G. D. SEARLE & CO. v. COHN
Legal provision: Equal Protection
ORAL ARGUMENT OF WILLIAM P. RICHMOND, ESQ., ON BEHALF OF THE PETITIONER
Chief Justice Burger: The Court will hear arguments first this morning in Searle and Company against Cohn.
Mr. Richmond, I think you may proceed whenever you are ready.
Mr. Richmond: Mr. Chief Justice, and may it please the Court, the question in this case is the constitutionality of a New Jersey statute which places unique discriminatory burdens on corporations which are located entirely outside the state of New Jersey.
On its face, the statute involved here is one that simply states that the New Jersey tolling statute will not run against a corporation... unless... I am sorry... will not run as long as the corporation is not represented in the state of New Jersey.
Our position is that the purpose of the tolling statute has been satisfied by the adoption in New Jersey of long arm jurisdiction and service of process.
The statute also places a heavy penalty upon out of state corporations, and finally, that the purported justifications for the tolling statute are either fictions or are improper, and each of these justifications could be accomplished in less discriminatory fashions.
Unidentified Justice: There is no question, Mr. Richmond, is there, that Searle does business in New Jersey, and is subject to the long arm statute?
Mr. Richmond: There is no dispute in this case, Your Honor, that New Jersey does have long arm jurisdiction over G. D. Searle and Company.
That is correct.
There is also no dispute in this case that Searle does not do business within the state for purposes of its qualification statute.
Tolling statutes exist in many states, but their purpose is to protect a plaintiff against having his cause of action lost as a result of not being able to serve the defendant within the state, but the New Jersey statute has a unique and critical difference.
In New Jersey, the only way a foreign corporation may get the benefit of a statute of limitations is by registering to do business within the state.
This means that New Jersey denies the statute of limitations to all corporations that may be served by long arm jurisdiction.
Unidentified Justice: Mr. Richmond, does your opposition agree with that?
I take it it is your position that to appoint an agent for service, you must qualify to do business within the state of New Jersey.
Mr. Richmond: Yes, sir.
Our position is that there is simply no procedure under New Jersey law by which a corporation could appoint an agent for service of process without more.
Unidentified Justice: Does your opposition agree with that?
Mr. Richmond: --No, but the opposition's position is based upon a footnote in the Velmohos case from the New Jersey Supreme Court.
The court was not considering in that footnote the extent of the qualification which would be necessary in order to appoint an agent for service of process.
All the court was doing was addressing the question of whether a corporation could terminate the running of the statute of limitations by appointing an agent, and the body of the Velmohos case makes it obvious that the court was considering that only two kinds of defendants could be exempted from the statute of limitations.
One was the domestic corporation and the other one was the one that was licensed within the state.
As I say--
Unidentified Justice: If there is any question about the New Jersey law here, certainly we can't determine it, can we?
Mr. Richmond: --No, sir.
We agree entirely that the New Jersey Supreme Court has the right to interpret its statute.
Unidentified Justice: What about the court of appeals, though?
Did the court of appeals have anything to say about it?
The Third Circuit?
Mr. Richmond: --The court of appeals, as a matter of fact, adopted obviously the interpretation of the New Jersey law by the Supreme Court of New Jersey.
However, the New Jersey Supreme Court was not addressing the point that the respondent here is arguing.
The New Jersey Supreme Court in Velmohos was not stating that in fact the New Jersey statutes permitted a designation of agents for service of process without more.
As I say, it was merely that footnote.
The body of the case makes it obvious that what they were addressing was the question of only two exemptions.
One was for the domestic corporation, and the other was for the corporation license in the state, that is, qualified.
Now, many companies, like Searle, may not be sued in New Jersey except under long arm jurisdiction.
All they do in New Jersey is send their products into the state for eventual sale, and they promote the products.
They don't have offices there, other facilities, and they are not doing business there.
These companies are subject, however, to product liability suits for... in instances where citizens of New Jersey claim that the products have caused them some harm.
Then, long arm jurisdiction is available.
As a matter of fact, in this case, long arm jurisdiction was in fact used to serve process on Searle.
This happened ten years after the event which gives rise to the cause of action here, and four years after the plaintiffs concede that they realize that they had a cause of action, or discovered it.
The New Jersey tolling statute therefore has the effect of never foreclosing the plaintiff's case on limitations against corporations which may be sued under long arm jurisdiction.
Unidentified Justice: Counsel, there would still be some kind of a Latchees defense, I suppose, eventually.
Mr. Richmond: Yes, Your Honor, there would perhaps be a Latchees defense, although that is an equitable remedy.
This is a law case.
But Latchees would certainly be an inadequate substitute for the certainty and predictability of a statute of defense based... a statute of limitations defense.
There is simply no comparison between the two defenses on the basis of planning opportunities for the corporation or its ability to have a reliable defense against liability.
Unidentified Justice: What would be the other effects on the company if it went ahead and appointed a statutory agent in New Jersey for service?
Mr. Richmond: If it were compelled to appoint a statutory agent for a service of process, the corporation would thereby be subject to the requirements of the New Jersey law which are applicable to domestic corporations.
