The opinion of the court was delivered by: Debevoise, Senior District Judge
This matter comes before the Court on two motions submitted by Defendant, Mercedes-Benz U.S.A., LLC ("Mercedes"). In the first, Mercedes argues that a recent decision by the Court of Appeals for the Third Circuit requires decertification of the class of plaintiffs*fn1 created by the Court's April 24, 2009 Opinion and Order. In the event the Court refuses to decertify the class, Mercedes contends in its second motion that the class definition should be narrowed to exclude any individual whose "Tele Aid" service -- an emergency response system which links subscribers to road-side assistance operators by using a combination of global positioning and cellular technology -- was terminated prior to December 31, 2007.
For the reasons set forth below, the Court will deny Mercedes's Motion for Decertification. The class definition will be clarified in two ways: (1) the date after which a plaintiff must have purchased or leased the vehicle in question will be changed from August 8, 2002 to August 22, 2002, and (2) persons or entities that purchased or leased a pre-owned vehicle after Decemeber 2006 will be excluded from the class. Moreover, the Court will certify an interlocutory appeal of two issues: (1) whether a district court may entertain a motion for reconsideration of an order certifying a class after a request for interlocutory appeal of that order pursuant to Federal Rule of Civil Procedure 23(f) has been denied, and (2) whether the Court was correct in its April 24, 2009 ruling that Restatement 148(2) governs the choice of law analysis under the "most significant relationship" test in consumer fraud actions in which the misrepresentations or omissions at issue were made and received in different states.
The circumstances underlying this litigation are laid out in detail in the Court's April 24, 2009 Opinion. See In re Mercedes-Benz Tele Aid Contract Litig., 257 F.R.D. 46 (D.N.J. 2009). For the sake of brevity, the Court incorporates by reference the "background" section of that decision, and will refrain from revisiting the majority of the facts contained therein.
A. FCC Rule Change and Discontinuation of Analog Service
Plaintiffs purchased Mercedes model year 2002-2006 vehicles equipped with analog-only Tele Aid Systems and subscribed to that service until being informed that it would be discontinued at the end of 2007.*fn2 In order to receive Tele Aid service, Plaintiffs were required to sign a Subscriber Agreement that was separate from their purchase or lease contracts. Mercedes offered free Tele Aid service for one year, after which Plaintiffs were required to periodically renew their subscriptions by pre-paying fees corresponding to a given number of years of Tele Aid service. See (Pls.' Br. Supp. Mot. Class Certification, Decl. of Geoffrey Munroe ("Munroe Decl."), Exs. 19-22).
The Tele Aid systems installed in Plaintiffs' vehicles used an analog signal provided by AT&T Wireless Services, Inc. ("AT&T"), as part of a contract between that company and Mercedes. Prior to August 8, 2002, federal regulations required wireless carriers to provide both analog and digital signals over their networks. However, on August 8, 2002, the Federal Communications Commission ("FCC") adopted a rule that abandoned that requirement by stating that carriers would no longer be required to provide analog service after a five-year "sunset period" ending on February 18, 2008.*fn3 That rule change was vigorously opposed by Mercedes, which filed several objections during the rulemaking process and whose representatives met with FCC officials on at least two occasions prior to the agency's final adoption of the new regulation.
Mercedes continued to manufacture and sell vehicles equipped with analog-only Tele Aid systems after the FCC's August 8, 2002 ruling, but did not inform its customers that wireless carriers would no longer be required to provide the analog service on which their Tele Aid systems depended after February 18, 2008. In fact, Mercedes admits that it did not publicly acknowledge the FCC rule change and the impending obsolescence of analog-only Tele Aid systems until 2006, when it posted information regarding those developments on its website. Compare (Def.'s Br. Supp. Mot. Decertify 22) (setting the date of that disclosure as "June 2006") with (Def.'s Br. Opp'n Class Certification 9) (stating that the information was posted in "November 2006.") Owners of vehicles equipped with analog-only Tele Aid systems were not personally informed until their Tele Aid subscriptions needed to be renewed, meaning that in some cases individual subscribers did not receive notice of the FCC rule change and the imminent cessation of their Tele Aid service until late 2007. See (Munroe Decl., Ex. 26 at 1) (letter from Mercedes to a Tele Aid subscriber dated September 7, 2007 stating that "in accordance with a recent Federal Communications Commission (FCC) ruling, traditional analog wireless networks that support some Tele Aid systems, including the one used in your vehicle . will no longer be required to be maintained by wireless carriers.")
