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Court Upholds Workers Comp Subrogation Law, 10-Year Time Limit for Suing Manufacturers

2006-1914.  Groch v. Gen. Motors Corp., Slip Opinion No. 2008-Ohio-546.
On Order from the United States District Court, Northern District of Ohio, Western Division, Certifying Questions of State Law, No. 3:06-CV-1604. Certified questions answered.  See opinion.
Moyer, C.J,. and Lundberg Stratton, O'Connor, and Cupp, JJ., concur.
O’Donnell, J., concurs in the answers to the certified questions only.
Lanzinger, J., concurs in the answers to the certified questions and concurs in the opinion in part.
Pfeifer, J., concurs in part and dissents in part.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2008/2008-Ohio-546.pdf

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(Feb. 21, 2008) In a multi-part decision announced today, the Supreme Court of Ohio affirmed the constitutionality of state laws that (1) allow the state or a self-insured employer to subrogate (recover) workers’ compensation payments made to an injured worker from the proceeds of a civil judgment or settlement subsequently obtained by that worker; and (2) set a 10-year statute of repose (time limit) for the accrual of a product liability claim against the manufacturer of a product.

The Court went on, however, to hold that retroactive application of the statute of repose to bar a claim against a manufacturer for injuries that a plaintiff suffered within two years before the statute took effect was unconstitutional under Section 28, Article II of the Ohio Constitution.

Today’s 6-1 decision, authored by Justice Maureen O’Connor, was in response to a request from the U.S. District Court for the Northern District of Ohio asking the Court to resolve nine “certified questions of state law” that arose in a federal lawsuit challenging the constitutionality of statutes enacted by the Ohio General Assembly over the past several years.

In March 2005, Douglas Groch was injured while working at a General Motors plant in Toledo when a trim press he was operating came down on his right arm and wrist. Groch filed suit in the Lucas County Court of Common Pleas seeking damages from GM for alleged unsafe working conditions and from the manufacturers of the trim press, Kard Corporation and Racine Federated, Inc., based on alleged product defects. The defendants invoked their right to remove the case to the U.S. District Court for the Northern District of Ohio.

GM subsequently asserted its right under S.B. 227, state legislation that took effect in April 2003, to subrogate (recover) amounts the company paid to cover Groch’s medical expenses and loss of wages under Ohio’s workers’ compensation program from any damage award or settlement Groch might receive from his lawsuit. Kard and Racine asserted that they were immune from liability to Groch for any alleged defect in their product under the terms of S.B. 80, a “tort reform” bill that took effect in April 2005. The bill added a “statute of repose” provision to Ohio’s products liability statute stating that, in any lawsuit commenced on or after the effective date of the bill, no user of a product has a cause of action (legal basis to sue for damages) against the manufacturer for any product-related injury that occurred more than 10 years after the manufacturer first delivered the product to an end user.  

Groch responded by asking the federal court to declare that both the Ohio subrogation and repose statutes cited by the defendants were void and unenforceable because they violated various rights guaranteed by the U.S. and Ohio constitutions. Rather than ruling on the parties’ respective motions, the federal judge hearing the case stayed proceedings in his court and asked the Supreme Court of Ohio to review nine separate constitutional arguments asserted by Groch as grounds to invalidate the challenged state laws. Because Groch’s complaint  sought to overturn statutes enacted by the General Assembly, the state of Ohio participated in the case as a co-respondent defending the validity of its laws.

Writing for the Court in today’s decision, Justice O’Connor noted that a court reviewing enactments of the General Assembly must begin with a strong presumption that they are constitutional, and may only void a duly adopted statute if it finds “beyond a reasonable doubt that the legislation and constitutional provisions are clearly incompatible.” Applying that standard, Justice O’Connor affirmed the “facial” constitutionality of both the subrogation and repose statutes, rejecting eight of the nine challenges asserted by Groch based on claimed infringements of his rights to open courts, due process, equal protection, to a remedy for his injuries and to protection from an unlawful taking of his property interest in a civil claim.