It would have to have an office for service of process.
It would have to file reports.
It would have to pay franchise taxes.
Furthermore, and at the heart of--
Unidentified Justice: Has that been resolved in any particular New Jersey case?
It is not possible to merely designate some statutory agent there, without more?
Mr. Richmond: --I don't believe it has been resolved in any New Jersey case, and I believe the reason is that there is no New Jersey statute which authorizes such a procedure.
It is the position of the New Jersey Secretary of State and our position in this case that there is simply no provision in the law which permits that.
If you examine the corporation law, it has only provisions which provide for full scale qualification, not simply for designation of an agent for service of process.
Furthermore, even if you could only appoint an agent for service of process, it would still create the problem of the burden that we are talking about, because the corporation would therefore be forced to make itself available for lawsuits which would be filed and would not necessarily satisfy the standard of minimum contacts or fairness.
Unidentified Justice: Is it your position that that doctrine would then no longer be applicable?
Mr. Richmond: I am sorry, Your Honor.
Our position is that--
Unidentified Justice: The minimum contacts requirement.
Mr. Richmond: --No, our position is that minimum contacts are the touchstone and should be the basis upon which any attempted requirement for licensing or other impact on these foreign corporations is made.
What would happen if you submitted yourself to registration of an agent is that lawsuits could be brought in New Jersey which would not necessarily satisfy the minimum contacts requirement.
In New Jersey, there is a case to that effect, and in this Court there is a case to that effect.
Now, whether that line of cases is correct or not is another matter, but as it presently stands, I believe we would be subjecting ourselves to the risk of cases which would not satisfy the standard that we believe is at the heart of this type of attempt at regulation.
Unidentified Justice: Well, Mr. Richmond, isn't there also inherent in your argument the claim that a state must have a statute of limitations?
Mr. Richmond: We believe that a state can have a statute of limitations, but that it would not be unconstitutional for it not to have one.
What we say is that whatever statute of limitations it decides to adopt, it must do so evenhandedly.
Unidentified Justice: So it is an equal protection.
Mr. Richmond: It must be evenhanded, Your Honor.
It cannot discriminate as this one does merely on the basis of whether or not you are a foreign corporation, and in this instance we believe that the statute of limitations which is here, that is, with the tolling provision as part of it, definitely does discriminate.
The state of New Jersey is perfectly free to adopt a two-year, four-year, ten-year, whatever statute of limitations or none at all if it chooses, but it must do so evenhandedly, and that is our position.
Unidentified Justice: Under what provision?
Mr. Richmond: Under what provision?
Unidentified Justice: Yes.
Mr. Richmond: Well, under--
Unidentified Justice: Does the due process... equal protection or the commerce clause?
Mr. Richmond: --This is all three, Your Honor.
This is a commerce clause case.
We contend that adoption of a discriminatory statute of limitations burdens--
Unidentified Justice: Did the court of appeals reject all of those?
Mr. Richmond: --The court of appeals did not address the commerce clause argument.
It was certainly presented to the district court in our memorandum.
The district court referred to it in a footnote in its opinion.
It found on equal protection but said that even aside from this it would also violate the commerce clause.
We briefed it to the Third Circuit court of appeals.
Ten pages of our brief there were devoted to it.
Unidentified Justice: So they necessarily rejected it, though.
Mr. Richmond: They did not necessarily reject it.
Unidentified Justice: Why?
Mr. Richmond: They just didn't address it.
Unidentified Justice: Well, I know, but you presented it, you claim.
Mr. Richmond: I don't believe that they--
Unidentified Justice: And they sustained the statute over your objection.
Mr. Richmond: --Yes, sir.
They did so on equal protection grounds.
Unidentified Justice: What do you mean, they did so on equal protection grounds?
Mr. Richmond: They sustained the statute and addressed their--
Unidentified Justice: Well, I know, but they can't sustain the statute unless they reject all of your constitutional arguments.
Mr. Richmond: --To the extent that they rejected it, Your Honor, they were, we feel, incorrect, and we are asking here that they be reversed on the commerce clause argument and on the other constitutional bases as well.
Now, what happens in connection with the commerce clause is that this does indeed constitute a heavy burden on interstate commerce because the defendants are placed in a position of having the added expense and the possibility of adverse judgments when New Jersey defendants would not be subjected to those risks.
There is no justification for this discrimination, and every one of the legitimate state interests can be fully accomplished by less discriminatory means.
The justification for the tolling statute has been basically on the ground that it makes it easier to serve process, or that there are purported difficulties in service of process for New Jersey residents against unrepresented foreign corporations.
However, when you look at the justifications, we believe that it is clear that they are either fictional or that they are in themselves improper.
The first of these is that it said that it is harder to locate perhaps the out of state defendant.
However, in this case Searle is a Fortune 500 company.
There was never any question in this case as to whether or not the defendant could be located.
Furthermore, the tolling statute really goes too far in that it permits the plaintiff to avoid the statute of limitations indefinitely, even though he does indeed find out the location of the defendant.
Decades could pass during which the plaintiff knew the location of the defendant, and yet he would not be subject to the statute of limitations.