The disclosures Mercedes sent to Tele Aid subscribers in 2006 and 2007 were part of a "customer ramp-down" plan initiated in cooperation with AT&T. In meetings between the two companies as early as August 22, 2002 -- a mere 14 days after the FCC's ruling -- AT&T made it clear that it would "shut down" its analog network as soon as the requirement that it provide such service expired. (Id., Ex. 12 at 3.) It was not until November 28, 2006, however, that Mercedes stopped selling new vehicles equipped with analog-only Tele Aid systems. On that date, the companies entered into a contract whereby Mercedes, in addition to halting new vehicle sales, also agreed to stop renewing analog-only Tele Aid Subscriber Agreements after June 30, 2007 and terminate service to all remaining subscribers on December 31, 2007. (Id., Ex. 11 at 2); see also (Id., Ex. 14 at 3) (describing Mercedes's plans for a "hard shutdown" of all analog Tele Aid service on December 31, 2007.) In exchange, AT&T reduced the fees charged for its services by $4.8 million. (Id., Ex. 14 at 2.)
In order to mitigate its impending loss of the revenue from analog Tele Aid subscriber fees, Mercedes on November 14, 2006 informed its parts managers that it would offer a "Digital Tele Aid Upgrade program" whereby customers whose vehicles contained an analog-only system could choose to purchase new hardware that would be unaffected by the discontinuation of analog service at a price of approximately $1,000 per vehicle. The company characterized the program as "a significant customer pay revenue opportunity," and stated that over 720,000 automobiles containing analog-only Tele Aid systems -- including all 2002-2004 and some model year 2005 and 2006 Mercedes vehicles -- were eligible for the digital upgrade. (Id., Ex. 18.)
Thus, subscribers were faced with a choice: bear the expense of upgrading to digital equipment or lose the benefits of Tele Aid service at the end of 2007.
This multi-district litigation is comprised of ten separate actions, which were originally filed in six different states. After those actions were consolidated and transferred to this Court pursuant to 28 U.S.C. § 1407, the named Plaintiffs were instructed to "file a Consolidated Amended Complaint in this Consolidated Action, which shall supersede the complaints filed in each of the individual Actions." (Case Management Order of April 11, 2008, ¶ H.) Plaintiffs complied, and on May 2, 2008 filed a Consolidated Class Action Complaint asserting claims for unjust enrichment and consumer fraud.*fn4 See (Consol. Compl. ¶¶ 64-77, 83-93.)
In light of the FCC's August 8, 2002 rule change and the aforementioned communications in which AT&T informed Mercedes that it would discontinue analog service as soon as it was allowed to do so, Plaintiffs alleged in their Consolidated Complaint that Mercedes knew or should have known as early as August 8, 2002 that analog Tele Aid systems would become obsolete in 2008, but continued to the market those systems without disclosing their future obsolescence to buyers of 2002-2004 and some model year 2005 and 2006 vehicles. Based on that allegation, Plaintiffs asserted causes of action for consumer fraud and unjust enrichment as the representatives of a purported nationwide class made up of individuals who purchased Mercedes vehicles equipped with analog-only Tele Aid systems between August 8, 2002 and the company's acknowledgment of the FCC ruling and impending obsolescence of analog Tele Aid, which was made in letters sent to subscribers in 2006 and 2007.
C. Motion for Class Certification
The parties on October 1, 2008 submitted a proposed Stipulation and Order setting forth a plan for the briefing of the Motion for Class Certification that the Plaintiffs planned to file shortly thereafter. That Stipulation and Order, which the Court entered on October 3, 2008, stated that the parties would file separate briefs relating to the issues of (1) which state's substantive law should apply to Plaintiffs' claims and (2) whether the proposed class met the requirements of Federal Rule of Civil Procedure 23.
