Products Liability Law Daily NJ adopts 2d Restatement choice of law rules for statutes of limitations in tort cases
Wednesday, January 25, 2017

NJ adopts 2d Restatement choice of law rules for statutes of limitations in tort cases

By John W. Scanlan, J.D.

New Jersey courts will henceforth apply the choice of law rules found in section 142 of the Restatement (Second) of Conflicts of Law when determining which state’s statute of limitations applies in a tort action, the New Jersey Supreme Court announced in reversing a decision by an appellate court applying the substantial relationship test in a product liability case brought by consumer who used the drug Accutane. As a result, because the high court found that New Jersey’s statute of limitations applied (rather than Alabama’s as the appellate court had found), the case was not untimely filed; therefore, jury verdict in favor of the consumer and the damage award were reinstated (McCarrell v. Hoffmann-La Roche, Inc., January 24, 2017, Albin, B.).

An Alabama resident was diagnosed in 1996 with a virulent form of inflammatory bowel disease after taking Accutane to treat his acne. In 2003, he brought suit in New Jersey state court against Hoffman-La Roche, Inc., and Roche Laboratories, Inc. (together, Roche), alleging the Accutane caused his illness and that he would not have taken it if he had been adequately warned of the risks. Both companies are New Jersey corporations, and they designed, manufactured, and labeled Accutane in New Jersey and distributed it from there.

Because New Jersey equitably tolls its statute of limitations under the discovery rule and Alabama does not, the consumer’s suit would be timely under New Jersey law but not under Alabama law. Applying the governmental interest test for choice of law, the trial court determined that New Jersey’s statute of limitations applied; the jury then found in favor of the consumer and awarded $2.6 million in damages. While agreeing that New Jersey’s statute of limitations applied, a state appellate court reversed and remanded the case for a new trial based on erroneous evidentiary rulings by the lower court. In the second trial, the jury awarded the consumer over $25 million.

On appeal, Roche argued that Alabama’s statute of limitations should have applied because the governmental interest test had been replaced in New Jersey by the substantive-relationship test found in sections 6, 145, and 146 of the Second Restatement as a result of the state supreme court’s 2008 decision in P.V. ex rel. T.V. v. Camp Jaycee. The appellate court agreed, finding that the consumer had not overcome the presumption in this test that the law of the state where the injury occurred should govern. Thus, the court found his claim untimely and dismissed the case [see Products Liability Law Daily’s August 11, 2015 analysis]. The state supreme court observed that the appellate court expressly declined to apply section 142 of the Second Restatement, Statute of Limitations of Forum, which addresses choice of law issues when there is a conflict between the statutes of limitations of the forum state and another state. The consumer appealed.

The Second Restatement. The New Jersey Supreme Court held that the choice of law analysis in section 142 of the Second Restatement should be adopted going forward for analyzing conflicts in state statutes of limitations. Its adoption in Camp Jaycee of sections 6, 145, and 146 of the Second Restatement to resolve conflicts of substantive law was not an indication that it would adopt the use of the same sections to resolve conflicts issues for statutes of limitations, and that it if had reason to consider section 142 in that case it would have done so. The drafters of the Second Restatement created section 142 specifically to address these issues and did not intend sections 145 and 146 to be used to resolve statute of limitations questions. Substantive tort law is intended to provide a remedy to a wronged party, but statutes of limitations are intended to encourage the timely litigation of claims.

Section 142 provides a presumption that the statute of limitations of the forum state generally applies whenever the state has a substantial interest in the maintenance of the claim, in which case the inquiry ends unless exceptional circumstances would make that result unreasonable. Only if the forum has no substantial interest does the court apply several choice of law factors to determine whether the claim would be barred under the statute of limitations of another state with a greater relationship to the parties and the occurrence.

The high court found that section 142 was easy to apply, promotes predictability and uniformity in decision making, and allows for greater certainty in the expectations of litigants. Adopting section 142 for consideration of choice of law issues regarding statutes of limitations for tort purposes completes the conversion from the governmental interest standard to the Second Restatement that began with Camp Jaycee, the court stated.

Application of section 142. New Jersey statutes of limitations rules applied to the case under the choice of law rules in section 142 of the Second Restatement. Because New Jersey is the forum state, there is a presumption that its statute of limitations should apply. New Jersey also had a substantial interest in preventing its manufacturers from making and distributing unsafe products, as well in protecting the citizens of its state and other states from unreasonably dangerous products originating in the state. As a result, the court was not required to address whether Alabama had a more significant relationship.

The court observed that if it were to address this question, it would find that Alabama had a significant relationship in light of the fact that the consumer resided there, was injured there, and was treated there, and the state had a substantial relationship in ensuring that pharmaceuticals entering the state were safe for its citizens to use. However, its statute of limitations was primarily intended to protect its manufacturers from stale claims brought in its courts, and Alabama did not have an interest in preventing one of its citizens who had been injured from seeking the same relief from a pharmaceutical company in New Jersey that a New Jersey resident could have sought. Therefore, it was not clear that Alabama had a greater relationship than New Jersey.

Because there were no exceptional circumstances that would make this result unreasonable, New Jersey’s statute of limitations applied. The court concluded by noting that the same result would have been reached had it applied the governmental interest test used by the trial court.

The case is No. (A-28-15) (076524).

Attorneys: David R. Buchanan (Seeger Weiss LLP) for Andrew McCarrell. Paul W. Schmidt (Dughi, Hewit & Domalewski, PC) for Hoffmann-La Roche, Inc. and Roche Laboratories, Inc.

Companies: Hoffmann-La Roche, Inc.; Roche Laboratories, Inc.

MainStory: TopStory SofLReposeNews JurisdictionNews DrugsNews NewJerseyNews

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