With regard to R.C. 4123.93 and 4123.931, which allow the state workers’ compensation fund or a self-insured employer to recover medical and lost-wage payments from the proceeds of an injured worker’s civil judgment or settlement, Justice O’Connor noted that in adopting the current statute, the General Assembly had addressed three specific issues that caused the Supreme Court to find a previous subrogation law unconstitutional in a 2001 decision, Holeton v. Crouse Cartage Co.

Following a detailed analysis of the Holeton decision and revisions to the old law made by the legislature in drafting the current subrogation statute, Justice O’Connor held that the constitutional defects identified in Holeton had been substantially remedied by S.B. 227. Finding that the current statutory language “bear(s) all the earmarks of compromise legislation that attempts to balance the legitimate, competing interests of claimants and statutory subrogees,” she concluded: “Based on the foregoing, we hold that R.C. 4123.93 and 4123.931 do not violate the Takings Clause (Section 19, Article I), the Due Process and Remedies Clauses (Section 16, Article I), or the Equal Protection Clause (Section 2, Article I) of the Ohio Constitution and are therefore facially constitutional.”

With regard to the statute of repose for product liability claims against manufacturers, codified in R.C. 2305.10(C) and former R.C. 2305.10(F) [now (G)], the Court upheld the statute against all of the facial claims of unconstitutionality asserted by Groch. In denying Groch’s claims based on the statute’s alleged violation of his rights to a remedy for injuries, due process and equal protection, the majority opinion cited and followed a 1990 decision, Sedar v. Knowlton Construction Co., in which the Supreme Court upheld a statute of repose similar to the one at issue in this case.

Justice O’Connor acknowledged a subsequent Supreme Court decision, Brennaman v. R.M.I. Co. (1994), in which the majority “overruled” Sedar and voided as unconstitutional a statute of repose applicable to improvements to real property. Pointing to what she characterized as “deficiencies” in the Brennaman decision, including broad language in the majority opinion applying its holding beyond the arena of real property law, Justice O’Connor wrote: “Because Brennaman did not involve a challenge to a products-liability statute of repose, as the instant case does, that decision is not directly on point and can arguably apply only because of its overexpansive language. We confine Brennaman to its particular holding that former R.C. 2305.131, the prior statute of repose for improvements to real property, was unconstitutional. It is entitled to nothing more. To the extent that Brennaman stands for the proposition that all statutes of repose are repugnant to Section 16, Article I, we expressly reject that conclusion.”

Finally, the Court ruled that under the particular facts of this case, application of the statute of repose on product liability claims to bar Groch’s claim against the manufacturers of the trim press was unconstitutional under Section 28, Article II of the Ohio Constitution, which bars retroactive application of a law when such application infringes on the exercise of  a substantive right.

Justice O’Connor explained that, because Groch’s injury took place on March 3, 2005, his cause of action against the manufacturers of the trim press “accrued” on that date – 34 days prior to the effective date of S.B. 80. Under the state laws in effect on the day he was injured, she noted, Groch had a vested right to seek recovery for his injuries by filing suit against Kard and Racine any time within two years after the date of his injury. But when S.B. 80 took effect on April 7, 2005, it retroactively barred anyone who had not already filed suit against a manufacturer by that date from asserting any such claim in the future. In effect, Justice O’Connor wrote, applying the statute of repose retroactively to Groch’s claims reduced the time available for him to sue the manufacturers from two years to 34 days – clearly less than a “reasonable time.”

“Both R.C. 2305.10(C)(4) and (C)(5) recognize that once a products-liability cause of action accrues, a plaintiff should have no less than two years in which to commence a suit,” Justice O’Connor wrote.  “We hold that former R.C. 2305.10(F) operates unreasonably as applied to petitioners because it provided them with only 34 days to commence their suit, with the consequence that they lost their cause of action if they did not file suit within 34 days.”