In their briefs regarding class certification and choice of law, Plaintiffs contended that this case is particularly well-suited to class treatment because (1) their claims "arise from a single course of conduct that affect[ed] large numbers of consumers" and (2) the costs to each class member of pursuing his or her suit would exceed any potential recovery. (Pls.' Br. Supp. Mot. Class Certification 14-16.) In support of the first point, Plaintiffs noted that all of Mercedes's conduct relating to Tele Aid was planned and coordinated by a "Telematics team" located in Montvale, New Jersey. (Pls.' Br. Regarding Choice of Law 4.) That team coordinated with AT&T on issues relating to the discontinuation of analog service, determined that customers should be charged approximately $1,000 for an upgrade to digital equipment, and was responsible for informing Tele Aid subscribers of the impending obsolescence of their analog devices. With respect to the second argument, Plaintiffs pointed out that the pecuniary loss suffered by each class member as a result of Mercedes's alleged misconduct consists only of the Tele Aid activation and subscription fees paid in anticipation of the continued operation of that system and the cost of a digital upgrade, and a refusal to grant class certification would therefore effectively preclude potential class members from pursuing their claims because doing so individually would be economically irrational.
Mercedes asserted two main arguments in opposition to Plaintiffs' request for class certification. First, the company contended that the Court should refuse to certify a nationwide class because each Plaintiff's claim is governed by the law of his or her home state, and the differences between those laws would render class treatment inappropriate. Additionally, Mercedes argued that Plaintiffs cannot demonstrate various elements of their claims using evidence common to all members of the class.
In addition to its arguments relating to class certification and choice of law, Mercedes on December 8, 2008 submitted a Motion to Exclude the Testimony of Dr. Russell L. Lamb, one of the experts on which Plaintiffs relied in their Motion for Class Certification. Dr. Lamb's testimony dealt with the number of potential class members. Mercedes contended that Dr. Lamb (1) ignored segments of the proposed class, (2) came to conclusions regarding common injury and damages that are unreliable and are not supported by classwide evidence, (3) impermissibly used aggregate damages as the measure of possible recovery, and (4) violated discovery rules by failing to produce material from a related case that he relied upon while formulating his opinions. On the basis of those allegations, the company argued that Dr. Lamb's testimony must be excluded pursuant to Federal Rule of Evidence 702. In support of its motion, Mercedes submitted an expert declaration by Dr. M. Laurentius Marais, which was dedicated solely to attacking the conclusions contained in Dr. Lamb's report.
D. April 24, 2009 Opinion
In a ruling dated April 24, 2009, the Court granted Plaintiffs' motion and certified a class consisting of:
All persons or entities in the United States who purchased or leased a Mercedes-Benz vehicle equipped with an analog-only Tele Aid system after August 8, 2002, and
(1) subscribed to Tele Aid service until being informed that such service would be discontinued at the end of 2007, or
(2) purchased an upgrade to digital equipment.
See Mercedes, 257 F.R.D. at 75.
In reaching that decision, the Court held that New Jersey law applied to Plaintiffs' unjust enrichment and consumer fraud claims.
As a preliminary matter, the Court found in its April 24, 2009 Opinion that Mercedes's Motion to Exclude the testimony of Plaintiffs' expert, Dr. Lamb, should be denied as moot. Dr. Lamb's testimony pertained only to the question of whether the proposed class was numerous enough to satisfy the requirements of Federal Rule of Civil Procedure 23(a)(1), and argued that a class should be certified because reasonable consumers would have relied on the alleged misrepresentations made by Mercedes in marketing Tele Aid in choosing to purchase a vehicle made by the company. Given the Court's ruling that New Jersey law applied to Plaintiffs' consumer fraud claims and the fact that the New Jersey Consumer Fraud Act ("NJCFA"), N.J. Stat. Ann. §§ 56:8-1 et seq., does not require a showing of individualized reliance -- along with the fact that Mercedes's own records demonstrated that the proposed class included hundreds of thousands of individuals -- Dr. Lamb's testimony was not relevant to the question of whether a class should be certified. Since the expert testimony of Dr. Marais submitted by Mercedes was dedicated solely to attacking Dr. Lamb's conclusions, the Court found that it need not be considered. Mercedes, 257 F.R.D. at 49.
The Court's April 24, 2009 Opinion included a lengthy choice of law analysis in which it determined that New Jersey law applies to both of Plaintiffs' claims. As part of that analysis, the Court completed a test in which it applied the choice of law rules applicable in each of the siX states -- California, Illinois, Missouri, New Jersey, New York, and Washington -- in which one of the named Plaintiffs originally filed his or her suit to both the unjust enrichment and consumer fraud claims at issue in this litigation. See Id. at 55-69. Two of those states -- New York and California -- utilize a "government interest" test. As stated by the Court in its prior Opinion:
As a threshold issue, that test requires the Court to determine whether a conflict exists between the laws of the interested states. If no conflict exists, the Court will apply the law of its forum state -- in this case, New Jersey. In the event of a conflict, however, the Court must determine the interest of each state, in light of the policies underlying its laws, in having those laws applied to the issues presented by the case. After making that determination, the Court will apply the law of the state with the greatest interest in governing the particular issue to each of Plaintiffs' causes of action.
