Opinion ID: 3018165
Heading Depth: 3
Heading Rank: 1

Heading: General Choice of Law Principles in New Jersey

Text: New Jersey has a flexible governmental-interest approach to resolving choice of law questions that “requires application of the law of the state with the greatest interest in resolving the particular issue . . ..” Gantes v. Kason Corp., 679 A.2d 106, 109 (N.J. 1996); Veazey v. Doremus, 510 A.2d 1187, 1189 (N.J. 1986). The Restatement (Second) of Conflict of Laws, which the New Jersey Supreme Court has cited as guiding the choice of law determination, uses an issue-by-issue approach. Erny v. Estate of Merola, 792 A.2d 1208, 1213 (N.J. 2002) (citing Restatement (Second) of Conflict of Laws § 145(1) (1971)). Damages issues are included in the issue-specific analysis, and the law that applies is based on the state with the dominant policy interest. Id. To apply the governmental-interest analysis, it is necessary to analyze the purposes underlying the competing state laws. Id. at 1214 (citing Restatement (Second) of Conflict of Laws § 6). There is a presumption that the law of the situs state applies. When another state has the more significant interest and the policies of the situs state will not be frustrated by the application of foreign law, however, the presumption can be overcome. Id. at 1216. The governmental-interest test consists of two prongs. First, we must determine whether there is an actual conflict. Gantes, 679 A.2d at 109. If there is not an actual conflict, the inquiry is over and, because New Jersey would apply its own law in such a case, a federal court sitting in diversity must do the same. See Curtis T. Bedwell & Sons, Inc. v. Geppert Bros., Inc., 655 A.2d 483, 484-85 (N.J. Super. 1995) (explaining “false conflict” situation) (citing Gilbert Spruance v. Pa. Mfrs. Ass’n 7 Ins. Co., 629 A.2d 885 (N.J. 1993)). The second prong of the governmental-interest test requires us to assess the interests each state has in applying its own law and determine which state has the most significant relationship to the parties and the event. Fu v. Fu, 733 A.2d 1133, 1138 (N.J. 1999). To effectuate this analysis, we “identify the governmental policies underlying the law of each state and how those policies are affected by each state’s contacts to the litigation and the parties.” Veazey, 510 A.2d at 1189 (citing Henry v. Richardson-Merrell, Inc., 508 F.2d 28, 32 (3d Cir. 1975)). If the state’s concerns with the litigation and the parties are not directed at the policies involved in the case before the court, the state has no interest in applying its law. Id. at 1190. New Jersey has articulated five broad factors to aid courts in applying the governmental-interest test. Erny, 792 A.2d at 1217. They include (1) interstate comity, (2) the interests of the parties, (3) the interests underlying the substantive body of law, (4) the interests of judicial administration, and (5) the competing interests of the states. Fu, 733 A.2d at 1140-41 (citing Restatement (Second) of Conflict of Laws § 145 cmt. b). The fifth factor is the most important. Erny, 792 A.2d at 1217. In addition to these general considerations, four contacts are most relevant to the governmental-interest test in cases based on an alleged tort: (1) the place where the injury occurred, (2) the place where the conduct causing the injury occurred, (3) the domicile, residence, nationality, place of incorporation, and place of business of the parties, and (4) the place where the relationship, if any, between the parties is centered. Fu, 733 A.2d at 1142 (citing Restatement (Second) of Conflict of Laws 8 § 145(2)). In personal injury cases, the place of the injury is important, and when both the conduct and the injury occur in the same place, that jurisdiction’s law generally will apply except in those rare instances where another jurisdiction has a demonstrably dominant interest and no policy of the situs state is frustrated by application of the sister state’s policy. Erny, 792 A.2d at 1217-18 (citing Restatement (Second) of Conflict of Laws § 145 cmt. e; § 146 cmts. c and d).