A federal court granted summary judgment in litigation brought by hormone replacement drug plaintiffs whose suits were previously ruled untimely by a New York court. See Rick v. Wyeth Inc.,  No. 08-1287 (D. Minn., 9/23/10).

Plaintiffs, all citizens of New York, were women, and spouses of women, who allegedly used
hormone therapy drugs manufactured and sold by defendants. Plaintiffs further alleged that they developed breast cancer as a result of the use of HT drugs.  Plaintiffs had previously brought suit individually in New York state court where their claims were consolidated into a single
coordinated proceeding. In the New York proceeding, defendants moved for summary judgment based on the New York statute of limitations. Foreseeing the end of their suits, plaintiffs moved for a discontinuance without prejudice. While the dueling motions in the New York proceeding were pending, plaintiffs commenced another action in federal court in Minnesota (where there is a much longer, highly controversial statute of limitations; none of plaintiffs, nor any of the claims at issue, had any connection to Minnesota. Instead, it seems this case, like hundreds of others involving HT drugs, was brought solely to take advantage of Minnesota’s six-year statute of limitations.)

The New York trial court granted the defendants’ motion for summary judgment and denied the
plaintiffs’ motion for “discontinuance without prejudice.” In doing so, the New York trial court reasoned that the defendants would be unfairly prejudiced by allowing the litigation to re-start in another forum after having completed discovery and reached the summary judgment phase in the New York proceeding.

In the federal court proceeding, defendants then moved for summary judgment arguing that the New York judgment was entitled to preclusive effect.  The traditional rule for claim preclusion was that dismissal for untimeliness does not bar a second action in another jurisdiction with a longer, unexpired statute of limitations. Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 504 (2001). However, the actual test for a federal court determining the preclusive effects of a prior state-court judgment is to ask ask what preclusive effect that state intends other jurisdictions to accord its judgments.  Here, the federal court determined that New York has not definitively answered that question in this context. Therefore, the court had to determine what rule New York would likely apply.

On one hand, the New York Court of Appeals has stated that, in general, New York views statutes of limitations as procedural rather than substantive. However, the New York Court of Appeals has also held that, in the narrow context of claim preclusion, statutes of limitations “in a practical sense may also be said to be substantive.”  Thus, said the federal court, the procedural/substantive distinction that formed the foundation of plaintiffs’ argument here was hardly clear under New York law. Indeed, while the procedural/substantive distinction may be a useful tool in some instances, a clear line between procedure and substance is not always ascertainable.

In interpreting this ambiguous area of New York law, the federal court was also mindful of the overarching principals of claim preclusion. Claim preclusion doctrine values judicial economy, preventing parties from burdening courts with claims already litigated.

Against this backdrop, the federal court found the procedural posture of the case decisive.  In the New York proceeding, the plaintiffs moved for a discontinuance without prejudice. Under New York law, an element of granting such a motion is whether the adverse party will suffer prejudice. The NY trial judge believed that a discontinuance without prejudice would not have preclusive effects in the federal action, and noted that granting the plaintiffs’ motion might thus allow plaintiffs’ Minnesota action to continue. Concluding that defendants would be highly prejudiced if forced to continue litigation in another forum, the trial judge denied the plaintiffs’ motion. Implicit in that reasoning was that the grant of summary judgment instead would have preclusive effect in the federal litigation. Indeed, the New York trial court specifically stated that defendants had a right to judgment on the merits.

Thus, at the summary judgment phase, the timeliness issues were “sufficiently close to the
merits” to implicate claim preclusion. Plaintiffs chose to bring their claims in New York and continued litigation up to summary judgment.