The problem of--
Unidentified Justice: But he would be subject to Latchess in those circumstances.
Mr. Richmond: --Yes, sir, to the extent that Latchees can be considered any kind of adequate substitute for the statute of limitations.
The problem of locating a defendant, were one to exist, would also apply to in state and out of state corporations alike, and there wouldn't be any basis for discriminating only against out of state corporations.
As a matter of fact, a fly by night local corporation may often be much more difficult to locate than a national corporation which is of the size and visibility of a G. D. Searle and Company.
Now, there are alternates in the New Jersey law which could be adopted in order to accomplish the legitimate purpose and those include the notion that since New Jersey now has a statute of limitations which applies only when the plaintiff could reasonably be said to have discovered this cause of action, it might be said that the plaintiff would not be subject to limitations until the plaintiff reasonably discovered the location of the defendant.
Also under existing law, as a matter of fact, the toll... the statute is tolled by the filing of the lawsuit, and time is given after that within which to file the... to serve the defendant.
As a practical matter, cases are not dismissed in New Jersey when the plaintiff reports that he is trying to find the defendant but has been unable to do so.
Finally, I suppose the state could adopt the statute which tolls only when the defendant cannot be located.
A second justification of the three... there are three justifications basically which have been used... is that the statute relieves the plaintiff of his burden under New Jersey rules of satisfying the court that long arm jurisdiction may not... or that long arm service may not be made within a state and of filing an affidavit to that effect, but the alternative obviously is to ease access to the use of long arm jurisdiction and service of process.
This would lift any burden that the plaintiff has without continuing the discrimination against interstate commerce.
For example, the requirement for an affidavit at all could be eliminated, and that would lift some of the burden of the plaintiff.
It could be adopted, a provision could be adopted whereby elimination of proof to the court at all that service of process by long arm jurisdiction isn't possible would be an alternative.
I think few, if any, states have this affidavit provision, probably because its only purpose is... or the only purpose it really serves is to facilitate harassment of the plaintiff by the defendants in connection with service.
The third and last justification for the tolling statute is that it relieves plaintiff of the burden of satisfying the court that long arm jurisdiction or service is consistent with due process.
Respondent is apparently saying that New Jersey has some interest in forcing the defendant to waive its right to due process or in simplifying litigation by eliminating the jurisdictional questions.
This is too heavy a burden on interstate commerce.
The burden can't be justified on the basis that the state is relieving the plaintiff of satisfying minimum contact requirements.
This Court in Shaffer v. Heitner said that cost is just too high.
None of the justifications raised to support the tolling statute based on the alleged difficulty of services justifies the indefinite tolling of the statute of limitations only against out of state corporations.
Requiring plaintiffs to utilize long arm jurisdiction is a far less burdensome alternative to the present tolling statute, but there, the respondents contend that this is not a burden on interstate commerce at all, this tolling statute.
That is just plain wrong.
It is a very heavy burden, because the corporations are subjected to having their assets and... placed under constant jeopardy, being subjected to suits and possibly judgments with local or in state defendants would be able to have dismissed on summary judgment or preliminarily.
The lower courts never relied on this justification, presumably because they recognized, as this Court has held in cases like Allenburg, that interstate businesses may not be compelled to register, but the statute effectively requires a registration by the corporation.
Indeed, the plaintiff argued in the district court that one of the purposes of the tolling statute was to compel registration by the interstate corporation.
The defendant is faced with choices under this tolling statute which we believe to be improper.
On the one hand, it can fail to register, in which case it continues to suffer the burden that has been imposed upon it, and may be paying judgments when other corporations would not have to.
On the other hand, it can qualify in New Jersey, but by qualifying, and nothing short of qualification is available, by qualifying, it therefore gives up its right not to be treated as a domestic corporation, and is consenting to any and every suit, whether or not it satisfies the minimum contacts requirement.
It is subjected also by compulsion to a licensing scheme with all the attendant requirements for maintaining an office, a registered office, filing reports, and paying franchise taxes.
We also believe this statute violates--
Unidentified Justice: Mr. Richmond, how is the franchise tax computed in New Jersey?
Do you know?
Mr. Richmond: --I do not know, Your Honor, how it is computed.
We also believe that the tolling statute violates the Fourteenth Amendment, and it is a problem in that it requires the corporation to give up its fundamental right under due process not to be sued in the state unless minimum contacts are met, that there is no substantial relationship between this discrimination and any legitimate state goal.
I might add that it is important to realize that even if one were to qualify today, it would not cure the harm caused by the tolling statute, because for two years, the statute of limitations period, the corporation would continue to be subject to suits which may have arisen many years in the past and are still viable because of the prior applicability of the tolling statute.
We respectfully submit on the basis of the foregoing facts that the decision of the Third Circuit court of appeals should be reversed.
Chief Justice Burger: Mr. Cohn?
ORAL ARGUMENT OF WALTER R. COHN, ESQ., ON BEHALF OF THE RESPONDENTS
Mr. Cohn: Mr. Chief Justice, and may it please the Court, the gravamen of counsel's argument today appears to have shifted greatly from a constitutional argument to a burden because they have to register in New Jersey, and I submit to this Court that that is not a proper statement of the law of New Jersey.
