Borofsky, Amodeo-Vickery & Bandazian P.A. Attorneys At Law

123 N.H. 512, 464 A.2d 288

July 18, 1983

Shute, Engel & Morse P.A., of Exeter (Mark S. Gearreald on the brief and orally), for Clifford A. and Carole A. Heath.

Wadleigh, Starr, Peters, Dunn & Kohls, of Manchester (John A. Lassey on the brief and orally in No. 82-170, and Theodore Wadleigh on the brief and orally in No. 82-314), for Sears, Roebuck & Co.

Law Offices of James J. Kalled, of Ossipee (Robert G. Whaland on the brief and orally), for Charles and Marilyn Eastman.

Kearns, Colliander, Donahue & Tucker P.A., of Exeter (David S. Brown on the brief and orally), for Chase Machinery & Supply Co., Inc.

Holland & Aivalikles, of Nashua (William E. Aivalikles on the brief), by brief for Michael Welch.

Devine, Millimet, Stahl & Branch P.A., of Manchester (Lee C. Nyquist on the brief and orally), for American Honda Motor Co., Inc.

Craig, Wenners, Craig & McDowell P.A., of Manchester (Vincent A. Wenners, Jr., on the brief and orally), for William Cunningham.

Stark & Peltonen P.A., of Manchester (John E. Peltonen on the brief and orally), for Invacare.

Upton, Sanders & Smith, of Concord (Gilbert Upton and Gary B. Richardson on the brief, and Mr. Richardson orally), for Roger S. and Edith Kidder.

Sulloway, Hollis & Soden, of Concord (John W. Mitchell on the brief and orally), for Jean-Guy‘s Used Cars and Parts, Inc.

Wadleigh, Starr, Peters, Dunn & Kohls, of Manchester (Ronald J. Lajoie on the brief, and Katherine M. Hanna orally), for Jordan-Milton Machinery, Inc.

Burns, Bryant, Hinchey, Cox & Shea, of Dover (James H. Schulte on the brief and orally), for Norman and Sandra Mallett.

Ransmeier & Spellman, of Concord (Brian T. McDonough on the brief and orally), for Bridgeport Machines, Division of Textron, Inc.

Ouellette, Hallisey, Dibble & Tanguay P.A., of Dover (William L. Tanguay on the brief and orally), for White Rogers Division, Emerson Electric Co.

Hamblett & Kerrigan P.A., of Nashua, for George D. Linehan, administrator of the estate of Francis A. Linehan.

Devine, Millimet, Stahl & Branch P.A., of Manchester, for Clark Equipment Corp.

Wiggin & Nourie, of Manchester, for International Harvester Co.

Ahlgren & Smith, of Manchester, and Laflamme, Champagne & Moquin, of Manchester, for Ethel L. and William R. Holt.

Law Offices of Emile Bussiere, of Manchester, for Raiche Mobile Homes, Inc.

Brown & Nixon P.A., of Manchester (Edward W. Stewart, Jr., on the brief), by brief for Chirstine Burnett & a., as amici curiae.

Stephen R. Fine, of Manchester, and Jerome L. Silverstein, of Nashua, by brief for Steven Tate, as amicus curiae.

Perkins, Phillips & Waters P.A., of Concord (Edmund J. Waters, Jr., on the brief), by brief for Roderick LeFort, administrator of the estate of Jeanne Ann LeFort, as amicus curiae.

Mulvey, Noucas & Sullivan P.A., of Portsmouth (William A. Mulvey, Jr., on the brief), by brief on behalf of toxic substance tort victims, as amici curiae.

Aeschliman & Tober, of Portsmouth, and Howard A. Specter, of Pittsburgh, Pennsylvania (Stephen L. Tober on the brief), by brief for the Association of Trial Lawyers of America and the New Hampshire Trial Lawyers Association, as amici curiae.

Leahy, Denault & Moody, of Claremont (Thomas P. Connair on the brief), by brief, pro se, as amicus curiae.

Myers & Laufer, of Concord (Howard B. Myers and Peter J. Duffy on the brief), by brief for Volkswagen of America, Inc., and Volkswagenwerk, A.G., as amici curiae.

AUTHOR: DOUGLAS

The plaintiffs in these consolidated appeals challenge the constitutionality of RSA chapter 507--D (Supp. 1979), governing suits for injuries caused by defective products.

In case No. 82-170, Clifford Heath was using a Sears drive ratchet to tighten the lug-bolt nuts while changing a rear tire on a logging skidder. The direction-change lever on the ratchet head snapped in two and a piece of the lever struck him, causing the near total loss of sight in one eye. The lever previously had been removed and reattached, allegedly because the metal used by the manufacturer was not suitable for northern climates and contracted in extremely cold weather. The United States District Court for the District of New Hampshire (Loughlin, J.), where the complaint was filed, transferred two questions to us by certification under Supreme Court Rule 34 : Whether a "foreseeable repair" is a "modification or alteration" within the meaning of RSA 507-D:3 (Supp. 1979), and whether that statutory section violates the equal protection provisions of either the State or the Federal Constitution.

In case No. 82-203, Roger Kidder was injured and permanently disabled after an accident involving a crane manufactured in 1958. Writs were brought against two prior owners and sellers of the crane for failure to disclose certain defects. The case was dismissed below by the Superior Court (Cann, J.), acting upon the recommendation of a Master (Frank B. Clancy, Esq.), because of the twelve-year statute of limitations contained in RSA 507-D:2, II(a) (Supp. 1979).

In case No. 82-275, Norman Mallett was severely injured when his hand was drawn into a vertical rotary cutting disc attached to a milling machine. Both his action and the separate loss of consortium action filed by his wife were dismissed by the Superior Court (Dunn, J.) under the three-year limitation provision of RSA 507-D:2, I and :5 (Supp. 1979). The plaintiffs challenge the three-year limitation as well as the "state of the art" defense set forth in RSA 507-D:4 (Supp. 1979).

In case No. 82-314, Sears, Roebuck & Co., as a defendant in another products liability case not presently before this court, seeks indemnity against the White Rogers Division of Emerson Electric Co., alleging that the latter’s defective gas control valve caused an explosion in a wall heater which injured a Hampton, New Hampshire resident. This case was dismissed by the Superior Court (Bean, J.) as not timely filed under RSA 507-D:2, III and :5 (Supp. 1979).

In case No. 82-458, Charles Eastman, a New Hampshire resident, was injured in 1979 when a piece of a saw blade broke off and struck him in the eye. Because suit was filed more than twelve years after the Massachusetts manufacturer parted with control of the saw, the United States District Court for the District of New Hampshire (Devine, C.J.) transferred to us the question whether RSA 507-D:2, II(a) (Supp. 1979) violates part one, article fourteen of the New Hampshire Constitution.

In case No. 82-485, Michael Welch was injured in an accident involving a Japanese motorcycle. His case was also transferred here by the Federal District Court (Loughlin, J.) for a determination of the constitutionality of the statute of limitations for products liability actions.

In case No. 82-497, William Cunningham, a paraplegic patient at the Veteran‘s Administration Hospital in Manchester, was sitting on a portable commode when it collapsed, causing his leg to fracture. Again, the case was transferred here by the Federal District Court (Loughlin, J.) to determine the constitutionality of RSA 507-D:2, I (Supp. 1979).

All of these cases were consolidated for oral argument, and briefs from amici were filed as well. After the above cases were argued orally, cases Nos. 83-053 and 83-093 were filed in this court and consolidated for decision, without briefs or oral argument.

In case No. 83-053, Ethel Holt suffered permanent injuries from an explosion and fire in a mobile home that had been purchased from Raiche Mobile Homes, Inc., in March 1968. The suit was filed in June 1982, alleging that a defective bottled-gas cooking system in the mobile home caused the explosion and fire. The case was dismissed by the Superior Court (Flynn, J.) on the basis of the twelve-year limitation period provided in RSA 507-D:2, II(a) (Supp. 1979), the constitutionality of which is being challenged on appeal.

