Paul Macri and the folks at Berman & Simmons won a remand in a decision raising interesting choice of law issues. New England Surfaces v. EI. DuPont De Nemours & Co., Docket No. 08-1048.
Simplifying the facts and claims (most of the claims on appeal were rejected, but hey, one argument stuck, and to me that means you still do the Dance of Victory), this was a franchisor-distributor dispute. The plaintiff distributor is based in Maine and sued in Maine. The contract said Delaware law applied. The plaintiff had a place of business in Connecticut. The plaintiff argued that the Connecticut franchise act applied. Not only does that statute prohibit termination without cause, but it overrides any waiver of the statute’s rights contained in the franchise agreement. The Connecticut statute says that it applies to franchise agreements "the performance of which contemplates the franchisee to establish or maintain a place of business in [Connecticut]."
Because the First Circuit found that the choice of law issue needed more development, it didn’t rule that the Connecticut statute applied. But it found that it might apply, and so vacated the summary judgment in favor of the defendant. The Court also started down the road of the choice of law analysis.
The forum, Maine, uses the test at Section 187 of the Second Restatement on Conflict of Laws, which provides that a forum selection clause can abrogate state law that would otherwise apply in certain situations. Looking at the fundamental policy of the state with the greatest interest in the issue, the First Circuit asked which state had the greater interest – Delaware or Connecticut. Again, the Court didn’t answer the question; it only noted that the only precedent it could find seemed to lean in favor of Connecticut.
There are other useful bits in this decision – for example, it notes that punitive damages are not available under Maine law for a tort with only nominal damages.