Justice O’Connor’s opinion was joined by Chief Justice Thomas J. Moyer and Justices Evelyn Lundberg Stratton and Robert R. Cupp. Justice Terrence O’Donnell concurred in all of the majority’s answers to the questions of state law posed by the federal court, but did not join the majority opinion. 

Justice Judith Ann Lanzinger also concurred with the majority’s answers to all of the questions of state law, and partially concurred with the majority opinion. She entered a separate opinion stating that, in her view, the Court’s decision in this case should have straightforwardly abandoned its earlier holding in Brennaman rather than merely limiting that holding to a narrow category of cases. Justice Lanzinger suggested that it may be time for the Court to abandon rigid application of the three-part test for overruling past precedents that it established in Westfield Ins. Co. v. Galatis (2003).

“If Galatis constrains our decisions so greatly that we cannot acknowledge cases that have clearly been wrongly decided and require overruling, then it is of questionable value itself,” she wrote.  “In this case the majority describes in many pages of the opinion the reasons why Brennaman was wrongly decided. Brenneman’slack of detail in overruling Sedar ... is compared to Galatis’ ‘well-structured’ approach. But given a prime opportunity to apply Galatis and state that Brennaman is overruled, the majority does not actually do so. ... To serve the need for predictability, consistency, and clarity in the law, we must be forthright about overruling cases when that is our true intent and is the practical effect of a decision. ... Because I view our decision as effectively overruling Brennaman, I respectfully concur in the answers only.”

Justice Paul E. Pfeifer entered a separate opinion in which he concurred with the portions of the majority opinion affirming the constitutionality of the workers’ compensation subrogation statute and holding that retroactive application of the statute of repose to bar Groch’s claims against the press manufacturers was unconstitutional as applied. He dissented, however, from the majority’s failure to follow Brennaman as a binding precedent applicable to all statutes of repose. Justice Pfeifer suggested that the majority’s reinterpretation of Brennaman to apply only to real property cases “demonstrates a continued disdain for stare decisis (the duty to follow prior rulings) and a propensity to engage in legal mumbo jumbo to obscure that fact.”

 Justice Pfeifer wrote that the court had reiterated its Brennaman holding in a 1999 case, State ex rel Ohio Academy of Trial Lawyers v. Sheward, when the General Assembly had again attempted to impose statutes of repose, and asked, “What has changed since this court last overruled statutes of repose in 1994 and 1999?  Not the language of the statutes in question and not the Ohio Constitution.”  Justice Pfeifer also noted that as recently as December of 2007, in Arbino v. Johnson & Johnson, the court had cited to Brennaman as authority for the proposition that Section 16, Article I of the Ohio Constitution prohibits statutes that effectively prevent individuals from pursuing relief for their injuries. Section 16, Article I of the Ohio Constitution reads: “All courts shall be open, and every person, for an injury done him in his land, goods, person, or reputation, shall have remedy by due course of law, and shall have justice administered without denial or delay.”

In assessing the impact of the 10-year statute of repose on Ohio consumers, Justice Pfeifer wrote: “Potentially, R.C. 2305.10 affects anyone who drives a car, crosses a bridge, rides an elevator, flies or rides in an airplane, utilizes a medical device, paints, mows grass, uses tools, or depends at all on any product in his or her daily existence. ... It is a harrowing thought that the products we use today that may be ticking time bombs – be they food additives, cell phones, automobiles – after ten years can leave us profoundly injured with no hope of recovery against the tortfeasor. For manufacturers, the bomb stops ticking at ten years. For Ohio’s consumers, once but no longer protected by the Ohio Constitution, the ticking continues.”

Kevin J. Boissoneault, 419.843.2001, for Douglas Groch.

Kimberly A. Conklin, 419.255.5990, for General Motors Corporation.

Robert H. Eddy, 419.241.4860, for  Kard Corp and Racine Federated, Inc.

Elise Porter, 614.466.2872, for the State of Ohio and Ohio Attorney General’s Office.