On August 11, the Appellate Division issued an important ruling in the ongoing litigation over Hoffmann-La Roche Ltd.’s acne medication Accutane. The decision by appellate judges Sabatino, Simonelli, and Leone overturns a $25 million+ verdict from a 2010 jury trial, and brings to a close a case that has been bogging down the court system for over a decade. It also sends a clear message that some choice of law questions are no longer open for debate.
The procedural history of McCarrell v. Hoffmann-LaRoche Inc. and Roche Laboratories Inc. is lengthy. It was first filed in 2003. It went to trial for the first time in 2007, and the jury awarded the plaintiff over $2.5 million. That verdict was overturned by the Appellate Division because Roche was not allowed to introduce relevant Accutane usage data at trial, and a new trial was held in 2010. The 2010 jury awarded the plaintiff over $25 million.
Leading up to both trials and on appeal, Roche argued that the case should be dismissed because Alabama law, which has a strict two year statute of limitations should apply.
The Appellate Division actually ruled on this issue when it took up the 2007 appeal. In 2009 the Appellate Division applied the “flexible governmental interest” test, which “appl[ies] the law of the state with the greatest interest in governing the specific issue in the underlying litigation.” Under that standard, the court found that New Jersey law should apply and refused to dismiss the case.
In between the two McCarrell jury trials, the New Jersey Supreme Court decided P.V. v. Camp Jaysee, another case where the court’s choice of what state’s law would apply would make a big different in the outcome. In that case, the court held that the law of the state where the injury occurred should apply unless New Jersey has a more significant relationship to the case than the other state. This is known as the “most significant relationship” test.
In 2010, the Appellate Division applied the most significant relationship in Cornett v. Johnson & Johnson, a products liability case with facts relatively similar to those in the Accutane case. In Cornett, the court dismissed a Kentucky plaintiff’s product liability action on the grounds that Kentucky’s one-year statute of limitations should apply rather than New Jersey’s more lenient discovery-based statute of limitations. The New Jersey Supreme Court later affirmed the Cornett decision.
On appeal of the 2010 McCarrell verdict, Roche argued that the Appellate Division should apply the “most significant relationship” test. The plaintiff argued that the old “flexible governmental interest” test should still be applied.
The court determined, “It would be fundamentally unfair to defendants to treat our unpublished 2009 opinion as a rigid barrier to the application of the Supreme Court’s clarified teachings in P.V. or the subsequent precedent issued in Cornett.”
It then applied the “most significant relationship” test by considering the following factors:
- the interests of interstate comity;
- the interest of the parties;
- the interests underlying the field of tort law;
- the interests of judicial administration;
- the competing interests of the states;
- the place where the injury occurred;
- the place where the conduct causing the injury occurred;
- the domicile, residence, nationality, place of incorporation and place of business of the parties; and
- the place where the relationship, if any, between the parties is centered.
and determined that Alabama law should ultimately apply and the case should be dismissed.
NJCJI released the following statement on the decision:
“Every business in the state should be thanking Roche for having the guts to stick out this case,” said Marcus Rayner, the president of the New Jersey Civil Justice Institute. “There is a lot of pressure to settle cases where the lower court is not handing out good rulings, and the defense costs are mounting, but this case shows the benefits of hanging in there when you know that the law should be on your side. It is now firmly settled that the choice of law principles laid down in Cornett apply across the board. Our courts should continue to rely on this line of cases to close the door to out-of-state plaintiffs forum shopping in New Jersey.”