tolling provisions

In 1974, Midwesco Enterprises, Inc., agreed with Bendix Autolite Corporation to deliver and install a boiler system at a Bendix facility in Fostoria, Ohio. Bendix is a Delaware corporation with its principal place of business in Ohio, while Midwesco is an Illinois corporation with its principal place of business in Illinois. Bendix became dissatisfied with the work, claiming that the boiler system had been installed improperly and that it was insufficient to produce the quantity of steam specified in the contract. This diversity action was filed against Midwesco in the United States District Court for the Northern District of Ohio in 1980. When Midwesco asserted the Ohio statute of limitations as a defense, Bendix responded that the statutory period had not elapsed because under Ohio law the running of the time is suspended, or tolled, for claims against entities that are not within the State and have not designated an agent for service of process. Midwesco replied that this tolling provision violated both the Commerce Clause and the Due Process Clause of the Fourteenth Amendment. The District Court dismissed the action, finding that the Ohio tolling statute constituted an impermissible burden on interstate commerce. The Court of Appeals for the Sixth Circuit affirmed, finding that the Ohio statute constituted discrimination in violation of the Commerce Clause because it required a foreign corporation to choose between exposing itself to personal jurisdiction in state courts by complying with the tolling statute, or, by refusing to comply, to remain liable in perpetuity for all lawsuits containing state causes of action filed against it in the State. Bendix appealed, and the Supreme Court noted probable jurisdiction to review the constitutionality of the Ohio tolling statute in 1987.

Shady Grove Orthopedic Associates, P.A., provided medical care to Sonia E. Galvez for injuries she suffered in an automobile accident. As partial payment for that care, Galvez assigned to Shady Grove her rights to insurance benefits under a policy issued in New York by Allstate Insurance Co. Shady Grove tendered a claim for the assigned benefits to Allstate, which under New York law had 30 days to pay the claim or deny it. Allstate apparently paid, but not on time, and it refused to pay the statutory interest that accrued on the overdue benefits at two percent per month. Shady Grove filed this diversity suit in the Eastern District of New York to recover the unpaid statutory interest. Alleging that Allstate routinely refuses to pay interest on overdue benefits, Shady Grove sought relief on behalf of itself and a class of all others to whom Allstate owes interest. The individual claim was worth roughly $500, which fell far short of the amount-in-controversy requirement for individual suits under 28 U.S.C. § 1332(a). The District Court dismissed the suit for lack of jurisdiction. It reasoned that N.Y. Civ. Prac. Law Ann. § 901(b), which precludes a suit to recover a penalty from proceeding as a class action, applies in diversity suits in federal court despite Federal Rule of Civil Procedure 23. Concluding that statutory interest is a penalty under New York law, it held that § 901(b) prohibited the proposed class action.

On April 22, 1974, Glen Gregos, a teenage boy, was injured while participating in a cross-country motorcycle race for novices sponsored by the American Motorcycle Association and the Viking Motorcycle Club. Glen's second amended complaint alleged that the American Motorcycle Association and Viking negligently designed, managed, supervised, and administered the race and negligently solicited entrants. Such negligence was a direct and proximate cause of his injuries, including a crushed spine resulting in permanent loss of the use of his legs. Glen's parents, acting as guardians ad litem, filed the underlying action against the American Motorcycle Association, the Viking Motorcycle Club, and the Los Angeles Coliseum Commission. The American Motorcycle Association answered the complaint, denying the charging allegations and asserting affirmative defenses that included a claim that Glen's own negligence was a proximate cause of his injuries. Thereafter the American Motorcycle Association sought leave of court to file a cross-complaint against Glen's parents. The first cause of action alleged that the parents knew motorcycle racing is dangerous, were knowledgeable about Glen's training, directly participated in his decision to enter the race by signing a parental consent form, and negligently failed to exercise their power of supervision over their minor child. The second cause of action sought declaratory relief. It asked for a declaration of the allocable negligence of Glen's parents so that any damages awarded against the American Motorcycle Association could be reduced by the percentage allocable to the parents' negligence. The trial court denied the American Motorcycle Association's motion for leave to file the cross-complaint. The American Motorcycle Association petitioned the Court of Appeal for a writ of mandate to compel the trial court to grant the motion. The Court of Appeal issued an alternative writ. Ultimately the court granted a peremptory writ of mandate. Because of the statewide importance of the questions presented, the Supreme Court ordered a hearing in the case on its own motion.

Georgia O'Keeffe, a renowned artist, had three paintings stolen from An American Place gallery in New York in March 1946. The gallery was operated by her husband Alfred Stieglitz. The paintings subject to this action are "Seaweed" and "Cliffs," with a third painting "Fragments" also missing. O'Keeffe did not report the theft to the police or advertise the loss, though she discussed it with associates. Stieglitz died in the summer of 1946. In 1947 O'Keeffe retained Doris Bry to help settle the estate. Bry urged reporting the loss, but O'Keeffe declined. In 1972, O'Keeffe authorized Bry to report the theft to the Art Dealers Association of America, Inc., which maintains a registry of stolen paintings. In September 1975, O'Keeffe learned that the paintings were in the Andrew Crispo Gallery in New York on consignment from Bernard Danenberg Galleries. On February 11, 1976, O'Keeffe discovered that Ulrich A. Frank had sold the paintings to Barry Snyder for $35,000. She demanded their return, but Snyder refused. O'Keeffe filed her complaint for replevin in March 1976 against Snyder, who impleaded Frank as a third-party defendant. The trial court granted summary judgment to Snyder on the ground that the action was barred by the six-year statute of limitations. The Appellate Division reversed and entered judgment for O'Keeffe. The Supreme Court of New Jersey granted certification to consider the issues. Frank traces his possession of the paintings to his father, Dr. Frank, who died in 1968, claiming to have seen them in his father's apartment as early as 1941-1943. Snyder purchased the paintings from Frank in 1975. There are factual disputes regarding the circumstances of the paintings' disappearance and acquisition.