Finally, in case No. 83-093, Francis Linehan was killed in December 1979 in an accident involving a forklift manufactured by Clark Equipment Corp. and a tractor-trailer manufactured by International Harvester Co. Wrongful death actions were filed in December 1981, within the two-year limitation period of RSA 556:11. Nevertheless, based on a Master’s (Charles T. Gallagher, Esq.) recommendation, the Superior Court (Nadeau, J.) dismissed the suits because they were instituted more than twelve years after the defendants parted with possession or control of their machines or sold them. The decendent‘s administrator argues that RSA 507-D:2, II(a) (Supp. 1979) is unconstitutional.

I. The Evolution of Products Liability Law.

The law of products liability is of relatively recent origin. It has been noted, in fact, that a scholarly commentator could remark as late as 1955 "’[p]roducts liability does not rank as a term of art in the courts of law.‘" W. KEETON, D. OWEN, AND J. MONTGOMERY, PRODUCTS LIABILITY AND SAFETY, CASES AND MATERIALS 19 (1980) (hereinafter cited as PRODUCTS LIABILITY AND SAFETY) (quoting Wilson, Products Liability (pt. 1), 43 CALIF. L. REV. 614, 614 (1955)). Under Roman law at the time of Justinian, the vendor’s liability turned upon whether he knew of the defect. DIG. JUST. (Book 19, 533 A.D.), reprinted in PRODUCTS LIABILITY AND SAFETY, at 21. By the thirteenth century in England, the growth of crafts in a feudal agricultural society led to concern in the law for "quality good after the fashion of the day." Hamilton, The Ancient Maxim Caveat Emptor, 40 YALE L.J. 1133, 1142 (1931).

The maxim "caveat emptor" first appeared in Moore v. Hussey, 80 Eng. Rep. 243 (K.B. 1601). For the next few centuries in this country and in England, the buyer had best beware. PRODUCTS LIABILITY AND SAFETY, at 24. Even during the early years of this century, an action generally could not lie against a "remote" manufacturer with whom the buyer had not directly entered into a contract (lack of "privity"). W. PROSSER, HANDBOOK OF THE LAW OF TORTS § 93 , at 622 (4th ed. 1971). Where privity existed, negligence was the standard for recovery for personal injuries.

The Industrial Revolution during the nineteenth century led to the products liability revolution in this century, which began when a Scotsman named Donald MacPherson was injured after a wheel fell off his new 1910 Buick automobile. His $5,000 verdict was appealed on the ground that, because MacPherson had bought the Buick from a dealer instead of from Buick Motor Company, he should not be allowed to sue the manufacturer with whom he did not stand in privity. In the famous opinion by Justice Cardozo, then of the New York Court of Appeals, the manufacturer who placed the item into the stream of commerce was held to be "responsible for the finished product." MacPherson v. Buick Motor Co., 217 N.Y. 382, 394, 111 N.E. 1050, 1055 (1916).

In New Hampshire, we adopted the doctrine of strict liability in tort fourteen years ago in Buttrick v. Arthur Lessard & Sons, Inc., 110 N.H. 36, 39, 260 A.2d 111, 113 (1969).

The reasons for the evolution of the law in the area of products liability are many. We live in an era of national advertising and of nationwide distribution which can add or remove a product from our store shelves in a matter of days. Many of those nationally sold products contain chemical compounds and synthetics the side effects of which clearly cannot be anticipated. It is believed that if today‘s products are capable of causing illness or physical injury, the risk of liability is best borne by the companies that profited from their sale, rather than by the unfortunate individual consumers. Buttrick v. Lessard, 110 N.H. at 39, 260 A.2d at 113; Greenman v. Yuba Power Products, Inc., 59 Cal. 2d 57, 63-64, 377 P.2d 897, 901, 27 Cal. Rptr. 697, 701 (1963).

As Justice Holmes noted, the life of the law is experience, and the modern experience with consumer products has been one of ever improving technology and rising standards of living, but also of injury and death:

"Americans--20 million of them--are injured each year in the home as a result of incidents connected with consumer products. Of the total, 110,000 are permanently disabled and 30,000 are killed. A significant number could have been spared if more attention had been paid to hazard reduction...

The exposure of consumers to unreasonable consumer product hazards is excessive by any standard of measurement."
PRODUCTS LIABILITY AND Safety, at 2 (quoting from National Commission of Product Safety, Final Report 1 (June 1970). Deterrence is also a valid consideration; without the stimulus of plaintiffs’ products liability actions, the incentive to improve products and make them safer would not exist. See generally Cowan, Some Policy Bases of Products Liability, 17 STAN. L. REV. 1077 (1965).

The recent rise in products liability claims and lawsuits has resulted in a corresponding increase in insurance rates for those making or selling products. This, in turn, led our own legislature in 1978 to enact a "products liability" law in the interest of protecting manufacturers who, it was believed, were being unduly burdened by rapidly rising insurance rates. See N.H.S. JOUR. 1020-29 (1977). It is significant that, during debate, a number of legislators expressed skepticism about the fairness of a State products liability law and about its effectiveness in stabilizing insurance rates for New Hampshire manufacturers. This concern about the legislation‘s effectiveness was based on the fact that most products manufactured in New Hampshire are sold in other States, and on the belief that the high insurance premiums paid by in-State manufacturers were attributable to the proliferation of lawsuits in larger industrialized States. See, e.g., Id. at 1016-17 (remarks of Sens. Preston and Bossie); N.H.S. JOUR. 593-94 (1978) (remarks of Sen. Bossie).

In fact, in conjunction with the enactment of RSA chapter 507-D (Supp. 1979), the New Hampshire Legislature authorized the creation of a fifteen-member Commission to Study Product Injury Reparations (commission) for the purpose of evaluating the legislation’s effect on products liability insurance rates. Laws 1978, 31:2. The legislature directed the commission to issue a final report by January 1, 1980, on the following matters: (1) the effectiveness of RSA chapter 507-D (Supp. 1979) "in improving the availability and affordability of products liability insurance"; (2) "other existing laws and practices which bear on the availability and affordability of such insurance"; and (3) "such changes as may be necessary to increase availability and affordability of such insurance, while at the same time allowing just compensation to those suffering injury from products." Laws 1978, 31:2.

The commission issued its final report on December 21, 1979, finding that it was "very difficult to assess the impact of RSA 507-D on the problems of availability and affordability" of products liability insurance. At the time of the report, the commission found that the "panic" rise in manufacturers‘ insurance rates had ended nationwide, and not just in New Hampshire, thereby tending to show that the State legislation was not the cause of the stabilization of rates. In conclusion, the commission stated that "[t]he problems of product liability insurance affordability and availability have eased, but it seems unlikely that this relaxation is attributable to the enactment of RSA 507-D."

Against this background, we now turn to the specific challenges raised by these consolidated cases.

II. The Statutes of Limitations for Products Liability Actions.

The constitutional challenges in these cases focus principally upon the twelve-year "statute of repose" in RSA 507-D:2, II(a) (Supp. 1979) and the three-year limitation provision of RSA 507-D:2, I (Supp. 1979). Generally, both federal and State courts recognize the power of legislative bodies to enact statutes of limitations which prescribe a reasonable time within which a party is permitted to bring suit for the recovery of his rights. The United States Supreme Court has stated:

"It may be properly conceded that all statutes of limitation[s] must proceed on the idea that the party has full opportunity afforded him to try his right in the courts. A statute could not bar the existing rights of claimants without affording this opportunity; if it should do so, it would not be a statute of limitations, but an unlawful attempt to extinguish rights arbitrarily, whatever might be the purport of its provisions."
Wilson v. Iseminger, 185 U.S. 55, 62 (1902).

