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New Jersey Supreme Court Allows Untimely Alabama Claim to Proceed Under New Jersey’s Longer Limitations Period

March 25, 2017

In McCarrell v. Hoffman-La Roche, Inc., 2017 WL 344449 (Jan. 24, 2017), the New Jersey Supreme Court held that the New Jersey statute of limitations applied to a products liability claim brought by Andrew McCarrell, an Alabama resident, against, Hoffmann-La Roche, Inc. and Roche Laboratories, Inc., two New Jersey pharmaceutical companies. Under the New Jersey statute of limitations, the suit was timely, but under the Alabama statute, the claim was barred. Because Mr. McCarrell’s complaint was timely, the New Jersey Supreme Court reversed the Appellate Division’s dismissal of the action and reinstated the jury’s verdict of $25,159,530.

The Court’s opinion distinguished between choice of law for substantive law issues and choice of law for statutes of limitation. While recognizing the substantial-relationship test articulated in sections 146, 15, and 6 of the Second Restatement of Conflicts of Law as governing choice of substantive law, the Court adopted section 142 as the “operative choice-of-law rule for resolving statute-of-limitations conflicts: ”

Whether a claim will be maintained against the defense of the statute of limitations is determined under the principles stated in § 6. In general, unless the exceptional circumstances of the case make such a result unreasonable:

(1) The forum will apply its own statute of limitations barring the claim.

(2) The forum will apply its own statute of limitations permitting the claim unless:

(a) maintenance of the claim would serve no substantial interest of the forum; and

(b) the claim would be barred under the statute of limitations of a state having a more significant relationship to the parties and the occurrence.

Section 142 is notable for its asymmetric treatment of claims which are timely under the New Jersey limitations period and those which are untimely. If a claim is untimely, it will be barred, unless the plaintiffs can show “exceptional circumstances” that make application of a New Jersey statute of limitations unreasonable. In contrast, if a claim is timely under New Jersey’s statute of limitations, the defendant can invoke the statute of limitations of another state if it can show that application of the New Jersey period would be unreasonable or if the two following elements are satisfied. First, New Jersey must have no substantial interest in the litigation. Second, another state must have a more significant relationship to the case than New Jersey. If the court concludes that these two elements are established, a defendant litigating in New Jersey can invoke the other state’s shorter limitations period to bar a claim.

Applying the section 142 standard, the New Jersey Supreme Court in McCarrell held that New Jersey did have a substantial interest in hearing Mr. McCarrell’s claim. The Court explained that citizens of other states, such as Mr. McCarrell, should be treated the same as New Jersey citizens. Thus, New Jersey had an interest in deterring its companies from developing, manufacturing, and distributing unsafe products, whether those products are provided to out-of-state or in-state consumers. New Jersey’s interest in hearing the claim furnished a basis to apply the more lenient New Jersey limitations period.

The McCarrell decision’s adoption of section 142 clarifies that, absent exceptional circumstances, defendants litigating in New Jersey will get the benefit of the New Jersey statute of limitations. However, when a claim is timely under the New Jersey statute but not under a foreign state statute, courts will have to decide when New Jersey does have a substantial interest and when it does not. One clue in this regard is contained in the Court’s seeming approval of Pitcock v. Kaskowitz, Benson, Torres & Friedman, LLP, 426 N.J. Super. 582 (App. Div. 2012). In Pitcock, the Appellate Division held that a shorter New York limitation applied to a malicious prosecution claim brought by a New Jersey resident against his New York employer because New Jersey does not have an interest in protecting its residents from financial harm arising from their professional activities in another state. It remains to be seen whether the Pitcock holding has a broader application in light of the outcome in McCarrell. For example, do shorter out-of-state limitation periods apply to all cases involving out-of- state harm which is purely pecuniary, or does the McCarrell opinion’s expansive notion that New Jersey has an interest in regulating its own companies preclude a New Jersey defendant’s invocation of more stringent out-of-state limitations periods?

The McCarrell case is also notable for its procedural history, in which the Defendants initially won reversal of $2,619,000 verdict based on erroneous evidential rulings. McCarrell v. Hoffman-La Roche, Inc., 2009 WL 614484 (Mar. 12, 2009). On remand, a four week trial resulted in the $25,159,530 award, nearly ten times the initial verdict which the Defendants had successfully challenged.

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