The Ninth Circuit’s decision last year in Mazza v. American Honda Motor Co. [666 F.3d 581] (a case I argued) made it more difficult to sustain a nationwide class action under California consumer protection laws. Applying California “governmental interest” choice-of-law principles, the Mazza court held that the jurisdiction having the greatest interest in supplying the rule of decision was the one in which a consumer received misleading communications, made her purchase, and sustained any injury—not the location of the company headquarters from which the communications “emanated.”
In Maniscalco v. Brother International (USA) Corp., the Third Circuit reached a similar conclusion applying New Jersey’s (and the Restatement’s) “most significant relationship” choice-of-law test. The court of appeals granted summary judgment against a South Carolina resident seeking to sue (and represent a nationwide class) under the New Jersey Consumer Fraud Act. In doing so, the court rejected In re Mercedes-Benz Tele Aid Contract Litigation, 257 F.R.D. 46 (D.N.J. 2009), a much-cited district court decision that had permitted a nationwide class action to proceed under New Jersey law.
In Maniscalco, the plaintiffs had claimed that Brother had misled consumers by concealing two purported defects in its printers. The plaintiffs asserted a claim under New Jersey law on the theory that the various alleged acts of concealment had emanated from Brother’s New Jersey headquarters. The district court dismissed the case, and the Third Circuit affirmed on the ground that South Carolina law governed the plaintiff’s claim.
The Third Circuit found that three of the six factors in Section 148(2) of the Restatement weighed strongly in favor of applying the law of South Carolina. Specifically, (1) the plaintiffs had received and (2) relied on the alleged representations, and where (3) the tangible object of the parties’ transaction was located. Weighing less heavily was the Restatement’s preference for the domicile of the plaintiff over that of the defendant. Finding a fifth factor irrelevant because the parties were not litigating over a contract, the court examined the final factor—the place of the “alleged omissions.” Assuming that the plaintiff was correct that the omissions took place in New Jersey rather than South Carolina, the court of appeals held that single factor insufficient to overcome the others, especially because nothing else having to do with the parties’ relationship took place in New Jersey.
The Third Circuit also held (in terms echoing Mazza) that general choice-of-law policies and “the interests of interstate comity” favored application of South Carolina law because “[a]pplying New Jersey law to every potential out-of-state claimant would frustrate the policies of each claimant’s state,” and the “interest of South Carolina in having its law apply to its own consumers outweighs the interests of New Jersey in protecting out-of-state consumers from consumer fraud.”
In declining to “open the floodgates to nation-wide consumer fraud class actions brought by out-of-state plaintiffs involving transactions with no connection to New Jersey other than the location of the defendant’s headquarters,” the Third Circuit put up another impediment to plaintiffs’ lawyers seeking to certify nationwide classes under one state’s consumer protection laws. Between them, Maniscalco and Mazza suggest that nationwide class certification under state law will be an uphill battle in forums applying either of two prominent modern choice-of-law analyses