Today the Supreme Court issued a decision, described below, of interest to the business community.
John R. Sand & Gravel Co. v. United States, No. 06-1164 (previously discussed in the May 29, 2007 Docket Report. The statute of limitations for claims against the Government in the Court of Federal Claims provides that "[e]very claim of which [the court] has jurisdiction shall be barred unless the petition thereon is filed within six years after such claim first accrues." 28 U.S.C. § 2501. In a series of decisions between 1883 and 1957, the Supreme Court held that this statute was "jurisdictional" so that it was not subject to principles of equitable tolling and should, when appropriate, be raised by the court sua sponte. In more recent cases involving other limitations periods, however, the Court has adopted a rebuttable presumption that statutes of limitations should generally apply to the Government in the same way that they apply to private parties--i.e., they should be subject to equitable tolling and waiver by the Government. Today, the Supreme Court reaffirmed the former line of decisions treating the court of claims statute of limitations as jurisdictional, reasoning that considerations of stare decisis weighed against revisiting those precedents.
John R. Sand & Gravel company ("John R.") filed an action in the court of claims in May 2002 in which it alleged that various Environmental Protection Agency activities on land on which John R. held a 50-year mining lease amounted to an unconstitutional taking of its leasehold rights. The Government initially argued that all of John R.'s claims were barred by the statute of limitations; subsequently, however, the Government tacitly conceded that at least some claims were timely. The court of claims ultimately ruled in favor of the Government on the merits, and John R. appealed to the Federal Circuit. On appeal, although the Government did not raise the statute of limitations as a ground for affirmance, the Federal Circuit concluded that it was obligated to address the issue and held that the action was untimely. See 457 F.3d 1345, 1352-60 (Fed. Cir. 2006).
In a 7-2 decision authored by Justice Breyer, the Supreme Court affirmed. The Court began by noting that "[t]he law typically treats a limitations defense as an affirmative defense that the defendant must raise at the pleadings stage and that is subject to rules of forfeiture and waiver" and that such time limits are generally subject to principles of equitable tolling. Slip. op. at 2. The Court also explained, however, that certain limitations periods serve "broader" goals such as "limiting the scope of a governmental waiver of sovereign immunity." Id. at 2-3. Such limitations periods are "more absolute" in that they cannot be waived or forfeited and are not subject to equitable tolling. Id. at 3. For this reason, they are sometimes referred to as "jurisdictional." Id. As noted in today's decision, the Court has "long interpreted the court of claims limitations statute as setting forth this second, more absolute, kind of limitations period." Id.. In light of its unwavering interpretation of the statute at issue, the Court rejected John R.'s argument that the decisions had already been or should be overruled. The Court reasoned that its more recent decisions applying a rebuttable presumption that statutes of limitations should apply to the Government in the same way that they apply to private litigants were distinguishable in that they did not address statutes that the Court had already given a definitive interpretation--and that, in any event, the definitive interpretation given to the court of claims statute was sufficient to rebut any such presumption. Id. at 6-7. The Court also rejected John R.'s call to overrule its precedents interpreting the court of claims statute, reasoning that the interpretation has not proven "unworkable" and noting that principles of stare decisis have "special force" in the statutory interpretation context. Id. at 8-9.
For companies that do business with the Government, today's decision makes clear that the statute of limitations in the court of claims is jurisdictional and that claims arising from disputes with the Government will be dismissed if they are not filed within six years of their accrual--regardless of the equities of the case or the Government's failure to raise the statute as a defense.