Unidentified Justice: Well, if it is a burden on interstate commerce, that is a constitutional question, isn't it?
Mr. Cohn: Yes, Mr. Chief Justice, but it isn't a burden, I submit to this Court, because of the fact that just because they have representation in New Jersey, there is nothing in the law and nothing before this Court which says that they must register and become domesticated and become subject to the franchise taxes.
The franchise taxes, Mr. Justice, are based upon our gross income of the amount of business done in New Jersey.
It is a minimum tax.
And they can be exempt from that.
There is another section of the New Jersey Corporation Business Act, part of the Act quoted by both counsel and myself, which gives a reporting section, and I know it is not before the Court, but it is the same Act that is before the Court.
And in the reporting section, a foreign corporation has the option of exempting itself from any franchise taxes by reporting and by having a representative in New Jersey and by filing a form with the Secretary of State.
It is an amendment to the Act which was passed in 1973, and will you indulge me by mentioning it, and permit me to, because of the question raised by the Court today?
The Searle Company, just as every other foreign corporation, can report to the Secretary of State filing the name of their agent, filing the name of their principal office.
The gravamen of counsel's argument forgets the fact that the purpose of this tolling statute is so that the plaintiff can find the out of state defendant.
There is no problem on the in state defendant, as counsel says.
They must register with the Secretary of State to file a certificate of incorporation in New Jersey, and they do, and it is a simple procedure to find out the name and the registered agent of an in state corporation.
Just write to the Secretary of State.
It is a simple procedure to find out the name and address of the representative of the foreign corporation if there is a representative available, and the very purpose of this tolling statute is to have that representative available so you can find your defendant.
Unidentified Justice: Is there some provision in the New Jersey statutes that permits designating an agent for service without registering as a foreign corporation?
Mr. Cohn: We submit there is, sir, and we submit that Justice--
Unidentified Justice: Can you give me the citation?
Mr. Cohn: --Under 14(a), there is a provision for a trade name certificate of a corporation.
It has to be renewed every five years.
Counsel for appellant has submitted to the Court a reply brief with a letter for the Secretary of State, and I have submitted to the Court a letter refuting that argument.
I think there are two provisions--
Unidentified Justice: Does the Secretary of State agree with you?
Mr. Cohn: --We have not had the opportunity to present that to this Court, because the--
Unidentified Justice: Well, you sound as though there were a question about it.
Mr. Cohn: --I don't think that there is, and I didn't know that there was a question, Your Honor.
I thought that it was clear.
Unidentified Justice: Well, the Court of Appeals didn't mention it either way.
Mr. Cohn: No, sir, and I did not think that was a question.
I thought it was clear even as a result of Justice Pashman's Footnote Number 10 in the Velmohos--
Unidentified Justice: It wasn't even presented in the Velmohos case.
Mr. Cohn: --No, sir, so I thought that wasn't before this Court, and I did not think it an issue to present to this Court.
I do not think it is a fact issue.
It is not part of your record.
It is in nothing in any of the documents in this Court except for the reply brief, which brought in a letter which was not new material.
If the question had arisen below, we would have presented to the Court not only Title 14(a) but the trade name certificate provision of New Jersey in Title 56.
Unidentified Justice: Well, let's assume you are right, that they wouldn't have to register, they would just have to designate an agent for service of process.
Then you are arguing there that, well, that is an additional burden that they have to go through, but it is not much?
Mr. Cohn: Well, if the burden is filing a form with the Secretary of State for a representation--
Unidentified Justice: You are saying it is a trivial burden.
Mr. Cohn: --It does require a $15 filing fee, and I think the question of $15 is not a burden under our commerce clause and a burden upon the defendant.
Unidentified Justice: What if you designate the agent, as you suggests, and pay your $15.
Then you have an agent for service of process in the state.
Mr. Cohn: Yes, sir, and I--
Unidentified Justice: And with respect to what kind of suits could the registering corporation, could the designating corporation be sued in New Jersey then?
Mr. Cohn: --Any suit where there was a basis for the bringing of the action in New Jersey, bearing in mind the International Shoe versus Washington with a minimum contact.
Unidentified Justice: Well, you would say, though, that suppose there are two corporations.
One is fully registered, fully registered, qualified... and then the other one has just designated an agent for service of process, as you suggest.
Now, could those two corporations be sued in New Jersey on precisely the same kind of cases, or would there be a difference?
Mr. Cohn: I think there might be a difference if the corporation raised the defense of minimum contacts and form non-convenience, because that is a defense to any defendant, even if... even, Your Honor, if the domesticated corporation was sued in New Jersey.
That corporation can sue if the accident was in Florida with the New Jersey corporation being a defendant, New Jersey being the domesticator, and a New Jersey plaintiff.
Under the form non-convenience of the minimum contacts, it could be dismissed.
The Volkswagen case that this Court decided recently would be extremely applicable to respond to Your Honor's question.
Unidentified Justice: Well, I don't know, if you have designated an agent for service of process.
Mr. Cohn: That agent is there so that--
Unidentified Justice: What if you have registered to do business?