The concept of allowing a reasonable period of time for suit to be brought after the cause of action arises is not new in our law, for along with "substantive rights, the first settlers brought over the incidental rights of adequate remedy and convenient procedure." State v. Saunders, 66 N.H. 39, 74, 25 A. 588, 589 (1889). Thus, the "right to an adequate remedy [exists] for the infringement of a right derived from the unwritten law." Id., 25 A. at 589. When it came time to establish a post-revolution form of government, the first part of our Constitution was devoted to chronicling our inherent rights. Part one, article fourteen of the New Hampshire Constitution provides:

"Every subject of this state is entitled to a certain remedy, by having recourse to the laws, for all injuries he may receive in his person, property, or character; to obtain right and justice freely, without being obliged to purchase it; completely, and without any denial; promptly, and without delay; conformably to the laws."
(Emphasis added.)

In an effort to facilitate the vindication of tort victims’ rights, legislatures and courts have developed the "discovery" rule, under which a cause of action does not accrue until the plaintiff discovers or, in the exercise of reasonable diligence, should have discovered both the fact of his injury and the cause thereof. Raymond v. Eli Lilly & Co., 117 N.H. 164, 171, 371 A.2d 170, 174 (1977); see United States v. Kubrick, 444 U.S. 111, 117-25 (1979). The rule is premised on "the manifest unfairness of foreclosing an injured person‘s cause of action before he has had even a reasonable opportunity to discover its existence." Brown v. Mary Hitchcock Memorial Hosp., 117 N.H. 739, 741-42, 378 A.2d 1138, 1139-40 (1977).

Although the legislature’s power is broad in determining how long a plaintiff may have to initiate a cause of action and when that limitation period begins to run, this power may not be exercised in an unconstitutional manner. In Carson v. Maurer, 120 N.H. 925, 424 A.2d 825 (1980), we held that, although not a fundamental right, "the right to recover for personal injuries is... an important substantive right." Id. at 931-32, 424 A.2d at 830. Thus, the classifications there at issue were required to be "reasonable" and to "rest upon some ground of difference having a fair and substantial relation to the object of the legislation... " Id. at 932, 424 A.2d at 831.

In Carson, we ruled that the legislature‘s extension of the discovery rule to some medical injury plaintiffs, while denying its applicability to others, constituted an impermissible discrimination between classes of plaintiffs. We therefore held that RSA chapter 507-C (Supp. 1979) violated the equal protection provisions of our Constitution to the extent that it limited application of the rule to only a narrow class of medical-malpractice plaintiffs. Id. at 936, 424 A.2d at 833.

More recently, in Henderson Clay Products, Inc. v. Edgar Wood & Associates, Inc., 122 N.H. 800, 451 A.2d 174 (1982), we struck down RSA 508:4-b insofar as it precluded application of the discovery rule against architects, but allowed its application against materialmen and suppliers of labor. Relying upon Carson, we concluded:

"It is difficult to rationally permit a situation to exist whereby the supplier of labor and material has a liability exposure for a period of six years after the injury has been discovered or, in the exercise of due care, should have been discovered when, at the same time, the designers of the premises can be immunized from the liability before the cause of action even accrues or can be factually asserted."
Id. at 801-02, 451 A.2d at 175; see 26 ATLA L. Rep. 152-53 (1983).

Here, too, our standard of review is whether the statute-of-limitations provisions contained in RSA 507-D:2 (Supp. 1979) are reasonable and are substantially related to the legislative objective of reducing products liability insurance rates.

RSA 507-D:2, II(a) (Supp. 1979), the twelve-year "statute of repose," requires a products liability action to be brought not "later than 12 years after the manufacturer of the final product parted with its possession and control or sold it, whichever occurred last." The effect of this absolute limitation on suits against manufacturers is to nullify some causes of actions before they even arise. As compared with non-products liability causes of action, which generally must be brought within six years after they accrue, whenever that may be, see RSA 508:4 (Supp. 1981), we hold that the twelve-year bar imposed by RSA 507-D:2, II(a) (Supp. 1979) is neither reasonable nor substantially related to the object of the legislation.

The twelve-year limit is unreasonable because the mere purchase of pills produced by a drug manufacturer in California, or of a defective automobile made in Michigan, does not place the consumer on notice of a hidden defect injurious to his health or safety. When product defects lead to injury, our law has long provided for recovery without regard to when the substance or object was made or placed into the national or international stream of commerce. This is particularly important in cases where the injuries may not clearly manifest themselves until years later, such as the clear-cell adenocarcinomas found in the daughters of mothers who twenty or more years previously took a female estrogen pill commonly known as DES (diethylstilbestrol). See, e.g., Bichler v. Eli Lilly and Co., 55 N.Y.2d 571, 577-78, 436 N.E.2d 182, 184, 450 N.Y.S.2d 776, 778 (1982).

The unreasonableness inherent in a statute which eliminates a plaintiff’s cause of action before the wrong may reasonably be discovered was noted by Judge Frank in his dissent in Dincher v. Marlin Firearms Co., 198 F.2d 821, 823 (2d Cir. 1952), in which he condemned the "Alice in Wonderland" effect of such a result:

"Except in topsy-turvy land, you can‘t die before you are conceived, or be divorced before ever you marry, or harvest a crop never planted, or burn down a house never built, or miss a train running on a non-existent railroad. For substantially similar reasons, it has always heretofore been accepted, as a sort of logical ’axiom,‘ that a statute of limitations does not begin to run against a cause of action before that cause of action exists, i.e., before a judicial remedy is available to a plaintiff."
(Footnotes omitted.)

Nor do we think that the twelve-year "statute of repose" is substantially related to a legitimate legislative object. As previously noted, the crisis in products liability insurance had abated nationwide independent of RSA chapter 507-D (Supp. 1979). Nonetheless, persons injured by defective products are deprived arbitrarily of a right to sue the manufacturers responsible for those defective products by virtue of a statute that has become entirely divorced from its underlying purpose. Cf. Boucher v. Sayeed, 459 A.2d 87, 92-93 (R.I. 1983) (medical malpractice crisis existing at time of enactment but not at time of suit was insufficient basis to uphold statute against equal protection challenge). We do not believe that the legislature may constitutionally bar suits against manufacturers by products liability plaintiffs, as a class, twelve years after the manufacturer sold or parted with control of the product, while allowing other plaintiffs to recover for personal injuries not related to a defective product, at any time within six years after the cause of action accrues.

Our sister States of Alabama, Florida, and North Carolina have come to the same conclusion under similar provisions of their State Constitutions. Lankford v. Sullivan, Long & Hagerty, 416 So. 2d 996, 1003-04 (Ala. 1982) (ten-year statute void under ALA. CONST. art. I, § 13); Battilla v. Allis Chalmers Mfg. Co., 392 So. 2d 874, 874 (Fla. 1980) (relying upon Overland Const. Co., Inc. v. Sirmons, 369 So. 2d 572 (Fla. 1979)) (twelve-year statute void under FLA. CONST. art. I, § 21); Bolick v. American Barmag Corp., 54 N.C. App. 589, 592-95, 284 S.E.2d 188, 191-92 (1981), modified and aff’d, 306 N.C. 364, 293 S.E.2d 415 (1982) (six-year statute void under N.C. CONST. art. I, § 18). See generally Birnbaum, " First Breath‘s" Last Gasp: The Discovery Rule in Products Liability Cases, 13 FORUM 279 (1977); Massery, Date-of-Sale Statutes of Limitation--A New Immunity for Product Suppliers, 1977 INS. L.J. 535; Phillips, An Analysis of Proposed Reform of Products Liability Statutes of Limitations, 56 N.C.L. REV. 663 (1978); Note, The Utah Product Liability Limitation of Action: An Unfair Resolution of Competing Concerns, 1979 UTAH L. REV. 149.

