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Pfizer, Inc. v. Employers Insurance of Wausau

154 N.J. 187, 712 A.2d 634 (1998)

ENVIRONMENTAL LIABILITY; INSURANCE—In a multistate, multisite environmental liability insurance coverage dispute where the sites are not in New Jersey and the polices were not purchased in New Jersey, even though the policyholder does business in New Jersey, choice of law dictates that it is best to apply the law of the site’s location of each to the sites.

This is a declaratory judgment action in which the insured property owner sought coverage for environmental contamination liability claims that arose at some ninety separate sites in nineteen states and Puerto Rico. Due to the many states involved, a choice of law question arose.

The Court cited Spruance, 134 N.J. at 102 as standing for the proposition that New Jersey has adopted the approach of solving conflicts of law cases by focusing on the state that has the most significant connections with the parties and the transaction. The Court further summarized Spruance as establishing a choice of law framework that first requires a lower court to apply Restatement (Second) of Conflicts of Law, Section 193, which provides that the place that the parties understood to be the principal location of the insured will govern unless some other state has a more significant interest. When the issue is a multistate one, however, Section 193 calls for application of the laws of the state with the dominant relationship as set forth in Section 6 of the Restatement. The Court cautioned that a “bright-line rule” should not be extracted from Spruance.

The Court then cited to a Third Circuit opinion which listed five categories of interest under Section 6 of the Restatement. Those factors are: (a) the competing interests of the relevant states; (b) the national interest of commerce among the several states; (c) the interests of the parties; (d) the interests underlying contract law; and (e) the interests of judicial administration. The Court found that factors (c) and (d) could be combined into one factor because contract law is largely private.

In applying this test, the Court concluded that it would be best to apply the law of the waste sites instead of New Jersey or New York law. The Court also concluded that trials in these matters need not be presented to a jury, allaying any concern that a jury would not be able to apply the law of several different forums to its verdict.


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