Mr. Cohn: --You are registered to do business.
Even a domestic corporation could have that as a defense, much less a foreign corporation domesticated.
If the lawsuit was not properly brought in New Jersey, it could be at least the plaintiff's option to find the defendant by having someone in New Jersey upon whom service can be processed.
The distinction is enormous between that and the long arm statute.
I think that Justice Garth made it in the Third Circuit opinion where he talked about the fact that there are agents under the long arm and registered or representation under the statute.
There is a difference in the type of person.
If there is a domesticated corporation, then you have the ability to serve, but that doesn't mean that the suit can be maintained.
You still have the minimum contacts rule.
Now, this Court is asked by the appellants to--
Unidentified Justice: Mr. Cohn, I don't really quite understand your argument.
Putting aside for one moment the form non-convenience argument, which I understand would be a different... just the jurisdictional argument, supposing this plaintiff, living in New Jersey, had been in Florida and had an accident with one of the defendant's vehicles.
If Searle were registered, would not the plaintiff be able to obtain jurisdiction over Searle?
Mr. Cohn: --Of course, sir, but then in the situation--
Unidentified Justice: Then that is a different situation, isn't it?
Mr. Cohn: --Well, then the situation is identical that you hypothesized to me as in the Worldwide Volkswagen versus the Richardson.
Unidentified Justice: There they could have the case dismissed because there was no jurisdiction over the defendant.
The defendant had not registered in the forum state.
Mr. Cohn: But they had the jurisdiction over the defendant.
The suit was brought in Oklahoma, even though neither the plaintiff nor the defendant were in Oklahoma.
Unidentified Justice: Well, they purported to exercise jurisdiction through the long arm statute.
Mr. Cohn: Yes, sir, but then you ought not distinguish between the long arm and the purpose of this statute of New Jersey, which is to find the defendant.
It was fortunate that I could find the defendant here, because it is a well known company.
What about the companies, Your Honor, that are not well known, that are not worldwide, and Fortune 500, as counsel argues?
The small company, which can secrete itself intentionally or not.
The company from out of state that has no identification on its product.
Counsel argues that the tolling of the statute is a detriment to a company because there is no response.
There are so many exceptions that have been carved by the courts into that argument at the present time that I present to the Court the fact that even with a two-year statute, the discovery rule.
In New Jersey, we have many cases on this today which permits the filing of the lawsuit and maintaining it.
When the event is discovered, that can be ten years after the two years, and has been maintained by the New Jersey Supreme Court.
We have insanity.
We have minors.
You have the stream of commerce theory.
Suppose the product is sold by the manufacturer, kept on the shelf of the store for ten years, purchased by the ultimate consumer.
Five years later the event occurs.
There certainly would be a maintaining of that lawsuit in spite of the statute of limitations in New Jersey.
The fact that we have this fixed and fast rule of two years is not unique in New Jersey.
We have statute of limitations in the 50 states, and every one is different.
New Jersey happens to be one that has a distinction between foreign and domestic corporations with respect to the statute, and the legislature made that distinction, and I submit to the Court that is a decision for the state court to determine, as it has in Velmohos, and Justice Pashman's decision that that is a proper distinction.
As a result, we have four types of corporations in New Jersey when it comes to the tolling statute.
You have your domestic corporation, you have your foreign corporation that is authorized to do business in New Jersey by domesticating.
You have your foreign corporation that is not domesticated but has a representative, as Justice Pashman says they must have, and you have the foreign corporation such as Searle that has not domesticated and does not have a representative and thus is subject to this tolling statute.
The legislature has made that decision, and we can presume that Searle must have known about it since 1949, the last time the tolling statute was amended by the New Jersey legislature.
The legislature did that at the time for a specific purpose, and I maintain to this court that that reason still remains.
The burden upon Searle or any out of state corporation for registering is one burden.
The burden for having a representative, which is all that is required to stop the tolling of the statute, is another burden so minimal that I maintain that that has not in any way affected the stream of commerce.
Unidentified Justice: Mr. Cohn, would you make the same argument if New Jersey said that an unrepresented foreign corporation may not have the defense of contributory negligence, say?
Would have the same... all they would have to do is the same thing, comply with the--
Mr. Cohn: Well, New Jersey has not made it, sir.
I submit to the Court that they--
Unidentified Justice: --I am just asking you, how would you deal with... would that statute also be constitutional on the same theory that this one is?
Mr. Cohn: --I don't think so, because I think Your Honor has posed an entirely different question.
We have a statute which I have quoted in the brief on Page 3, 14(a): 13-3, Subpoaragraph 2, where the New Jersey Corporation Act specifically provides that the non-registered, non-domesticating corporation in New Jersey can do many things.
It can maintain.
It can defend.
It can participate in any action, any proceeding, whether it is judicial, administrative, arbitrative, or otherwise.
It can hold meetings of its directors.
Unidentified Justice: I understand all that, but it may not assert one defense that all other defendants can assert, namely, the statute... I am just asking, why wouldn't the same reasoning apply to a second offense, contributory negligence?
Mr. Cohn: Because the reason, Your Honor, that this defense is excluded is for a purpose.