The plaintiffs also challenge the three-year statute of limitations established in RSA 507-D:2, I (Supp. 1979). This three-year period begins to run from the "time the injury is, or should, in the exercise of reasonable diligence, have been discovered by the plaintiff." As previously mentioned, personal actions generally must be brought within six years of the time they accrue, with the exception of libel or slander actions, to which a three-year limit applies. RSA 508:4 (Supp. 1981). We do not think that merely because a manufactured product causes the injury, or because the cause of action is legislatively defined as a "product liability action," see RSA 507-D:1, I (Supp. 1979), a plaintiff’s injury is therefore different from any other injury.

For instance, in the context of an automobile collision case, it makes no sense to say that for that part of an injury caused by another driver‘s alleged negligence a six-year statute applies, while a product defect that may have been a factor in causing the harm to the plaintiff is subject to a three-year statute. Libel and slander were and are separate common-law torts which may reasonably be distinguished for statute of limitations purposes; however, there is no tort called "products liability."

For the reasons stated in our analysis of the twelve-year "statute of repose," we hold that RSA 507-D:2, I (Supp. 1979) also denies products liability plaintiffs equal protection of the laws. This is not to say that the legislature could not constitutionally establish a statute of limitations of three years for all personal injury actions if it so desired. However, it may not constitutionally discriminate against one class of plaintiffs for the purpose of protecting manufacturers by means of a statute of limitations which is neither reasonable nor substantially related to a legitimate legislative object.

The last statute-of-limitations provision under attack in these cases, RSA 507-D:2, III (Supp. 1979), requires third-party claims in products liability cases to be initiated within ninety days of the end of the time periods set forth in paragraphs I and II of that section. To the extent that the statute of limitations for third-party actions is dependent upon RSA 507-D:2, I and II(a) (Supp. 1979), which we have already ruled invalid, we further hold that RSA 507-D : 2, III (Supp. 1979) is unconstitutional.

Although the validity of the remaining provisions of RSA 507-D:2 (Supp. 1979) has not been questioned in the cases before us, these provisions would appear to be subject to the same constitutional infirmity as the provisions actually challenged on appeal. Nor are the provisions of the section severable from one another, due to their interrelationship. Accordingly, we must void RSA 507-D:2 (Supp. 1979) in its entirety.

III. Modification or Alteration of Products.

Next, we turn to RSA 507-D:3 (Supp. 1979), which provides that a "defendant may be held liable only for harm that would have occurred if the product had been used in its unaltered and unmodified condition and shall not be held liable for harm arising in any part from alteration and modification of the product by another." Alterations or modifications based on the manufacturer’s specifications or instructions do not bar the plaintiff‘s cause of action.

The plaintiffs maintain that this section violates the equal protection provisions of our State Constitution in two respects. First, they argue that the challenged provision denies persons injured by modified or altered products the same right to recover for personal injuries that is available to other products liability plaintiffs. Second, they contend specifically that RSA 507-D:3 (Supp. 1979) impermissibly distinguishes between persons injured as a result of product modification and persons injured as a result of product misuse. For the reasons stated below, we rule section three of the products liability statute to be unconstitutional.

Under our decision in Thibault v. Sears, Roebuck & Co., 118 N.H. 802, 395 A.2d 843 (1978), the parties to a products liability action are entitled to have the jury " compare the causal effect of the defect in the product or design with the affirmative defense of misconduct of the plaintiff and allocate the loss... " Id. at 813, 395 A.2d at 850 (emphasis added). RSA 507-D:3 (Supp. 1979), however, provides that a defendant "shall not be held liable for harm arising in any part from alteration and modification of the product by another." (Emphasis added.) This provision thus operates to establish an absolute defense in products liability cases where the modification or alteration of the product contributes in any way to the plaintiff’s injury, regardless of the dangerousness of the product or the insignificance of the modification. Consequently, RSA 507-D:3 (Supp. 1979) denies to persons injured by modified products the same right of apportionment and at least partial recovery provided to all other products liability plaintiffs in Thibault.

Moreover, RSA 507-D:3 (Supp. 1979) distinguishes impermissibly between plaintiffs injured by modified products and plaintiffs injured by misused products. Under current New Hampshire law, a plaintiff may recover some percentage of his damages where his misuse of a product did not contribute more to the accident than did the manufacturer‘s conduct, and the misuse is found to have been foreseeable to the manufacturer. This holds true whether the product is misused by the plaintiff, see Thibault v. Sears, Roebuck & Co., 118 N.H. at 809, 395 A.2d at 847, or by a third party, see Reid v. Spadone Mach. Co., 119 N.H. 457, 465, 404 A.2d 1094, 1099 (1979). In contrast, RSA 507-D:3 (Supp. 1979) by its own terms bars recovery altogether by plaintiffs whose "misconduct" takes the form of modification or alteration not in accordance with the manufacturer’s specifications or instructions, irrespective of how foreseeable such a modification may have been.

The overall effect of RSA 507-D:3 (Supp. 1979) is both arbitrary and inequitable. For example, the statute would totally bar recovery by the plaintiff in case No. 82-170, who was injured when using a modified Sears tool, simply because a modification contributed to the injury. Yet if the same plaintiff had received the identical injury as a result of actually misusing an unmodified wrench, he would be entitled to sue the manufacturer and have the jury consider the foreseeability of such misuse in the balance of comparative responsibility. As we noted in Thibault, the term "plaintiff‘s misconduct" includes, "where applicable, product misuse or abnormal use" as well as the older concept of "assumption of the risk" or "voluntarily and unreasonably proceeding to encounter a known danger." 118 N.H. at 812, 395 A.2d at 849. Obviously, whether modified or not by a plaintiff, a product may be misused or altered from its foreseeable use to such a degree as to absolve the manufacturer of liability. But these are questions of fact to be resolved by the trier of fact.

While RSA 507-D:3 (Supp. 1979) may result in some slight benefit to manufacturers, such an effect is clearly outweighed by the severe restriction of plaintiff’s rights to recover for injuries caused by modified or altered products. See Carson v. Maurer, 120 N.H. at 936-37, 424 A.2d at 833-34. We conclude that RSA 507-D:3 (Supp. 1979) denies equal protection of the laws under the New Hampshire Constitution and is therefore invalid.
IV. The State of the Art Defense.

RSA 507-D:4 (Supp. 1979) codifies what is known in products liability law as the "state of the art" defense. Under this section of the statute,

"it is an affirmative defense that the risks complained of by the plaintiff were not discoverable using prevailing research and scientific techniques under the state of the art and were not discoverable using procedures required by federal or state regulatory authorities charged with supervision or licensing of the product in question. Discoverability of risks shall be measured as of the time the manufacturer parted with possession and control of, or sold the product in question, whichever occurred last."
The plaintiffs have raised a general objection to this provision on equal protection grounds. One assertion raised by the plaintiffs is that RSA 507-D:4 (Supp. 1979) codifies current industry practice as the standard by which "discoverability of risk" is to be measured. We find this contention to be without merit.

It has long been recognized that because entire industries may lag behind in the development of safer and technologically feasible alternatives, "custom and usage" is an unsound standard of liability. See The T. J. Hooper, 60 F.2d 737, 740 (2d Cir.), cert. denied, 287 U.S. 662 (1932); Hancock v. Paccar, Inc., 204 Neb. 468, 479-80, 283 N.W.2d 25, 35 (1979). The legislativehistory of RSA 507-D:4 (Supp. 1979) indicates the legislature‘s intent to reject mere compliance with current industry practice as a defense to liability. See N.H.S. JOUR. 1028-29 (1977) (remarks of Sen. Bradley). Instead, RSA 507-D:4 (Supp. 1979) holds a defendant in a products liability action to the standard of technological feasibility at the time of sale or distribution. See Phillips, The Standard for Determining Defectiveness in Products Liability, 46 U. CIN. L. REV. 101, 115 & n.71 (1977).