Id. at 56-57 (citations omitted).
The other four states in which the suits that make up this multi-district litigation were originally filed -- Illinois, Missouri, New Jersey, and Washington -- follow the "most significant relationship" test laid out in the Restatement (Second) of Conflict of Laws ("Restatement") when determining which state's substantive law applies. The Court in its earlier ruling summarized the inquiry under that test, stating:
As with the "government interest" analysis utilized by California and New York, the Court's first step under the Restatement test is to determine whether a conflict exists between the laws of the various states. If no conflict exists, the Court will apply the law of New Jersey, its forum state. If the various state laws are materially different, however, the Court must weigh the considerations contained in the Restatement and determine which state has the "most significant relationship" to each cause of action asserted in the suit. In doing so, the Court must consider two sets of factors: (1) the general considerations articulated in § 6, and (2) those specific to each claim.
Id. at 57 (citations omitted).
After setting forth the two choice of law tests used by the states in which the actions that make up this litigation were originally filed, the Court proceeded to apply those tests to each of the causes of action asserted by the Plaintiffs. With respect to the Plaintiffs' unjust enrichment claim, the Court found that "[w]hile there are minor variations in the elements of unjust enrichment under the laws of the various states, those differences are not material and do not create an actual conflict." Id. (citing Agostino v. Quest Diagnostics, Inc., 256 F.R.D. 437, 463-64 (D.N.J. 2009); Powers v. Lycoming Engines, 245 F.R.D. 226, 231 (E.D. Pa. 2007)). Based on that finding, the Court held that New Jersey law applies to Plaintiffs' unjust enrichment claim.
Even if there were a conflict between the unjust enrichment laws of the various states in which the suits that make up this action were filed, the Court found that New Jersey law would apply. In doing so, it first examined the Plaintiffs' unjust enrichment claims under the "government interest" test used by New York and California. The Court held that each state from which potential Plaintiffs will be drawn has an equal interest in compensating its citizens, thus meaning that "the only means of distinguishing between the various state interests at play is by applying the law of the forum where the alleged wrongdoing took place." Id. at 58-59. Since Mercedes is headquartered in New Jersey and all of the company's actions relating to Tele Aid were coordinated from that state, the Court held that it had the greatest interest in having its law applied. Id. at 59 (citing Cooney v. Osgood Mach., Inc., 612 N.E.2d 277, 282-83 (N.Y. 1993) ("Assuming that the interest of each State in enforcement of its law is roughly equal . the situs of the tort is appropriate as a "tie breaker' because that is the only State with which both parties have purposefully associated themselves in a significant way.")).
In addition to the fact that it was the site of the alleged wrongdoing, the Court found that New Jersey possessed two interests in having its law applied that were not at stake for any other state, stating:
First, Mercedes is headquartered in New Jersey. Therefore, New Jersey is the only state that has an interest not only in compensating its citizens, but also in regulating a resident corporation. Furthermore, the benefits provided by Plaintiffs which they allege unjustly enriched the company -- their payments for Tele Aid subscriptions prior to the suspension of analog service and the $1,000 upgrade fee paid by individuals who converted to digital technology -- were accepted by Mercedes in New Jersey. The revenue received by the company was subject to New Jersey taxes, thus giving that state an economic stake in the outcome of this litigation beyond those of others, whose policies are implicated only with respect to their interest in assuring that their residents receive restitution for any benefits conferred on Mercedes by their citizens as a result of the company's alleged wrongful activities. In light of the foregoing, it is clear that the interactions between Mercedes and potential class members relating to Tele Aid were centered in New Jersey, and that New Jersey has a greater interest than any other jurisdiction in having its law applied to Plaintiffs' unjust enrichment claim. Therefore, New Jersey law would apply pursuant to the government interest test utilized by California and New York if the unjust enrichment laws of the various states from which class members will be drawn were in conflict.
Id. at 59 (citations omitted).