It is to permit the New Jersey plaintiff to find that corporation, and if you exclude the contributory negligence argument, I think it may be unconstitutional.
Yes, Your Honor.
But that is not the purpose of the tolling statute.
If you said that the contributory negligence was tied into the tolling statute, I submit yes, it would be unconstitutional, but that--
Unidentified Justice: Yes, but your case allows tolling.
Say it takes five years to find a defendant, and you spend the five years finding him, and then you say, well, I will wait another ten years to sue.
He may wait much longer than the time required to find the defendant.
Mr. Cohn: --Latchees would be a perfect defense in that instance, again.
We can only say that the purpose of the statute is to... very explicit that the--
Unidentified Justice: Is it clear that Latchees is a defense in an action at law?
Mr. Cohn: --Absolutely, because in this very case after Judge Pashman issued his decision in Velmohos, Searle amended its pleadings to plead the defense of Latchees.
They filed a specific motion to do so, and it is part of this case now under the--
Unidentified Justice: Does that make Latchees proper?
Mr. Cohn: --I am sorry, sir?
Unidentified Justice: Does that make Latchees proper?
Mr. Cohn: It makes it a defense.
Unidentified Justice: It makes it a defense which Searle conceived of.
That doesn't mean it would be sustained by the New Jersey courts, does it?
Mr. Cohn: No, sir.
It is a fact question then as to what the trier of the fact determines as to whether it is a proper defense.
Unidentified Justice: Ordinarily, you don't think of Latchees as being a defense to an action at law.
Mr. Cohn: Oh, yes.
We have in our court rules and I think there isn't any problem on this, that we have specific defenses which must be pleaded in pleadings by our court rules, and one of them is Latchees.
But if you don't raise it, you can't plead it.
Unidentified Justice: But ordinarily in an action on the law side where you are seeking damages, you have statutes of limitations, not Latchees.
Latchees, at least to my mind... perhaps I am wrong... is an equitable defense.
Mr. Cohn: Under our court rules, it is a law defense as well, and under our cases it is a law defense as well.
There is no question on that.
It may be traditionally an equitable defense, but it is certainly a defense, Your Honor, in a lawsuit, in the law side of our courts.
Unidentified Justice: You plead Latchees and the statute of limitations in New Jersey?
Mr. Cohn: Yes, sir.
Unidentified Justice: You plead them both?
Mr. Cohn: Yes, sir, and you must by court rule affirmatively--
Unidentified Justice: And if there is a statute of limitations, you still can say Latchees?
Mr. Cohn: --Yes, sir.
You must affirmatively--
Unidentified Justice: For example, if the statute of limitations is five years, and you filed in four years, somebody could still raise Latchees?
Mr. Cohn: --It always can be raised.
Now, the statute of limitations is a defense to that raising of the defense, Your Honor.
If you are within the statute of limitations, then Latchees would not apply, but if you are without the statute of limitations, then it would apply.
Unidentified Justice: You said Latchees always applies.
Mr. Cohn: If you are without the defense of a statute of limitations.
Unidentified Justice: I see.
Mr. Cohn: I don't know whether I answered your previous question.
I was cut off.
Unidentified Justice: I heard what you said.
Mr. Cohn: I say that Latchees applies in the law side of our courts.
Unidentified Justice: Do you think the district court... the district court invalidated the statute, didn't it?
Mr. Cohn: The district court did under the equal protection theory.
Unidentified Justice: And didn't... wasn't its assumption, at least, that the... that there was no provision for just filing a name, designating an agent?
Mr. Cohn: I don't think that was the district court's assumption.
I don't think that came up, Your Honor, until--
Unidentified Justice: Well, it's awful close to it in Footnote 17 of its opinion.
Mr. Cohn: --I think that the real reason for the district court's, if I may submit, holding that the statute was unconstitutional was under the equal protection.
The trial judge in the district court dealt solely in his decision... the thrust of it was the equal protection argument, thus finding the statute unconstitutional.
He thought that the defense was valid where you have the long arm jurisdiction, but I--
Unidentified Justice: Let me ask you, what would your position be... I suppose it would be the same... that there is under New Jersey... the only way you could get the benefit of the statute of limitations would be to fully register.
Mr. Cohn: --No, sir.
Unidentified Justice: Well, suppose that was the only way that a foreign corporation could do it.
Suppose you had to make a choice either between the statute of limitations or registering.
You just couldn't designate an agent.
Mr. Cohn: All right.
Unidentified Justice: You still would argue for the statute?
Mr. Cohn: Yes, sir, because without admitting, but for the sake of--
Unidentified Justice: I understand.
Mr. Cohn: --responding to Your Honor's question, the domestication of the foreign corporation in New Jersey is not as burdensome as counsel would have this Court believe.
If you do become domesticated in New Jersey and are subject to franchise taxes, those cannot be duplicative taxes.
If Searle files in Illinois, and I don't know whether or not they do... they are a Delaware corporation with a home office in Illinois... wherever they file they must pay taxes on their income.
Unidentified Justice: Well, do you think a state could say to a corporation that is engaged only in interstate commerce in New Jersey, that is the only kind of business it does in New Jersey, do you think the state could say, well, we wish you would register, and if you don't we are going to charge you $10 a year?
