Opinion ID: 620819
Heading Depth: 1
Heading Rank: 3

Heading: Which State Interest is Most Impaired

Text: California's governmental interest test is designed to [accommodate] conflicting state policies, as a problem of allocating domains of law-making power in multi-state contexts. . . . McCann, 48 Cal.4th at 97, 105 Cal.Rptr.3d 378, 225 P.3d 516. It is not intended to `weigh' the conflicting governmental interests in the sense of determining which conflicting law manifested the `better' or the `worthier' social policy on the specific issue. . . . Id. The test recognizes the importance of our most basic concepts of federalism, emphasizing the the appropriate scope of conflicting state policies, not evaluating their underlying wisdom. Id. The importance of federalism when applying choice of law principles to class action certification is reinforced by the Class Action Fairness Act of 2005. Pub.L. 109-2, 119 Stat. 4. A key purpose of the Act was to correct what former Acting Solicitor General Walter Dellinger labeled a wave of false federalism. [T]he problem is that many state courts faced with interstate class actions have undertaken to dictate the substantive laws of other states by applying their own laws to other states, resulting in a breach of federalism principles. S.Rep. No. 109-14, at 61 (2005), 2005 U.S.C.C.A.N. 3, 57 (quotation marks and ellipses omitted). Accordingly, courts should not attempt to apply the laws of one state to behaviors that occurred in other jurisdictions. Id. at 62-63 (summarizing Supreme Court cases). The district court did not adequately recognize that each foreign state has an interest in applying its law to transactions within its borders and that, if California law were applied to the entire class, foreign states would be impaired in their ability to calibrate liability to foster commerce. That this concept was missed or given inadequate weight was error. The district court's reasoning elevated all states' interests in consumer protection to a superordinate level, while ignoring or giving too little attention to each state's interest in promoting business. This presents a mode of analysis that the Class Action Fairness Act was aimed at stopping. See Findings, Class Action Fairness Act § 2(a)(4), Pub.L. No. 109-2, 119 Stat. 4, 5 (2005) (categorizing as an abuse[] of the class action system the practice of state courts making judgments that impose their view of the law on other States and bind the rights of the residents of those States). California recognizes that with respect to regulating or affecting conduct within its borders, the place of the wrong has the predominant interest. See Hernandez v. Burger, 102 Cal.App.3d 795, 802, 162 Cal. Rptr. 564 (1980), cited with approval by Abogados v. AT & T, Inc., 223 F.3d 932, 935 (9th Cir.2000). California considers the place of the wrong to be the state where the last event necessary to make the actor liable occurred. See McCann, 48 Cal.4th at 94 n. 12, 105 Cal.Rptr.3d 378, 225 P.3d 516 (pointing out that the geographic location of an omission is the place of the transaction where it should have been disclosed); Zinn v. Ex-Cell-O Corp., 148 Cal.App.2d 56, 80 n. 6, 306 P.2d 1017 (1957) (concluding in fraud case that the place of the wrong was the state where the misrepresentations were communicated to the plaintiffs, not the state where the intention to misrepresent was formed or where the misrepresented acts took place). Here, the last events necessary for liability as to the foreign class memberscommunication of the advertisements to the claimants and their reliance thereon in purchasing vehiclestook place in the various foreign states, not in California. These foreign states have a strong interest in the application of their laws to transactions between their citizens and corporations doing business within their state. Conversely, California's interest in applying its law to residents of foreign states is attenuated. See Edgar v. MITE Corp., 457 U.S. 624, 644, 102 S.Ct. 2629, 73 L.Ed.2d 269 (1982) (While protecting local investors is plainly a legitimate state objective, the State has no legitimate interest in protecting nonresident shareholders. (emphasis added)). Plaintiffs contend that California is connected to both sides of the dispute, with interests both in protecting it citizens and in regulating Honda, a California corporation. We recognize that California has an interest in regulating those who do business within its state boundaries, and foreign companies located there, but we disagree with the dissent that applying California law to the claims of foreign residents concerning acts that took place in other states where cars were purchased or leased is necessary to achieve that interest in this case. We also note that Plaintiffs' argument that California law is the best choice for this nationwide class is based on a false premise that one state's law must be chosen to apply to all 44 jurisdictions. Under the facts and circumstances of this case, we hold that each class member's consumer protection claim should be governed by the consumer protection laws of the jurisdiction in which the transaction took place. Accordingly, we vacate the district court's class certification order and remand for further proceedings consistent with this opinion. We express no view whether on remand it would be correct to certify a smaller class containing only those who purchased or leased Acura RLs in California, or to certify a class with members more broadly but with subclasses for class members in different states, with different jury instruction for materially different bodies of state law. See, e.g., In re Computer Memories Sec. Litig., 111 F.R.D. 675, 685-86 (N.D.Cal.1986).