Similarly, the Court found that New Jersey law would apply to Plaintiffs' unjust enrichment claim under the "most significant relationship" test, which is used by Illinois, Missouri, New Jersey, and Washington. In doing so, it first examined Plaintiffs' claim in light of the factors set out in § 221 of the Restatement. That section states:
(1) In actions for restitution, the rights and liabilities of the parties with respect to the particular issue are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.
(2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
(a) the place where a relationship between the parties was centered, provided that the receipt of enrichment was substantially related to the relationship,
(b) the place where the benefit or enrichment was received,
(c) the place where the act conferring the benefit or enrichment was done,
(d) the domicil, residence, nationality, place of incorporation and place of business of the parties, and
(e) the place where a physical thing, such as land or a chattel, which was substantially related to the enrichment, was situated at the time of the enrichment.
These contacts are to be evaluated according to their relative importance with respect to the particular issue.
Restatement (Second) of Conflict of Laws § 221 (1971).
The Court found that the first, second, and fourth of the five factors enumerated in § 221 weighed in favor of applying New Jersey law, while the third consideration favored using the law of each Plaintiff's home state. The fifth consideration was neutral due to the fact that "physical thing[s]" at issue in Plaintiffs' unjust enrichment claim -- the Tele Aid systems contained in their automobiles -- were scattered across all 50 states and did not have any substantial connection to any one jurisdiction. Mercedes, 237 F.R.D. at 61.
In addressing the first two factors, the Court stated that:
Plaintiffs allege that all Mercedes's actions related to Tele Aid -- including its promotion and marketing, coordination between Mercedes and AT&T relating to the discontinuation of analog service, and the determination that customers would be charged roughly $1,000 to upgrade to digital equipment -- were made by a "Telematics team" based in Montvale, New Jersey. Thus, the relationship between the parties, at least insofar as it related to the Tele Aid systems at issue in this litigation, was centered in New Jersey. Furthermore, the benefits at issue in Plaintiffs' unjust enrichment claim -- subscription payments for Tele Aid prior to the suspension of analog service and the $1,000 upgrade fee paid by individuals who converted to digital equipment -- were received in New Jersey by virtue of the fact that Mercedes is headquartered in that state.
Id. at 60 (citations omitted).
The third factor -- "the place where the act conferring the benefit or enrichment was done" -- weighed in favor of applying the law of each Plaintiff's home state. The Court ruled, however, that "[t]he weight to be accorded to the third factor is minimal in this case, however, because it is unrelated to the conduct at issue and the ongoing relationship between the parties." Id. In making that ruling, the Court noted that:
The fact that individual Plaintiffs may have remitted payment from their home states as the result of [Mercedes's alleged] misrepresentations is purely fortuitous.
For example, a plaintiff residing in New Jersey but working in New York may have sent payment for his or her Tele Aid service or digital upgrade from the latter state. In such a situation, it would be absurd to rule that New York law should be applied to the plaintiff's claim simply because the benefit at issue was sent from that state. Similarly, it would be absurd to apply the laws of all 50 states and the District of Columbia to the claims of potential class members from those jurisdictions simply because Mercedes's alleged wrongdoing -- which emanated from New Jersey -- was so widespread as to affect individuals throughout the United States.
Id. at 60-61 (citing Restatement (Second) of Conflict of Laws § 221, Comment (d) ("The place where a relationship between the parties was centered . is the contact that, as to most issues, is given the greatest weight in determining the state of the applicable law.")).
The Court also found that the fourth factor -- "the domicil, residence, nationality, place of incorporation and place of business of the parties" -- weighed in favor of applying New Jersey law to the Plaintiffs' unjust enrichment claim. In doing so, it noted that:
[I]t is likely that members of the proposed class will reside in all 50 states and the District of Columbia. Therefore, no state has a greater relationship to the litigation than any other by virtue of its ties to potential class members. Since Mercedes is headquartered in New Jersey and the conduct at issue took place in that state, however, New Jersey is connected to both sides of the dispute. Accordingly, its twin interests in assuring that its citizens are compensated for any wrongdoing and in regulating a resident corporation support the application of New Jersey law.
In addition to the five factors outlined in § 221, the Court considered the corresponding concerns outlined in Restatement § 6. That section sets forth a number of general considerations relevant to which state has the "most significant relationship" to the litigation, including:
(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.
Restatement (Second) of Conflict of Laws § 6(2).