In recent years, some courts have held manufacturers liable for defects which, at the time of sale, were "scientifically unknowable." See, e.g., Beshada v. Johns-Manville Products Corp., 90 N.H. 191, 202-09, 447 A.2d 539, 545-49 (1982). By imposing what amounts to "absolute" liability upon manufacturers, such judicial decisions sever the traditional connection between tort liability and fault. To hold Ford Motor Company to today’s standard of scientific knowledge when determining liability for an injury caused by a Model T bought in 1921 appears to us to be clearly unreasonable.

We view a properly worded "state of the art" defense as being a rational means of addressing manufacturers‘ reasonable objection to application of modern legal concepts and scientific knowledge to products made decades ago. We therefore find it both reasonable and constitutionally permissible to raise an affirmative defense based upon "discoverability of risk" as measured by the "state of the art" at the time of distribution or sale.

We note that the standard enunciated in RSA 507-D:4 (Supp. 1979) is consistent with our decision in Thibault v. Sears, Roebuck & Co., 118 N.H. at 807, 395 A.2d at 846, as well as with the judicial actions of many of our sister States. See, e.g., Hancock v. Paccar, Inc., 204 Neb. at 479-80, 283 N.W.2d at 35; Boatland of Houston, Inc. v. Bailey, 609 S.W.2d 743, 746 (Tex. 1980). As we stated in Thibault, "strict liability is not a no-fault system of compensation. The common-law principle that fault and responsibility are elements of our legal system applicable to corporations and individuals alike will not be undermined or abolished" solely by a concept of spreading of risk and cost in this State. 118 N.H. at 806 , 395 A.2d at 845-46.

Despite the constitutional validity of RSA 507-D:4 (Supp. 1979) viewed in isolation, the question of its severability, from the portions of the products liability statute which have been stricken, remains. Indeed, the plaintiffs have asserted that if we find enough of RSA chapter 507-D (Supp. 1979) to be unconstitutional, we should follow our decision in Carson v. Maurer and strike down the statute in its entirety. We agree.

In Carson, we addressed the severability of the unconstitutional provisions of RSA chapter 507-C (Supp. 1979), the medical-malpractice statute, from the remainder of that statute. We stated that we were "not sure that the remaining provisions of RSA ch. 507-C (Supp. 1979) would have been enacted without the rest." 120 N.H. at 946, 424 A.2d at 839. Accordingly, the entire statute was stricken.

Here, too, we are not sure whether the legislature would have enacted a "state of the art" defense in the absence of all of the unconstitutional provisions of the products liability statute. We must therefore leave that question to the legislature. Because we have stricken the remainder of the substantive sections of the statute, we void the entire chapter.

In light of our holding that RSA chapter 507-D (Supp. 1979) is void in its entirety, the plaintiffs’ argument that the retrospective application of the chapter under RSA 507-D:5 (Supp. 1979) is unconstitutional is moot.

Nos. 82-203, 82-275, 82-314, 83-053, and 83-093 are reversed and remanded; Nos. 82-170, 82-458, 82-485, and 82-497 are remanded to the United States District Court.

All concurred.

NANCY PHELPS AND RICHARD PHELPS
vs.
HASKELL KINGSTON, D.M.D.

No. 87-036

130 N.H. 166, 536 A.2d 740

December 7, 1987

The Legal Clinics P.A., of Manchester (Stephen E. Borofsky on the brief and orally), for the plaintiffs.

Devine, Millimet, Stahl and Branch P.A., of Manchester (George R. Moore and Thomas Quarles, Jr., on the brief, and Mr. Quarles orally), for the defendant.

AUTHOR: JOHNSON

The plaintiffs, Nancy Phelps and her husband Richard Phelps, appeal from the Superior Court‘s (Gray, J.) dismissal of their complaint for lack of in personam jurisdiction over the defendant, Haskell Kingston, D.M.D. For the reasons stated below, we hold that the superior court does have in personam jurisdiction over the defendant, and therefore reverse and remand.

During the late winter or early spring of 1985, plaintiff Nancy Phelps, a New Hampshire resident, developed what she later found to be a cancerous parotid gland tumor at the corner of the right side of her jaw. In late March of that year, while visiting her regular dentist, Dr. James Malloy, in Portsmouth, she mentioned the then undiagnosed lump and accompanying pain in her jaw to attending staff. The receptionist, who worked both part-time for Dr. Malloy in Portsmouth and part-time for the defendant, Dr. Kingston, offered to make the plaintiff an appointment with Dr. Kingston, who she allegedly said had experience with such problems, at his office in Eliot, Maine. The plaintiff agreed, and the receptionist arranged an appointment for April 8, 1985. On that date Nancy Phelps saw Dr. Kingston at his Eliot, Maine office. As a result of that visit, she now sues him for dental malpractice, alleging that he failed reasonably and properly to diagnose and treat her condition, failed properly to follow-up her case, and prematurely discharged her from his care. She contends that, as a result of this alleged malpractice, the cancerous tumor grew and spread. This, she says, ultimately necessitated radical surgery, which caused serious nerve damage and disfigurement to the right side of her face. It also created the danger of the cancer’s terminal recurrence. In a separate but related action, the plaintiffs also sue Dr. Ira Schwartz, a Portsmouth internist who apparently lacks any contact with the State of Maine, for malpractice arising out of his examination of Nancy Phelps regarding the same jaw condition.

Dr. Kingston is a resident of South Berwick, Maine, with his sole office in Eliot, Maine. He holds a valid New Hampshire dental license and has been licensed to practice dentistry in this State since 1982. He thus continues to be subject to regulation by the board of dental examiners of New Hampshire. See RSA ch. 317-A. Indeed, Dr. Kingston was a New Hampshire resident from 1981 through 1983 and practiced dentistry in this State from 1981 through 1984. Of the 1350 families that he treats, approximately 100 reside in New Hampshire, as do two of his eight employees. Dr. Kingston also advertises his practice in the Yellow Pages for the Portsmouth, Exeter, Dover, Somersworth and Rochester area.

On the defendant‘s motion to dismiss the action against him, the trial court issued the following order dismissing the plaintiffs’ complaint for lack of personal jurisdiction:

"The Court finds that the tortious act complained of happened, if at all, in Maine and therefore RSA 510:4(I) does not apply. The fact that the Defendant has contacts with N.H. is not determinative. RSA 510:4(I) states that jurisdiction arises out of the ‘acts enumerated above’ and one of the ‘acts enumerated above’ is the commission of a ‘tortious act within this state.’ Non relevant contacts with N.H. are therefore insufficient to give rise to jurisdiction. The Motion to Dismiss is granted."
The plaintiffs now appeal this decision, contending that New Hampshire may exercise personal jurisdiction over the defendant consistent with RSA 510:4, I , and the United States Constitution.

In determining whether or not it may exercise in personam jurisdiction over a foreign defendant, a court must typically engage in a two-part inquiry. It must first determine whether the State‘s long-arm statute authorizes such jurisdiction. Weld Power Industries v. C.S.I. Technologies, 124 N.H. 121, 125, 467 A.2d 568, 570 (1983); Tavoularis v. Womer, 123 N.H. 423, 426, 462 A.2d 110, 112 (1983); Cove-Craft Industries v. B. L. Armstrong Co. Ltd., 120 N.H. 195, 198, 412 A.2d 1028, 1030 (1980). If the long-arm statute would establish jurisdiction over the defendant, the court must further ask whether the defendant has "minimum contacts" with the State sufficient to insure that suit against him there does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted); see Hall v. Koch, 119 N.H. 639, 644, 406 A.2d 962, 965 (1979). The plaintiff bears the burden of demonstrating facts sufficient to establish personal jurisdiction over the defendant. Weld Power Industries, supra at 123, 467 A.2d at 469; Kibby v. Anthony Industries, Inc., 123 N.H. 272, 274, 459 A.2d 292, 293-94 (1983). In determining whether this burden has been met, the court will take facts that the plaintiff has properly pleaded as true and will construe reasonable inferences therefrom in the manner most favorable to the plaintiff. Weld supra; Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 610, 392 A.2d 576, 578 (1978); Bell v. Pike, 53 N.H. 473, 475 (1873).

