New Jersey Court of Appeal Says Choice of Law Exception May Apply in Interest Rate Class Action


On October 9, the New Jersey Superior Court Appeal Division reversed a trial court decision to reactivate a proposed class action lawsuit that challenged, among other things, interest rates of over 30% on auto title loans. According to the appeals court, the trial court dismissed the case because Delaware, not New Jersey, had a more substantial relationship to the parties’ dispute. While the plaintiff’s contract with the Delaware-based securities lender stated that Delaware law applied even if she resided in New Jersey, the appeals court said that under the second exception to the test established by Instructional Systems Inc. v. Computer Curriculum Corp., Courts in New Jersey will uphold the contractual choice unless “the application of the law of the chosen state is contrary to the fundamental policy of the state which has a materially greater interest than the state chosen in the matter. determining the particular question and which one. . . would be the state of the applicable law in the absence of an effective choice of law by the parties. “

“In her certification, the plaintiff claimed that she applied for the title loan from her home in New Jersey and that the defendant informed her that the loan had been approved by calling her and informing her that all she had to do to collect the money was to come to Delaware and sign the contract. The court of appeal said that these additional facts may be sufficient to satisfy the preconditions of the second exception and that, from a procedural point of view, the trial court should have either converted the motion to dismiss the securities lender on motion for summary judgment to review new information or allowed plaintiff’s motion to file second amended complaint.


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