The Court found that those factors lent further support for the application of New Jersey law to Plaintiffs' unjust enrichment claim. With respect to the first, it noted that each state in which potential class members reside would have an equal interest in assuring that those individuals were compensated for any wrongdoing on the part of Mercedes, and the use of New Jersey law would therefore not lead to friction between the states. Mercedes, 257 F.R.D. at 62. In light of the Court's earlier ruling that that New Jersey had the greatest governmental interest in having its law applied, the Court found that the second and third factors -- "the relevant policies of the forum" and "the relevant policies of other interested states and relative interests of those states in the determination of the particular issue" -- also supported the application of that state's law. Id. Turning to the fourth and fifth considerations, the Court found that the "justified expectations" and "basic policies underlying the particular field of law" of the parties would be best served by applying New Jersey law, stating that:
Given the fact that it is headquartered in that state, Mercedes cannot reasonably argue that it will suffer any hardship or surprise due to the use of New Jersey law in a suit in which it is the defendant. In light of the relatively small amount of damages claimed by each class member, however, the Plaintiffs would likely find it impossible to achieve recovery if the Court applied the law of each individual's home state to his or her claim and refused to certify a class based on differences between the unjust enrichment cause of action in the various jurisdictions. Such a scenario would have the undesirable result of leaving potential class members with no practical means of vindicating their expectations regarding the continued functionality of their Tele Aid systems. For similar reasons, the fifth consideration -- "the basic policies underlying the particular field of law" -- also weighs in favor of applying New Jersey law. The compensatory function of Plaintiffs' unjust enrichment cause of action would be frustrated if the law of each class member's home state was applied and a class was not certified.
Id. (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997) ("The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone's (usually an attorney's) labor.") (internal quotations omitted)).
Finally, the Court found that the sixth and seventh factors enumerated in Restatement § 6 -- "certainty, predictability and uniformity of result" and "ease in the determination and application of the law to be applied" -- supported the application of New Jersey law to Plaintiffs' unjust enrichment claims. In doing so, it stated that:
The potential class members reside throughout the United States. Assuming that the laws of the various Plaintiffs' home states relating to unjust enrichment conflict, it is likely that different class members -- who have suffered the same harm based on the same alleged wrongdoing -- will have their rights adjudicated inconsistently if the Court applies the law of each class individual's home state to his or her claims. Such a formulation would also have the detrimental effect of requiring the trial jury to engage in a time-consuming and bewildering analysis of the miniscule differences between the elements of unjust enrichment in each forum.
After determining that New Jersey law applies to the Plaintiffs' unjust enrichment claim, the Court undertook a similar inquiry with respect to the consumer fraud cause of action. In doing so, it found as a preliminary matter that there are material conflicts between the various states' consumer fraud laws. Id. at 63 (citing Fink v. Ricoh Corp., 839 A.2d 942, 974-82 (N.J. Super. L. Div. 2003) (finding that "[a] review of the consumer fraud statutes of the various states, and the cases decided thereunder demonstrates the existence of numerous actual conflicts on various issues between provisions of the NJCFA and those of the statutes enacted by other states," and discussing those differences at length)). The Court then examined the facts underlying Plaintiffs' consumer fraud claim to determine which state's law governs under both the "government interest" and "most significant relationship" tests.
In attempting to determine the government interests possessed by each state from which class members might be drawn, the Court noted that -- unlike in the unjust enrichment claim, where each state's law is aimed mainly at providing restitution to a party who has conferred a benefit on another under circumstances where the retention of that benefit would be inequitable -- "[t]here is no monolithic policy interest underlying the consumer fraud laws of the various states." Id. The consumer fraud statutes of some states appear to focus on compensation by limiting plaintiffs' recovery to compensatory damages. See Id. at 64 n.7. Others include measures such as punitive or mandatory treble damages that are aimed at deterring fraud. See Id. at 64 n.8. The Court noted that New Jersey falls in the latter category, stating:
"Under the NJCFA an award must be made of threefold the actual damages suffered by the victim of any practice declared unlawful . plus an award of reasonable attorney's fees and costs of suit to the successful plaintiff." Fink, 839 A.2d at 979. The award of treble damages, fees, and costs mandated by the NJCFA are a form of punitive damages, Id. at 980, and are meant to deter wrongful activity on the part of businesses operating in New Jersey. Cox v. Sears Roebuck & Co., 647 A.2d 454, 463-64 (N.J. 1994). Thus, the NJCFA is designed to serve two purposes: compensating victims of consumer fraud and regulating companies within New Jersey. Id.