Mr. Cohn: I think the state under this statute can say you must have a representative in the state, and even if that representative requires registration to the point of domestication, Your Honor, I think that is not a burdensome event in interstate commerce, because if it is really filing a form, and because of that form this defendant and any other state defendant can obtain the benefit of the tolling statute, then that is a minimum burden that the defendant must bear if they wish to raise this defense.
They are not prevented from doing business in New Jersey.
Their argument is that this is a burden.
There isn't a scintilla of evidence in the record or before this Court that it is a burden.
They have done business to this date and continue to do business, and there is no indication of any loss of business because to our knowledge there hasn't been.
Unidentified Justice: Well, one way it is a burden is that they don't have the benefit of the statute of limitations.
Mr. Cohn: There are many reasons that people don't have benefits in a state, and if this benefit doesn't burden interstate commerce, then it is not a burden under the theory of the defendant.
This burden is so minuscule if it is, and I only say if it is because of Your Honor's question, because I don't admit under any theory that they must domesticate in order to have the benefit of this statute, they must have a representative, and Justice Pashman in Velmohos is quite clear about that.
The representative can be many types of representatives.
It is only so that you can write some place where everyone knows and find that person who is authorized to accept service.
If you write to the Secretary of State, albeit for a registered agent, for a representative, for the person trading as, you can determine that person who can accept process, and thus the defendant will be able to avoid the argument that they have today and avoid the problem they are in.
Presuming that there is any burden, it is so minuscule that I submit to this Court that it is not such that you can overturn a statute which can easily be complied with.
Unidentified Justice: Mr. Cohn, was there any attempt to institute litigation for this injury other than this particular suit?
Mr. Cohn: I couldn't hear the beginning.
I am sorry, sir.
Unidentified Justice: Was this New Jersey litigation the only one attempted against Searle for the injury that Mrs. Cohn sustained?
Mr. Cohn: Yes.
Unidentified Justice: There was no attempt to sue them elsewhere?
Mr. Cohn: No, sir.
A New Jersey plaintiff--
Unidentified Justice: Why did you wait so long?
Mr. Cohn: --Well, in the first place, the event occurred in 1963.
It was not until 1969-70 that there was any causal connection between the ingestion of the birth control pill and any trauma that could have occurred, the thrombosis that eventually resulted.
We have presented to the district court, and that issue really has not been determined on appeal... it was determined in a second opinion of Judge Meaner in the district court... as to whether there was a discovery rule exception.
If you take from mid-July, 1970, which Judge Meaner, the trial judge, found as the discovery date, and you take two years from that, there is only approximately 12 months, 12 and a half months until suit was started.
There was a valid reason.
We have raised that in the district court.
It is not before this Court, because Judge Garth of the Third Circuit said, I do not have to get to the question of whether or not insanity, quote, end quote, constitutes a disability under the tolling provision of a statute.
We argued that the emotional bar of the plaintiff, Susan Cohn, was sufficient so that we could not start this lawsuit until psychiatric treatment was complete in 1974, and that was when we started suit, as soon as we knew that we were able to psychologically and psychiatrically.
Now, that period happened to be very short in this case, but that is not the real reason that this statute could be argued as constitutional or unconstitutional.
Searle still has that defense of Latchees, which they even brought in within the last year.
And if we ever get to trial... we haven't had a trial in this case, as Your Honor, I am sure, knows.
If we get to trial I would presume I have to meet that defense at the time, and am prepared to, for the reasons I have just stated.
The question as to whether or not this is an incident that harms in the stream of commerce to prevent the doing of business of Searle in New Jersey is one which is so minimal that I submit to the Court that the commerce clause cannot apply.
This Court has held that the stream of commerce is just as natural a force as a stream of water, even though it was in Justice Brennan's dissent where the language came from, but that is so true.
If this defendant is a multi-billion dollar company, worldwide operations, as it claims in its briefs, then this is a minuscule absolutely minute, inconsequential event that we ask for, merely the--
Unidentified Justice: You wouldn't make the question turn on the net worth of the company, would you?
Mr. Cohn: --Oh, absolutely not, because this must be a broad, general principle.
There are small companies which can secrete themselves intentionally or not throughout the entire world where a New Jersey plaintiff might want to sue that defendant.
The principle can certainly not be designated as that which applies to this case only, because it happens that I was able to find Searle in Illinois, a Delaware corporation.
I couldn't even have found them if I wrote to the Illinois Secretary of State.
The very purpose of this is so that the legislatures determine that any New Jersey plaintiff can find its defendant.
Now, it is quite significant, I think, that the New Jersey statute has said that this is very different than any other situation where there is a foreign corporation.
The defendant must be found, and the only way to find it is to have some place where an agent is in New Jersey, very distinct from the company doing business, as counsel argues, where they have to have an office.
They don't have to have an office in New Jersey in order to comply with this statute.
They don't have.
And there is no one, in spite of what counsel says, no place in any case, no place in any argument, no place in any statute which says they have to be in New Jersey at all, except to have a representative.
