform the court's consideration of prior law. Neither, however, suggested a reading other than one that would conform to the wording of the Uniform Conflict of Laws-Limitations Act.
Indeed, the plaintiff in Fleeger plainly argued "under [§ 541.31], virtually all of the out-of-state plaintiffs' claims have already expired since any claims based on injuries arising after August of 2004 now fall under the new act. The filing of out-of-state cases will completely dry up in just over a year." (Brief on Certified Question of Plaintiff Rachel Fleeger at 10, Fleeger v. Wyeth, 771 N.W.2d 524 (Minn. 2009) (No. A08-2124)).
On Sept. 3, the Minnesota Supreme Court answered "yes" to the question certified to it by the hormone therapy MDL court. Fleeger, 771 N.W.2d at 525. The court held it did not have a "compelling reason to overrule ... long-standing precedent that the Minnesota statute of limitations applies in cases properly commenced here." Id. at 529. The opinion twice noted the borrowing statute. It acknowledged that the statute did not apply to Ms. Fleeger's claims, which arose in 2002. Id. at 528.
Nonetheless, the court relied on the statute to reinforce its holding, observing that all cases "arising after" Aug. 1, 2004, are subject to the borrowing statute. Id. at 529. Further, the court stated that "[a] prospective change in the common law would apply only to cases commenced between the date of this decision and Aug. 1, 2010. And a retroactive change would only affect cases that arose before Aug. 1, 2004, which have not yet been finally resolved." Id.
Thus, the court's incidental reference to the statute as applying to cases "arising after" Aug. 1, 2004, aligned with the plaintiff's characterization. Yet, the language of Section 541.34 does not speak to "injuries" arising after Aug. 1, 2004, but rather to "incidents" occurring on or after that date.
To date, it's a distinction without a difference. Tomorrow, it may not be. As the last beneficiaries of Minnesota's warm embrace of forum shopping file their claims and the first nonresident plaintiffs subject to the borrowing statute find their claims barred as untimely, Minnesota courts may yet experience a surge in litigation about the meaning of Section 541.34.
Minnesota's courts should not tolerate drawn-out challenges to a reading of Section 541.34 consistent with Uniform Conflict of Laws-Limitations Act. In deciding this issue, lower courts should start by looking to the Minnesota Supreme Court's decision in Fleeger.
The Fleeger court squarely characterized the statute as applying to claims "arising" after Aug. 1, 2004. Plaintiffs' arguments appear to have prevailed in Fleeger in significant measure precisely because the plaintiffs convinced the court that the statute would soon take full effect and resolve all but a relative few lawsuits. Id.
The legislative history of the act itself offers little guidance on this issue. The legislative debate surrounding the Atkins amendment focused on protecting the interests of plaintiffs who had potential or pending claims at the time the act became effective. The legislature did not debate whether the amendment intended to exempt from the act a subset of cases in which injury postdated Aug. 1, 2004, but incidents giving rise to the injury pre-dated Aug. 1, 2004.
Finally, any interpretation of the statute other than the one endorsed in Fleeger could prove judicially cumbersome as litigants wrestle over the manner, quantity and timing of "incidents" pre-dating Aug. 1, 2004, which render the statute inapplicable. Indeed, such an interpretation could very well undermine the entire purpose of the act by promoting the filing of stale, foreign claims that would require extensive discovery before determining whether the act applies. With Aug. 1, 2010, fast approaching, this issue ripens.
This article was originally published by Law360.
The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or Portfolio Media, publisher of Law360.