RSA 510:4, I , the New Hampshire long-arm statute that confers jurisdiction over individuals, provides that:

"Any person who is not an inhabitant of this state and who, in person or through an agent, transacts any business within this state, commits a tortious act within this state, or has the ownership, use, or possession of any real or personal property situated in this state submits himself, or his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from or growing out of the acts enumerated above."

The question whether RSA 510:4, I , provides for jurisdiction over a foreign defendant in a malpractice suit, when all examination and treatment occurred outside the State, is not one that this court has previously addressed. However, we have held that the legislature intended RSA 510:4, I , "to be construed in the broadest legal sense to encompass personal, private and commercial transactions." Leeper v. Leeper, 114 N.H. 294, 297, 319 A.2d 626, 628 (1974) (citations omitted). We have further held that the legislature’s purpose in enacting the statute was to provide resident plaintiffs a convenient forum in which to sue for injuries attributable to foreign defendants. Tavoularis, supra at 425, 462 A.2d at 112. In light of these legislative purposes, we have further construed both RSA 510:4, I , and its corporate parallel, RSA 293-A:121 , to provide jurisdiction over foreign defendants to the full extent that the statutory language and due process will allow. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984); Tavoularis, supra at 426, 462 A.2d at 112; Roy v. Transairco, Inc., 112 N.H. 171, 176, 291 A.2d 605, 608 (1972); Seymour v. Parke, Davis & Company, 294 F. Supp. 1257, 1259 (D.N.H. 1969), aff‘d, 423 F.2d 584 (1970); Roy v. North American Newspaper Alliance, Inc., 106 N.H. 92, 94-95, 205 A.2d 844, 845-46 (1964).

As noted above, a court’s principal inquiry in determining whether the due process clause permits personal jurisdiction over a foreign defendant is whether the defendant maintains minimum contacts with the forum State. Absent such contacts, the fourteenth amendment forbids the State to exercise jurisdiction. Williams v. Williams, 121 N.H. 728, 732, 433 A.2d 1316, 1319 (1981); Kulko v. California Superior Court, 436 U.S. 84, 91-93, reh‘g denied, 438 U.S. 908 (1978).

The question whether sufficient contacts exist to warrant jurisdiction is one that can be answered only in light of the facts of the particular case:

"Like any standard that requires a determination of ’reasonableness,‘ the ’minimum contacts‘ test of International Shoe is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite ’affiliating circumstances‘ are present. We recognize that this determination is one in which few answers will be written ’in black and white. The greys are dominant and even among them the shades are innumerable.‘"
Kulko, supra at 92 (quoting Estin v. Estin, 334 U.S. 541, 545 (1948)) (citations omitted). Nevertheless, the United States Supreme Court has frequently stated that the minimum contacts inquiry is best informed by asking whether the defendant’s "conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). The Supreme Court has further elucidated this inquiry by stating that, where the litigation in question arises out of or relates to the defendant‘s forum contacts, the minimum contacts requirement is satisfied provided the defendant "has ’purposefully directed‘ his activities at residents of the forum." Burger King v. Rudzewicz, 471 U.S. 462, 472 (1985); Kenerson v. Stevenson, 604 F. Supp. 792, 793-94 (D. Me. 1985); Hanson v. Denckla, 357 U.S. 235, 253 (1958). However, even where the litigation does not "arise out of or relate to" forum contacts, those contacts directed at New Hampshire citizens may satisfy due process for jurisdictional purposes provided they are substantial. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414-15 (1984); Perkins v. Benguet Mining Co. 342 U.S. 437, 445-47 (1952).

Whether the defendant’s contacts with the forum are sufficient to support jurisdiction is the consideration most critical to the due process inquiry. However, it is not the only one which the court should take into account. Rather:

"Once it has been decided that a defendant purposefully established minimum contacts within the forum State, these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with ‘fair play and substantial justice.’ Thus courts in ‘appropriate case[s]’ may evaluate ‘the burden on the defendant,’ ‘the forum State’s interest in adjudicating the dispute,‘ ’the plaintiff‘s interest in obtaining convenient and effective relief,’ ‘the interstate judicial system’s interest in obtaining the most efficient resolution of controversies,‘ and the ’shared interest of the several States in furthering fundamental substantive social policies.‘ These considerations sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required."
Burger King, supra at 476-77 (citations omitted). Thus, where litigation relates to the defendant’s activities purposely directed at the forum State, the sufficiency of these activities or contacts reasonably to forewarn him of the possibility of suit in the forum, weighed in combination with other factors relevant to affording substantial justice, will determine whether the State may constitutionally exercise personal jurisdiction over the defendant.

We hold that, in this case, the defendant does have sufficient forum contacts related to the litigation in question to raise in him the reasonable expectation of being haled into a New Hampshire court. First, plaintiffs‘ suit seeks damages from Dr. Kingston in tort. The acts allegedly constituting the tort (examination, diagnosis, treatment, failure to follow up, and early discharge) arguably occurred entirely in Maine. However, the injury or damage for which the plaintiff now seeks recovery (the growth and spread of cancer necessitating radical surgery and resulting in nerve damage, disfigurement, and risk of recurrence) apparently occurred predominantly in New Hampshire. Many courts have held that in personam jurisdiction over a foreign defendant in tort suits does not offend due process merely because the injury alone occurred in the forum State. Due process concerns may be satisfied provided that it was reasonably foreseeable that the consequences of the defendant’s out-of-state activities would manifest themselves in the forum. Tavoularis, 123 N.H. at 425-27, 462 A.2d at 113-14. Moreover, this court has specifically held that: "[b]ecause the long-arm statute must be construed in its broadest legal sense to give effect to legislative intent... the fact that only the alleged injury occurred within the State does not preclude New Hampshire courts from subjecting a non-resident to their jurisdiction under the long-arm statute." Id. at 426, 462 A.2d at 112.

In examining and counseling Nancy Phelps at his Maine office before sending her home to New Hampshire, the defendant could have had no doubt that any injurious consequences of his actions would be felt in New Hampshire. Such a result of treating a New Hampshire resident is in no sense fortuitous or unexpected. While we do not hold that defendant‘s conduct could by itself confer jurisdiction simply because the plaintiff is a New Hampshire resident, it is nevertheless a contact relevant to the jurisdictional inquiry.

Moreover, defendant’s relevant contacts with New Hampshire are not limited to the fact that it was reasonably foreseeable that the injuries allegedly resulting from his care would ultimately become apparent in this State. Dr. Kingston, who had lived and practiced in New Hampshire for approximately three years, continued to hold a valid New Hampshire dental license even after he moved to South Berwick, Maine and set up a practice in Eliot, Maine, directly across the New Hampshire border. He voluntarily placed an advertisement in the Yellow Pages, which he knew or should have known circulated in Portsmouth and the surrounding towns of New Hampshire, as well as in Eliot, Maine, as follows:

"‘ALL PHASES OF DENTISTRY’
PRACTICED WITH GENTLENESS
FAMILY & PREVENTIVE DENTISTRY
COSMETIC DENTISTRY
TMJ & MYOFACIAL PAIN DISFUNCTION IMMEDIATE EMERGENCY CARE
DAY, EVENING AND SAT. APPTS AVAIL.
NEW PATIENTS ALWAYS WELCOME"

Presumably at least in part as a result of his advertising, his New Hampshire license, his previous New Hampshire practice, and his close proximity to the border, approximately 7 12% of the defendant‘s patients were New Hampshire residents. However, it should be made clear that Dr. Kingston’s Yellow Page advertisement, by itself, would not subject him to New Hampshire jurisdiction. Rather, it is the totality of his contacts with New Hampshire that determines that he is subject to suit in New Hampshire.

