Laches Cannot Bar a Claim That is Filed Within the Applicable Statute of Limitations

Fox v. Millman, 210 N.J. 401 (2012).  This case is one of many cut from a similar pattern:  an employee subject to a duty of loyalty to his employer left that job for a new one and provided a customer list of the old employer to the new employer.  The former employer sued both the former employee and his new employer.

Though the Supreme Court’s unanimous opinion, written by Justice Hoens, holds that a subsequent employer has no duty “to undertake an inquiry … as to the source of the customer list” provided to it by a new employee, an important ruling by itself, the key aspect of the opinion is its announcement that the doctrine of laches cannot be used to bar a case that is filed within the applicable statute of limitations.  Justice Hoens explained that laches, an equitable doctrine, has historically been employed where “equity, or fairness, demanded it,” and has been used to grant plaintiffs a right broader than what would have been available if a statute of limitations were applied strictly.

But here there was an attempt to use laches to block a lawsuit filed within the statute of limitations period.  After a detailed discussion of laches, including the differences in its application in cases in equity and cases at law, Justice Hoens concluded that laches cannot defeat a case that was filed within the statute of limitations.  Allowing that to happen would defeat “statutes of limitations that have been fixed by the Legislature to create defined and regularly applicable periods against which to determine timeliness.”

A footnote in the Court’s earlier opinion in Lavin v. Hackensack Bd. of Educ., 90 N.J. 145 (1982), appeared to support the idea that laches could override a statute of limitations.  Justice Hoens explained, however, that Lavin was “limited to making a laches approach available only when there is no governing statute of limitations.”