Now, that representative can even be in Illinois.
A trade name certificate provides for the service upon the Secretary of State.
If I write to the Secretary of State for the trade name G. D. Searle, and they have a trade name certificate with someone in Illinois, I can serve the Secretary of State.
These cases that Searle cites are idiosyncrata when they talk about the motor vehicle cases.
In every motor vehicle case there is an official in a state where you can serve.
They are distinct.
There is no majority-minority rule on this issue.
In the cases that have upheld the tolling of a statute even where you have long arm, you have an official in the state in the motor vehicle cases.
Unidentified Justice: Mr. Cohn--
Mr. Cohn: Yes, sir.
Unidentified Justice: --was any effort to review Velmohos sought here?
Mr. Cohn: Oh, yes.
That is before this Court.
Unidentified Justice: Now?
Mr. Cohn: Yes, sir.
There is a petition for certification on Velmohos.
Or a motion for argument.
I don't know which.
That is before the Court.
And my understanding is, it is being held pending the decision in this case, but that is just what I was told.
There are several cases, Your Honor, before this Court on the same issue.
There is a companion case--
Unidentified Justice: All involving the New Jersey statute?
Mr. Cohn: --Yes, sir.
There is a companion case that Judge Garth decided in the Third Circuit, the Hopkins-Kelsey-Hayes.
There is the Cumbs Honda case which is before this Court.
They all involve the same issue.
And they are all pending the decision in this case.
Unidentified Justice: And do all of them sustain the statute?
Mr. Cohn: So far, this Court is asked to overturn the Third Circuit on the issue, the New Jersey Supreme Court on the issue, the U. S. District Court, Judge Brockman in the Kelsey-Hayes case on the issue, all cases upholding the statute.
And the only one who did not uphold the statute is my trial judge in my case, and he did it for a different reason.
He stated that the long arm was sufficient to obtain jurisdiction so the statute should not toll.
Unidentified Justice: Now, I submit that is a very different thing.
The long arm is a court rule.
The statute is a legislative enactment.
One has nothing to do with the other.
The long arm rule, enacted in 1958 in New Jersey, was certainly known, but that is only where you can find the defendant.
The very purpose of the statute is to obviate the situation in the long arm rule instance, where you can't find the defendant, where the defendant must come to New Jersey, at least have somebody for process, and that is what we are after here, the maintaining of the ability to find the defendant, big corporation, little corporation, regardless of the incident.
That is the penalty the defendant has to pay for not having some representative in New Jersey.
Do you think there is any filing with the Secretary of State in all the years that New Jersey has been in business just designating an agent for service of process?
Mr. Cohn: Whether there isn't or there has been, I am not aware of any statistics to give to you, Your Honor, but whether there has or there hasn't is immaterial--
Unidentified Justice: Have you ever tried to find one?
Mr. Cohn: --No, sir.
The occasion has not--
Unidentified Justice: Have you ever tried to serve a foreign corporation based only on its trade name certificate?
Mr. Cohn: --I have not had occasion, but I have written to--
Unidentified Justice: In all the years that--
Mr. Cohn: --In 30 years, I have had occasion to write to the Secretary of State as to whether the foreign corporation had a trade name certificate, whether the foreign corporation had any kind of person in New Jersey.
Unidentified Justice: --Did they ever answer, yes, it has a trade name, and then you tried to serve them?
Mr. Cohn: The occasion hasn't arisen.
It just hasn't.
But I have been able to serve by long arm, as I did in this instance.
Unidentified Justice: Oh, yes.
Mr. Cohn: Pardon me, sir?
Unidentified Justice: I understand.
Mr. Cohn: Now, it just happens I could find the defendant.
That was a fortuitous circumstance.
But that should not make an exception to the rule to make this statute invalid.
The principle remains as to the fact that you have to have somebody in New Jersey, and Justice Pashman is so clear about that.
The fact that it hasn't occurred before, I can only answer Your Honor with the fact that this issue hasn't appeared before this Court, although our statute was passed in 1820.
Why it has come up now, a matter of circumstance.
Unidentified Justice: Well, doesn't this letter that the petitioner appends to the reply brief suggest that at least the Department of State--
Mr. Cohn: I don't know the question that petitioner asked.
Unidentified Justice: --Well, the statement is pretty flat, isn't it?
Please be advised it is the view of the Department of State that unless a foreign corporation has qualified to do business in New Jersey, they are unable to designate a registered agent for service of process.
Mr. Cohn: I don't know the question asked, Your Honor.
I can ask a question and I am sure I can get different answers from witnesses.
If I had asked the question, is there a procedure, and can I file a name as an out of state defendant, if given the opportunity, I might get a different answer.
This did not come up at any point in the proceedings until a week ago today when I received that reply brief of the appellant.
There has never been an issue in this case as to whether the defendant, Searle, can merely file a registration and have a registered agent or a person to designate service.
My time is up.
Chief Justice Burger: Your time has expired now.
Mr. Cohn: Thank you.
Chief Justice Burger: Do you have anything further, counsel?
Mr. Richmond: No, Your Honor.
Chief Justice Burger: Thank you, gentlemen.
The case is submitted.