The fact that Nancy Phelps happened to visit the defendant as a result of a conversation with his receptionist, as opposed to having read his paid Yellow Pages advertisement, is unimportant. The defendant, through various means, purposely sought and made himself attractive to New Hampshire residents who, in the ordinary course of their day-to-day activities, found it necessary to seek a dentist possessing particular skills. Nancy Phelps was not the resident of some remote State (with which the defendant had no related contacts) who, finding herself suddenly in need of dental services, arrived on his doorstep solely by happenstance. She was precisely the type of person whose business the defendant actively sought to obtain. In short, the effects of the alleged malpractice were felt in New Hampshire by a plaintiff of the type that defendant‘s forum contacts sought to attract. See Soares v. Roberts, 417 F. Supp. 304, 307 (D.R.I. 1976). It is therefore neither fortuitous nor in any way surprising that the defendant is now asked to appear to defend charges in New Hampshire that arise out of his treatment of Nancy Phelps, and it is entirely just that we require him to do so.

While we need not address the issue, in light of our holding above, we note in passing that, contrary to the plaintiffs’ contentions, the fact that defendant‘s part-time receptionist suggested his name to Nancy Phelps and made her an appointment with him does not constitute a forum contact out of which this litigation arises. Plaintiffs do not allege that the defendant made patient solicitation part of his receptionist’s duties. The receptionist does not appear to have been employed as an agent for this purpose, and to hold that her actions, in and of themselves, constitute contacts relevant to the due process inquiry would be to construe as purposeful an event over which the defendant apparently had no control.

In addition to the defendant‘s New Hampshire contacts related to this litigation, other factors support our decision that the exercise of personal jurisdiction over him comports with the "fair play and substantial justice" requirement of International Shoe. Particularly relevant are the short distance between the defendant’s home and office and the Rockingham County Superior Court in New Hampshire, where this case would be tried, the fact that by according personal jurisdiction over the defendant in New Hampshire we enable the plaintiff to consolidate two related malpractice actions, and the fact that the State of New Hampshire has a significant interest in affording injured New Hampshire plaintiffs a forum in which to litigate the question of liability for their injuries.

Therefore, because of the significant connection among Dr. Kingston, this State, and the litigation in question, we hold that the United States Constitution and the laws of this State permit the New Hampshire courts to exercise in personam jurisdiction over the defendant. In view of this result, we need not address the plaintiffs‘ equal protection argument.

Reversed and remanded.

All concurred.

KEVIN DAVIS, Plaintiff, Appellee,

BROWNING-FERRIS INDUSTRIES, INC., Defendant, Appellant.

No. 89-1943.

898 F.2d 36

UNITED STATES COURT OF APPEALS,

FIRST CIRCUIT.

Heard Feb. 6, 1990.

Decided March 27, 1990.

In jury trial on issue of damages in personal injury action, the United States District Court for the District of New Hampshire, Martin F. Loughlin, J., refused defendant's request to charge on matter of discounting future earnings and refused post verdict relief. On appeal, the Court of Appeals, Bailey Aldrich, Senior Circuit Judge, held that: (1) even if refusal to charge jury on discounting lost earnings damages was error under New Hampshire law, error was not prejudicial, and (2) under applicable federal law, plaintiff's counsel could not state amount of ad damnum to jury.

Affirmed.

Matthias J. Reynolds with whom James M. Costello and Devine, Millimet, Stahl & Branch, Manchester, N.H., were on brief for defendant, appellant.

Stephen E. Borofsky with whom John M. Lewis, Jennifer Rood and The Legal Clinics, Professional Ass'n, Manchester, N.H., were on brief for plaintiff, appellee.

JUDGES: BREYER, ALDRICH and SELYA, Circuit Judges.

AUTHOR: BAILEY ALDRICH, Senior Circuit Judge.

Plaintiff Kevin Davis, a laborer, was injured when a platform on which he was standing came out from under him, leaving him with a permanent disc problem. The basis of defendant's liability does not appear, but it was conceded after a summary trial. Thereafter damages were tried to a jury. The jury answered special questions, reaching a total figure of $238,000, $136,000 being for lost earnings over a 26 year work expectancy. While, in every area--e.g., swimming fee expense the rest of his life, although plaintiff had already stopped swimming for over a year--plaintiff presented his damages in day-glo paint, we would not overrule the court's finding that they were not unacceptably excessive. We do, however, have one difficulty. Plaintiff pinned his lost earnings figure on the difference between the hourly rate of a full-time job he was holding down and the rate for a new job he did not receive because of his injury, multiplied, without discounting, for 26 years. No economic experts had been called by either party. Plaintiff argued to the jury in favor of straight multiplication. Defendant argued there must be discounting, saying, not only forcefully, but in violation of a basic rule of attorney's conduct, "I'm going to tell you that I think this is outrageous for many reasons." [FN1] The court refused defendant's request to charge as to discounting, and refused post verdict relief, either to perform a discounting itself, or to grant a new trial. Defendant appeals. We affirm.

FN1. Cf. Willey v. Ketterer, 869 F.2d 648, 650 (1st Cir.1989), a New Hampshire case, citing long-existing, and uniform, bar associations' rules of ethics, that counsel must not express personal opinions.

In the matter of discounting future earnings, we remarked in Brochu v. Ortho Pharmaceutical Corp., 642 F.2d 652, at 664 n. 17 (1st Cir.1981), that this was a difficult subject, adding, "New Hampshire has apparently not examined the issue of discounting in recent years." This is still the case. The court got off, long ago, to a somewhat confusing start. In Humphreys v. Ash, 90 N.H. 223, 6 A.2d 436 (1939), the court charged the jury it "should award only the present worth of any element of damages." The supreme court reversed, saying, at page 230, "It is not to be assumed that average jurors have mathematical knowledge sufficient for an understanding of the words, or enough skill to calculate present worth." Seven months later, in Roussin v. Blood, 90 N.H. 391, 10 A.2d 224 (1939), the court said, at 393-94,

They were told to discount, but not at what rate, nor was specific evidence given to them regarding the standard rate. However the jury may have been supposed to have some knowledge of current interest rates. Most men know something about savings accounts and about the rates at which towns are able to borrow money. With such common knowledge the jury could have calculated the discount with approximate accuracy, and the verdict that they gave is conformable to the rule laid down in Humphreys v. Ash.

We get little more help out of the more recent cases. At the same time, there is none that holds it is not error to refuse altogether to charge that recovery is to be limited to the present worth of future damages. Our question is whether refusal was prejudicial error in this particular case.

As a matter of arithmetic, plaintiff's straight calculations for 26 years, undiscounted, produced the figure of $174,803. The jury returned $136,000. Accordingly, while there could be other explanations, seemingly it did discount. Although on straight interest tables, even this figure was large, there could be other discounting methods. See Roussin; Ortho. Any concern we might have to pursue this subject further, or to find the court's failure to charge on the matter prejudicial, is offset by our noting that the jury had the benefit of defendant's improper summation. We leave it at that.

We will deal, however, with plaintiff's disclosing the ad damnum to the jury. Following the New Hampshire state practice, the court charged the jury,

[W]e apply New Hampshire law in this case; an attorney can state the amount of the ad damnum, but I must caution you in this regard. This is not evidence in this case. But you can consider it.

Defendant did not except, and we do not consider it plain error, but we do state that this charge was error. Since, by the very hypothesis, this is a matter of procedure, the federal law applies, even though a diversity case. Morris v. Getscher, 708 F.2d 1306, 1309 (8th Cir.1983); Smith v. Mill Creek Court, Inc., 457 F.2d 589 (10th Cir.1972); cf. Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). The ad damnum is, blatantly, an opinion of counsel. Cf. Waldorf v. Shuta, 896 F.2d 723 (3d Cir.1990) (plaintiff's counsel may not, in closing argument, request a dollar figure for pain and suffering). Indeed, it is even less; it is a mere psychological expression of hope. In addition to the opinion rule, it could well be said to violate Fed.R.Civ.P. 11, as not being "well grounded in fact." It was error for the court to inform the jury, "[Y]ou can consider it." On what basis was it to consider it? It would still be wrong to have the ad damnum disclosed to the jury and tell it it could not consider it; plaintiff hoping, meanwhile, that it, nevertheless, would do so, which it well might. The jury should not know the ad damnum. As we said in Ouelette v. Champagne, 296 F.2d 636, 638 (1st Cir.1961), "[There is a] general impression among laymen that the amount of the ad damnum measures the importance of the case." Cf. Aggarwal v. Ponce School of Medicine, 745 F.2d 723, 727 (1st Cir.1984). At that time we failed to note that we were not bound by the state rules of pleading. We now exclude it.

