New Jersey Removes Impediment to Multistate Certification of Class Actions
The presumption in New Jersey is now that its statute of limitations governs claims pursued in the jurisdiction, eliminating an impediment to pursuing certain matters here—like some multistate class actions—that implicate the laws of two or more states.
On January 24, 2017, the New Jersey Supreme Court held “that section 142 of the Second Restatement is now the operative choice-of-law rule for resolving statute-of-limitations conflicts[.]” McCarrell v. Hoffman-LaRoche, Inc., ___ N.J. ___ (2017).
Like other sections of the Restatement, Section 142 establishes a presumption that aids in the resolution of conflicts of laws:
Under section 142(2)(a), the statute of limitations of the forum state generally applies whenever that state has a substantial interest in the maintenance of the claim. In that circumstance, the inquiry ends for statute-of-limitations purposes, unless exceptional circumstances would render that result unreasonable. Only when the forum state has “no substantial interest” in the maintenance of the claim does a court consider section 142(2)(b) -- whether “the claim would be barred under the statute of limitations of a state having a more significant relationship to the parties and the occurrence.”
In formally adopting Section 142, the New Jersey Supreme Court has made it clear that statute-of-limitations-law conflicts must be addressed independently of conflicts that relate to substantive law. “The rationales for whether the forum state’s substantive law or statute of limitations should govern are different.”.
In the past, defendants have had some success limiting, and in some cases defeating, efforts to certify multistate class actions by arguing that statute-of-limitations-law conflicts represent conflicts of substantive law. The New Jersey Supreme Court’s ruling in McCarrell eliminates that avenue of attack.
For instance, in Agostino v. Quest Diagnostics, Inc., 256 F.R.D. 437 (D.N.J. 2009), the court found that the relatively complex issues raised by plaintiff’s breach of contract claim might be resolved differently depending on which state’s law was applied. In particular, it found that “state breach of contract laws conflict with respect to the application of . . . statutes of limitations.” Id. at 464. Having determined that a conflict of laws existed, the court undertook the required conflicts-of-laws analysis under Section 188 of the Restatement, which applies to substantive-contract-law conflicts, and concluded that “the laws of the prospective Class members' home states [should govern] because each state has the most significant relationship with the contract claims asserted[.]” Id. at 465. The court denied class certification of the breach of contract claim for several reasons, including its finding that the plaintiffs had “not suggested any manageable way to litigate the claims in light of the variation among state laws of contract with respect to important elements of Plaintiffs’ contract claims.” Id. at 468.
McCarrell is a complete bar arguments of that type and thus abrogates Agostino in part. It is now clear that statute-of-limitations-law conflicts have no bearing on whether there exist substantive-law conflicts. Going forward, defendants must therefore look beyond differing statute of limitations in their unceasing quest to prevent the uniform application of New Jersey’s substantive law in multistate actions.