Based on the dual purpose of the NJCFA, the Court found that New Jersey had a greater interest than any other state in having its consumer fraud statute applied to Plaintiffs' claims. In doing so, it noted that the application of New Jersey law would provide for compensatory damages, and thus would not infringe the interests of states' whose consumer fraud acts are directed mainly toward providing restitution. The use of the law of each Plaintiff's home state, however, would compromise New Jersey's interest in deterring fraudulent behavior by a resident corporation by assuring that punitive damages would not be available for at least some Plaintiffs. Id. The Court clearly outlined its reasoning to that effect, stating that:
While each of the various jurisdictions from which class members will be drawn have an equal interest in compensating their citizens, only New Jersey has the additional interest of regulating a corporation which is headquartered -- and allegedly committed the acts in question -- within its borders. The intended deterrent effect of the NJCFA would be compromised if Mercedes were allowed to escape liability for the treble damages, attorneys' fees, and litigation costs mandated by New Jersey law simply because its alleged misconduct defrauded citizens of states whose laws do not provide for similar punitive damages. On the other hand, the New Jersey legislature's decision to limit recovery in consumer fraud actions against businesses within that state to treble damages would be compromised if class members residing in jurisdictions which allow unlimited punitive damages were allowed to bring claims under the law of their home states. Id. (citations omitted).
Similarly, the Court found that the "most significant relationship" test used by Illinois, Missouri, New Jersey and Washington requires that the NJCFA be applied to the Plaintiffs' consumer fraud claim. In doing so, it first noted that choice of law in consumer fraud actions is governed by Restatement § 148, which states:
(1) When the plaintiff has suffered pecuniary harm on account of his reliance on the defendant's false representations and when the plaintiff's action in reliance took place in the state where the false representations were made and received, the local law of this state determines the rights and liabilities of the parties unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.
(2) When the plaintiff's action in reliance took place in whole or in part in a state other than that where the false representations were made, the forum will consider such of the following contacts, among others, as may be present in the particular case in determining the state which, with respect to the particular issue, has the most significant relationship to the occurrence and the parties:
(a) the place, or places, where the plaintiff acted in reliance upon the defendant's representations,
(b) the place where the plaintiff received the representations,
(c) the place where the defendant made the representations,
(d) the domicil, residence, nationality, place of incorporation and place of business of the parties,
(e) the place where a tangible thing which is the subject of the transaction between the parties was situated at the time, and
(f) the place where the plaintiff is to render performance under a contract which he has been induced to enter by the false representations of the defendant.
Restatement (Second) of Conflict of Laws § 148. Based on that section, the Court explained that:
[T]he Restatement distinguishes between, on the one hand, fraud claims in which the defendant's alleged misrepresentations and plaintiffs' reliance on those statements took place in the same state, and on the other, those in which the misrepresentations and reliance occurred in different jurisdictions. In the former situation, the state in which both the misrepresentations and reliance occurred is presumed to have the "most significant relationship" with the litigation. In the latter scenario, however, the Court must weigh the factors enumerated in section 148(2) in order to determine which state has the greatest ties to the plaintiffs' fraud claim.
Mercedes, 257 F.R.D. at 65 (citations omitted).
In making that conclusion, the Court specifically noted and rejected a case from this district decided by the Honorable Stanley R. Chesler, Agostino v. Quest Diagnostics, Inc., 246 F.R.D. at 462, holding that the Restatement "recognizes that the state in which a prospective plaintiff acted in reliance on a defendant's fraud is presumed to have the predominant relationship to the parties and the issues in the litigation." Relying on that ruling, Mercedes had argued that "[s]section 148 of the Second Restatement creates a presumption that the law of the state where the misrepresentation or omission is received and relied on applies unless some other state has a more significant relationship to the occurrence and the parties under the principles states in section 6 of the Restatement." (Def.'s Notice of Supplemental Authority, March 10, 2009.) The Court categorically rejected that assertion, stating that it "relie[d] on an interpretation of the Restatement that is at odds with the plain meaning of section 148, which calls for such a presumption only in cases where "the plaintiff's action in reliance took place in the state where the false representations were made and received.'" Mercedes, 257 F.R.D. at 65-66 ...