being a Massachusetts resident. The Fund was set up by a
Massachusetts labor union; it was funded by that union and
Massachusetts employers. The Fund provides medical insurance
primarily to residents of Massachusetts, who presumably received
and acted upon Tobacco's alleged deceptive conduct in
Massachusetts. These factors, taken together, ensure that the
lions share of adverse economic and health effects from Tobacco's
alleged deceptive conduct, as relevant to this action, were felt
New York's interest, which as noted is a weighty concern for
preventing New York from becoming a haven for national
conspiracies foisted on the American public, appears at this
stage of the controversy to be outweighed by Massachusetts'
greater interest in protecting the economic welfare of its
instate corporate entities and in preventing the dissemination of
deceptive information injurious to its residents.
In view of the substantial interests of Massachusetts, it
appears probable that after discovery is completed the court will
find that under New York's conflict rules, Massachusetts has the
greater interest in the pending action. It is, however, premature
at this stage to dismiss plaintiffs' claims under the New York
Consumer Protection Act. See N.Y.Gen.Bus.L. §§ 349(a), 350.
Fuller discovery in this and the related tobacco cases now
pending in this court and elsewhere may shed a different light on
the degree of interest of New York and of other states.
Accordingly, discovery may proceed without a final decision on
whether plaintiffs claims are more appropriately brought under
the Massachusetts Unfair and Deceptive Trade Practices Statute.
See M.G.L.A. c. 93A, § 1 et seq.
C. Massachusetts' Statute
Plaintiffs contend that the Massachusetts Statute does not
cover Tobacco's conduct and that therefore a conflicts analysis
is inappropriate. Specifically, plaintiffs claim that section
11 — which prohibits businesses from bringing suit under the
Massachusetts Statute unless the deceptive acts occurred
"primarily and substantially within" Massachusetts — precludes
application of the Statute and thus counsels in favor of applying
New York's Consumer Protection Act. See M.G.L.A. c. 93A, § 11;
see also Makino, U.S.A., Inc. v. Metlife Capital Credit Corp.,
25 Mass. App. Ct. 302, 518 N.E.2d 519, 523 n. 4 (1988)
In Clinton Hospital Assoc. v. Corson Group, Inc.,
907 F.2d 1260 (1st Cir. 1990), the court of appeals for the First Circuit
identified a three factor balancing test to determine whether the
Massachusetts Statute applies. The first factor "requires
consideration of where the defendant committed the deceptive or
unfair acts or practices" in question. Id. at 1265. Relevant to
the court's consideration in Clinton Hospital was the fact that
"although the acts [allegedly committed by the defendant]
originated in New York, it was intended that their force and
input influence the plaintiff's behavior in Massachusetts." Id.
The second factor looks to "where the plaintiff received and
acted upon the deceptive or unfair statements." Id. The third
factor "requires courts to look at the situs of plaintiff's
losses due to the unfair or deceptive acts or practices." Id.
All three factors appear to support application of the
Massachusetts' Statute. Sonesta Inter. Hotels Corp. v. Central
Florida Investments, Inc., 47 Mass. App. Ct. 154, 712 N.E.2d 607,
610 (1999) (whether transactions or actions occurred primarily
within the commonwealth is a "question of law" for the court).
With respect to the first factor, even assuming Tobacco's
deceptive conduct was orchestrated outside of Massachusetts', the
deceptive practices were intended to effect the smoking patterns
of Massachusetts' residents, among others. As for the second
factor, a substantial majority of the Fund's participants
"received and acted upon the deceptive
and unfair statements" in Massachusetts. And with respect to the
third factor, the Fund's losses occurred in Massachusetts. Taken
together, all three factors do counsel in favor of an ultimate
finding that Tobacco's deceptive conduct occurred "primarily and
substantially within the Commonwealth of Massachusetts,"
supporting a claim under the Massachusetts Unfair and Deceptive
Trade Practices Statute. See also M.G.L.A. c. 93A, § 11 ("[T]he
burden of proof shall be upon the person claiming that such
transactions and actions did not occur primarily and
substantially within the commonwealth.").
D. New York's Act
It deserves noting that although plaintiffs in this action may
ultimately be foreclosed from suing under New York's Consumer
Protection Act, defendants are not exempt from the regulatory
regime established by the Act. Either New York residents or the
New York Attorney General could bring suit under New York's
Consumer Protection Act for the deceptive conduct alleged. See
N YGen.Bus.L. §§ 349(b), 350-c (authorizing suit by the Attorney
General of New York); see also Ortho Pharmaceutical Corp. v.
Cosprophar, Inc., 32 F.3d 690, 697 (2d Cir. 1994) ("In order to
establish a claim under either section, a plaintiff must show (i)
that the act or practice was misleading in a material respect,
and (ii) that the plaintiff was injured." (citation and internal
quotation marks omitted)).
The question presented here is a narrow one: whether
plaintiffs, in accordance with New York's choice-of-law
principles, can bring suit under the Act rather than under
Massachusetts' Unfair and Deceptive Practices Statute. It is not
whether Tobacco's alleged conduct falls within the reach of New
York's Consumer Protection Act generally.
Defendants' motion to dismiss is denied with leave to renew
upon further development of the litigation. At present, the
threshold conflicts issue is not ripe for final decision.
Discovery shall continue under the supervision of the
magistrate judge with every effort made to utilize materials
already available from the related tobacco litigations already
pending in this court.
© 1992-2003 VersusLaw Inc.