Affirmed.

APPEAL OF DONNA L. HURST

No. 93-862

139 N.H. 702, 660 A.2d 1143, 1995 N.H. LEXIS 74

July 6, 1995, Decided

Released for Publication August 2, 1995.

Engel, Gearreald & Gardner, P.A., of Exeter (Mark S. Gearreald on the brief and orally), for the petitioner.

Roussos, Hage & Hodes, P.A., of Manchester (Edward F. Patch and John B. FitzGerald, III on the brief, and Mr. Patch orally), for Arthur’s Market.

Jeffrey R. Howard, attorney general (Mark P. Hodgdon, assistant attorney general, on the brief), for the State, as amicus curiae.

McLane, Graf, Raulerson & Middleton, P.A., of Portsmouth (J. Kirk Trombley and Kevin M. Leach on the brief), for the New Hampshire Trial Lawyers Association, as amicus curiae.

AUTHOR: JOHNSON

The petitioner, Donna L. Hurst, appeals a decision by a panel of the New Hampshire Department of Labor Compensation Appeals Board (the panel) denying her claim for workers‘ compensation benefits. We reverse and remand.

The petitioner was employed as a meat cutter for Arthur’s Market when she injured herself. Arthur‘s Market maintained that the petitioner’s condition bore no causal relation to her employment and refused to provide benefits. The petitioner‘s case was heard by a hearings officer, who ruled in favor of Arthur’s Market. The petitioner appealed to the compensation appeals board.

Before the board hearing began, the petitioner filed a motion requesting the disqualification of any panel members who were "represented in the adjusting of cases by counsel hired to represent the employer in this matter." Nicholas Georges, an adjuster for the New Hampshire Auto Dealers Association, was a member of the panel. The following colloquy ensued:

[Chairperson]: Mr. Georges, what is your relationship to Attorney Fitzgerald [counsel for Arthur‘s Market, the employer of Donna Hurst]?

Mr. Georges: They do, or perform defense work for my company at various times.

[Chairperson]: I believe the standard required of this panel is actual bias not appearance of impropriety and I’m inclined to continue the prior practice.

The petitioner‘s motion was denied. The panel held a hearing and concluded that the petitioner had failed to prove that her injury was work-related or that it was an occupational disease. The petitioner filed a motion for a rehearing, which was denied.

On appeal she argues: (1) that the panel chairperson should have disallowed Georges’ participation in her case; (2) that the panel erred in finding that she did not sufficiently establish legal and medical causation; and (3) that the panel erred in holding that she did not have an occupational disease.

Because we remand for a new hearing, we need only address the first issue. We base our decision on RSA 281-A:42-a, I (Supp. 1993) (amended 1993), which requires that "no person who is an interested party or an employee of an interested party shall participate as a member of [a compensation appeals board panel]."

The panel chairperson found that the statutory requirement that panel members have at least five years experience in the area of workers‘ compensation creates an "inevitable" situation where panel members often "know or have previously been in a professional relationship with persons presenting matters to a Board Panel." See RSA 281-A:42-a, I. He therefore concluded that "the standard applied to qualify a juror was not the appropriate standard with which to test a Board member’s qualification to sit with a panel," and denied the petitioner‘s motion to disqualify Georges.

"We do not overturn agency decisions or orders, absent an error of law, unless the court is satisfied, by a clear preponderance of the evidence before it, that such order is unjust or unreasonable," Appeal of Stetson, 138 N.H. 293, 295, 639 A.2d 245, 247 (1994) (quotation omitted); RSA 541:13 (1974).

The petitioner argues that Georges’ presence on the panel created an appearance of impropriety in violation of her right to a fair and impartial hearing under the State and Federal Constitutions. Arthur‘s Market argues that the standard for disqualification is actual bias, which can be established only by proving that the panel member has a direct interest, either personal or pecuniary, in the outcome of the case.

An administrative official acting in a quasi-judicial capacity must be disqualified if he or she "is an interested party or an employee of an interested party." RSA 281-A:42-a, I. An official is an "interested party" if he or she cannot satisfy two requirements. First, the official must not have a direct personal or pecuniary interest that is immediate, definite, and capable of demonstration. State ex rel. Thomson v. State Bd. of Parole, 115 N.H. 414, 422,342 A.2d 634, 639 (1975). Second, the official must not have any "connection with the parties in interest, as would be likely, improperly, to influence [his or her] judgment." N.H. Milk Dealers’ Ass‘n, 107 N.H. 335, 338,222 A.2d 194, 198 (1966) (quotation omitted); see Totty v. Grantham Planning Board, 120 N.H. 388, 390, 415 A.2d 687, 688 (1980). Whether a direct interest or a connection requires disqualification depends upon the particular circumstances of the case. N.H. Milk Dealers’ Ass‘n, 107 N.H. at 339, 222 A.2d at 198.

The petitioner contends that Georges had a business connection to Arthur’s Market‘s counsel that would be likely to affect his judgment. We hold that the current and ongoing relationship between Georges and the attorney was such that it "would be likely" to influence his opinion and thus necessitated his removal from the panel. See Id. at 338, 222 A.2d at 198.

We note that in recent years certain quasi-judicial administrative boards have been accorded the final fact-finding voice in determining important rights between litigants, subject only to this court’s review for conclusions "affected by an error of law or clearly erroneous." Appeal of Swift, 134 N.H. 177, 179, 589 A.2d 590, 592 (1991); see RSA 282-A:67, V (Supp. 1994); RSA 281-A:43, I(c) (Supp. 1994). The members of these administrative bodies are paid reasonably on a daily basis for their services, unlike various town and city planning boards and zoning boards of adjustment. See, e.g., RSA 282-A:62, I (Supp. 1994); RSA 281-A:42-a, III. In the past, appeals from these administrative agencies were made in the first instance to the superior court, which would conduct a de novo review. See, e.g., RSA 282:5(G) (1977) (repealed 1981); RSA 281:37, I (1977) (repealed 1988).

We need not base our decision in this case on constitutional grounds. We conclude, however, that a board, such as the one in this case, should carefully consider the words of this court in New Hampshire Milk Dealers‘ Association, 107 N.H. 335, 222 A.2d 194, in which we said:

Since 1784, Article 35th, Part I of our Constitution has provided that "It is the right of every citizen to be tried by judges as impartial as the lot of humanity will admit." We subscribe to what was said in that respect by this court as far back as 1851 that it is an obvious principle of justice that all persons who are to act as judges, should be impartial, without any interest of their own in the matter in controversy, and without any such connection with the parties in interest, as would be likely, improperly, to influence their judgment. There is no doubt that these principles apply to the members of [an administrative board] acting in a quasi-judicial capacity . . . .

Id. at 338-39, 222 A.2d at 197-98 (quotation omitted).

Reversed and remanded.

All concurred.

APPEAL OF MARK S. GRIFFIN

140 N.H. 650

February 12, 1996

Engel, Gearreald & Gardner, P.A., of Exeter (Mark S. Gearreald on the brief and orally), for the petitioner.

Devine, Millimet & Branch, P.A., of Manchester (Julie A. Quigley on the brief, and Douglas N. Steere orally), for the respondent, Kidder Building & Wrecking, Inc.

AUTHOR: BROCK, C.J.