In Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), plaintiff Gaines Huson filed a federal lawsuit against Chevron Oil Co. in 1968 because Huson was injured in 1965 while working on an artificial island drilling rig owned and operated by Chevron. The rig was located on the Outer Continental Shelf off the coast of Louisiana. The federal district court granted Chevron's summary judgment motion on the ground that Louisiana's one-year statute of limitations barred Huson's action. (Chevron Oil Co. v. Huson, 404 U.S. at pp. 98-99.)
The appellate court reversed, holding that the United States Supreme Court's interpretation in a prior case of the Outer Continental Shelf Lands Act (Lands Act), which governs injuries on fixed structures on the Outer Continental Shelf, does not require application of the state statute of limitations. ( Id. at p. 99.)
Even though the United States Supreme Court held that the federal Lands Act requires state statute of limitations to be applied to personal injury actions, it affirmed the appellate court decision. ( Chevron Oil Co. v. Huson, supra, 404 U.S. at p. 100.) It noted that the prior decision relied on by the appellate court "was not only a case of first impression in this Court under the Lands Act, but it also effectively overruled a long line of decisions by the Court of Appeals for the Fifth Circuit. . . . " ( Id. at p. 107.)
"When Huson was injured, for the next two years until he instituted his lawsuit, and for the ensuing year of pretrial proceedings, these Court of Appeals decisions represented the law governing his case. It cannot be assumed that he did or could foresee that this consistent interpretation of the Lands Act would be overturned. The most he could do was to rely on the law as it then was. 'We should not indulge in the fiction that the law now announced has always been the law and, therefore, that those who did not avail themselves of it waived their rights.'" (Ibid.)
The Supreme Court held that retroactive application of the state one-year statute of limitations would deprive Huson of a remedy based on unforeseeable superseding legal doctrine, and it would be inequitable to hold that Huson "'slept on his rights' at a time when he could not have known the time limitation that the law imposed upon him." ( Id. at p. 108.) "Nonretroactive application here simply preserves plaintiff's right to a day in court." (Ibid.)
"In our cases dealing with the nonretroactivity question, we have generally considered three separate factors. First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it has been stressed that 'we must . . . weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.' Finally, we have weighed the inequity imposed by retroactive application, for 'where a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the "injustice or hardship" by a holding of nonretroactivity.'" (Chevron Oil Co. v. Huson, supra, 404 U.S. at pp. 106-107.)
The Court identified three factors to be considered when dealing with the issue of nonretroactivity.
"First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed."
The second factor considers whether in light of the "history . . . purpose and effect" of the rule in question its operation will be furthered or retarded by retrospective application.
The third factor weighs "the inequity imposed by retroactive application" and whether it would produce " '. . . substantial inequitable results . . . "injustice or hardship" . . . ." (Chevron Oil Co. v. Huson, supra, 404 U.S. at pp. 106-107 92 S.Ct. at p. 355.)