Another non-drug/device case recently caught our eye, not only because it allows us to parody Shakespeare, but because of its potential implication for all those companies that are based in New Jersey and get sued under the liberal New Jersey Consumer Fraud Act as a result (and as we all know, there is a considerable drug/device presence in the Garden State). The question in the case was one that would have plagued the Prince of Denmark – whether ‘tis nobler in the mind to suffer the slings and arrows of outrageous picture, or to take arms against Samsung?

Nathan Cooper decided to take the latter approach. In Cooper v. Samsung Electronics America, Inc., 2010 WL 1220946 (3d Cir. Mar. 30, 2010), Cooper sought to represent a nationwide class of purchasers of Samsung’s 1080p HDTVs. Cooper’s beef was that he paid a premium price for the 1080p capability, only to learn that the HDTV he bought could not accept a 1080p signal via an input known as “HDMI.” The lower court blew out the warranty claims on failure to provide notice to Samsung, and knocked out the fraudulent concealment claim for failing to plead with particularity. Id. at *2-3. The Third Circuit affirmed those rulings, but that really isn’t the part we found interesting, because the court next went on to tackle the consumer fraud claim alleged by Cooper.

In the lower court, Cooper had pled a claim under the New Jersey CFA. The district court decided that Arizona law should apply, because Cooper, an Arizona resident, bought his TV in Arizona. So the district court sua sponte converted the New Jersey CFA claim into an Arizona CFA claim, and then declined to dismiss that claim. Id. at *2. Cooper decided to take a gamble – he was so determined to have New Jersey’s liberal CFA apply that he agreed to dismiss with prejudice the AZCFA claim so that he could challenge the application of Arizona law on appeal. Id.

The gamble didn’t pay off. The Third Circuit noted that New Jersey’s choice of law rules had changed since the time of the District Court’s decision. New Jersey used to apply the “government interest” test, but in November 2008 the New Jersey Supreme Court adopted the Second Restatement’s “most significant relationship” test for determining which state’s law applies (the case is PV v. Camp Jaycee, 962 A.2d 453 (N.J. 2008), for all you choice of law nuts out there). Id. at *3. But this change of law didn’t matter – under either test, Cooper’s consumer fraud claim should have been decided under Arizona law, not New Jersey law. Id. at *3-4. Cooper argued that New Jersey law should apply since Samsung is headquartered there, but the court disagreed and concluded, “[t]he transaction in question bears no relationship to New Jersey other than the location of Samsung’s headquarters.” Id. at *3. Looking at the “most significant relationship” factors enumerated by the court, id. at *4, it is easy to see how the court reached this conclusion:

(a) the place where Cooper acted in reliance on the alleged misrepresentations – Arizona
(b) the place where Cooper received the alleged misrepresentations – Arizona
(c) the place where the defendant made the representations – Arizona (although Cooper argued that the alleged fraud was conceived, created, and orchestrated from Samsung’s home office in New Jersey)
(d) the place where the parties are located – tie
(e) the place where the “tangible thing which is the subject of the transaction” – i.e., the TV – was located – Arizona
(f) the place where plaintiff was to render performance (payment) under the contract – Arizona.

There was a dissent, by Judge Ambro, which echoed the advice of Polonius – “Take each man’s censure, but reserve thy judgment.” Judge Ambro believed the court should have vacated and remanded to the district court to apply the new choice of law rules articulated in Jaycee. Id. at *4. But then Judge Ambro also went on to complain about the majority’s choice of law analysis, which was cursory. Most importantly, the same triptych of choice of law arguments that plaintiffs make all the time, especially in drug and device cases, were “trippingly on the tongue” of Judge Ambro: (1) New Jersey has an overriding interest in deterring fraudulent conduct occurring within its borders by domestic businesses; (2) New Jersey’s liberal protections will not frustrate other states’ interests in protecting consumers, but will in fact further those interests; and (3) the New Jersey legislature intended its CFA to have wide-ranging effect and apply to sales made by New Jersey sellers wherever those sales were made. Id. at *4-5.

In the end, though, the majority brushed aside these concerns. Arizona was clearly the state with the “most significant relationship” to the claim, because Arizona was “the state in which the television was marketed, purchased, and used.” Id. at *4. So in New Jersey, the law of the state where the product was purchased and used – or, in our cases, the state where the drug was prescribed, used, and (possibly) was the cause of alleged harm – should govern, and courts should not reflexively apply New Jersey’s liberal CFA simply because the manufacturer has headquarters in the state. Or as Hamlet would say, all that matters is the place where the transaction and harm allegedly occurred; “the rest is silence.”