Summary of a Recent
Judicial Development in
Food Safety

Purposive Interpretation of New York Borrowing Statute Rejected

Heather N. Sutton
National AgLaw Center Research Associate

Summary of Decision

In Bennett v. Hannelore Enterprises, Ltd., 296 F. Supp. 2d 406 (E.D.N.Y. 2003), the United States District Court for the Eastern District of New York granted the defendant's motion for summary judgment because of the passing of statutes of limitation applicable due to a New York borrowing statute. Personal claims brought by the plaintiffs' children and expense recovery claims by the plaintiffs were not contested by the defendant, allowing the children's personal injury actions to proceed.

Background

Ultrasound tests showed that Luke and Chloe Bennett were developing normally and were in good health. Id. at 409. While their mother, Tressa Bennett, was in the fifth or sixth month of her pregnancy, she ate D'Artagnan paté while in her home state of Virginia. Id. The "flu-like symptoms" that Tressa experienced were joined with labor signs and Tressa went to the hospital. Id. The listeria bacterial infection both she and the children contracted resulted in an early birth of the twins. Luke and Chloe suffered severe medical complications, requiring hospitalization for approximately one month. Id. Eventual recall efforts included over 80,000 pounds of the product. Id. at 410. Interestingly, Hannelore, the producer of the paté had "a history of producing contaminated products." Id.

A diversity lawsuit was filed by the plaintiffs and the children for personal injuries in the Eastern District of New York. The defendant, Hannelore, moved for summary judgment pursuant to Fed. R. Civ. P. 56(c), arguing that the plaintiffs could not proceed due to the passing of the applicable statute of limitations. Id. at 409. Additionally, Hannelore argued that because they had not developed sufficient contacts with either New York or with Massachusetts to allow the exercise of personal jurisdiction, no action had accrued against them under CPLR 202, the New York borrowing statute. Id.

The plaintiffs were residents of Virginia and the injury accrued in Virginia; however, Virginia had a two-year statute of limitations for personal injury actions, effectively barring their claims in that state. Accordingly, the plaintiffs brought suit in New York because they were unable to obtain personal jurisdiction over Hannelore and New York provided a three year statute of limitations for a personal injury actions. Id. at 411.

The plaintiffs cited Stafford v. Int'l Harvester Co., 668 F.2d 142 (2d Cir. 1981), claiming that a purposive rather than literal reading of the New York borrowing statute was the correct application of law. Under Stafford, the New York District court would accept that the three year New York statute of limitations should apply because the borrowing statute's purpose of the prevention of forum-shopping was not applicable in a diversity action when the defendants had no minimum contacts in Virginia. Id. at 410. As the plaintiffs asserted, a literal reading of the borrowing statute failed to advance the "anti-forum shopping purpose of the borrowing statute" because if this court would not allow jurisdiction, there was no danger that the plaintiffs would attempt to bring suit in another New York court. Id. at 412.

In the event that the court did not accept Stafford's reasoning under a subsequent decision, Insurance Co. of North America v. ABB Power Generation, Inc., 690 N.E.2d 1249, 1252-53 (1997), the plaintiffs argued that ABB Power Generation could be distinguished from the instant case, thereby requiring Stafford's reasoning to apply. Bennett, 296 F. Supp. 2d, at 413. According to the plaintiffs, a dispute involving an arbitration clause in a contract, as in ABB Power Generation, could not be likened to their case; furthermore, the court's statement in ABB Power Generation that "it matters not that jurisdiction [was] unobtainable over a defendant" was only dicta and not binding on the court. Id. at 413.

Next, the plaintiffs argued that if the New York Court of Appeals opinion in ABB Power Generation required the Virginia two-year statute of limitations to apply, the privileges and immunities clause of the United States Constitution would be violated. Id. The plaintiffs also argued that the New York borrowing statute was inapplicable to claims brought by the plaintiffs based solely on New York law. Id. at 414. Finally, the plaintiffs asserted that the New York borrowing statute should not apply to negligence per se actions because Virginia does not have any comparable laws to the underlying New York statutes. Id. at 416.

Arguments

As explained by the District Judge, "[a] court may grant summary judgment only if 'there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law.'" Id. at 410 (citing Fed. R. Civ. P. 56(c)). Hannelore had the burden of showing that no genuine issue of material fact was present between the opposing sides, and the court was required to "construe the facts in the light most favorable" to the plaintiffs. Id.

Choice-of-law requirements in New York mandated that "a cause of action 'accrues' where the injury is suffered as opposed to where the allegedly tortuous act occurred." Id. at 411 (quoting CPLR 202). The New York Civil Practice Law and Rules specifically noted that a non-resident could not bring suit in the New York jurisdiction when the statute of limitations had passed in their jurisdiction. Id. Pursuant to this law, if the New York borrowing statute required application of the Virginia statute of limitations, the plaintiffs would be clearly time-barred from bringing their suit. Id.

The court noted that the New York Court of Appeals, in ABB Power Generation, Inc., 690 N.E.2d 1249, 1252-53 (1997), has specifically rejected the logic and holding of Stafford after considering the New York borrowing statute. Bennett, 296 F. Supp. 2d at 411.

Holdings

The court held that the New York Court of Appeals had explicitly bound the court to apply a literal interpretation of the New York borrowing statute to this personal injury action. Refusing to distinguish the Bennett's case from ABB Power Generation, the court explained that the greater need was to avoid case-by case factual analysis and "anomalous results." Id. at 412-13. The New York borrowing statute clearly required Virginia's statute of limitations to apply. Rejecting both the defendant's position that no cause of action accrual can occur where no minimum contacts are established and the plaintiffs' privileges and immunities clause argument as incorrect under existing case law, the court found that Virginia did in fact offer equivalent causes of action for the plaintiffs' negligent per se claims and negligent infliction of emotional distress claims. Id. This eliminated the plaintiffs' argument that "the borrowing statute can't apply to claims founded solely upon New York law." Id. Finding that neither New York nor Virginia provided legal recovery for emotional damage based on physical harm to others, the court rejected a purposive reading of the New York borrowing statute and granted the defendant's motion for summary judgment as to the bar of the plaintiffs' individual claims by Virginia's statute of limitations as applied under the New York borrowing statute.

The case was decided on Dec. 19, 2003.