Appellate Court gives green light to nationwide class

Steve Gonzalez Jul. 31, 2006, 12:37pm

Stephen Tillery

Gordon Broom

The Illinois Appellate Court reversed Madison County Associate Judge Ralph Mendelsohn's decision to limit a class action lawsuit against Intel to Illinois residents or purchasers.

In a 3-0 decision, the court said "California law, not Illinois law, is applicable" in the case involving people who claim that Intel Pentium 4 processors are no faster than the Pentium III, Celeron, or AMD Athlon processors.

On July 12, 2004, Mendelsohn concluded that Illinois law could not be applied to a nationwide class, therefore only Illinois consumers or residents would be allowed in the class.

Justice Richard Goldenhersh issued the panel's recent decision, stating that Mendelsohn, "...did not first consider which state has the most significant relationship to the occurrence."

The questions certified for appeal were whether the circuit court erred in certifying a class of Illinois consumers under Illinois law rather than certifying a nationwide or Illinois class under California law as plaintiffs requested and whether the circuit court erred in holding that the action should not proceed as a nationwide class action.

"We answer both questions in the affirmative, reverse the circuit court's decision on the choice-of-law issue, vacate the class certification, and remand with directions," wrote Goldenhersh.

The plaintiffs' are represented by Stephen Tillery of Belleville and Stephen Swedlow of Chicago.

Justices Melissa Chapman and Terrance Hopkins concurred with Goldenhersh.

The plaintiffs argued that California law, rather than Illinois law, applies because Intel's conduct with regard to the Pentium 4 processor took place in California. Intel named, promoted, marketed, tested, and priced the Pentium 4 processor in California, plaintiffs claim.

Intel, represented by Gordon Broom and Troy Bozarth of Edwardsville, claimed that California law should not be applied because a state court's application of another state's law to the claims of a nationwide class would be both unconstitutional and a "novel expansion" of choice-of-law jurisprudence.

Goldenhersh wrote, "In deciding which substantive law to apply, we look to our own choice-of-law rules because Illinois is the forum state.

"Because the trial court's analysis was fatally flawed, its order regarding class certification must be vacated and the cause remanded.

"To determine the state with the most significant relationship, the forum court considers the following contacts: (1) the place where the injury occurred, (2) the place where the conduct occurred, (3) the parties' domiciles, nationality, place of incorporation, and place of business, and (4) the place where the parties' relationship is centered.

"We disagree with Intel's assertions that applying California law would be unconstitutional and a novel expansion of choice-of-law jurisprudence.

"We fail to see how another state's interests, including our own, would be jeopardized by applying California law. Applying the law of Intel's home state is a sensible choice that cannot be said to be fundamentally unfair.

"...The billion-dollar Intel Inside campaign was devised and launched in California. Intel's marketing strategy was based upon putting forth a consistent message, across all 50 states, to convince the public that the Pentium 4 was the best and fastest processor ever and far superior to the Pentium III.

"With this in mind, we conclude that California's interest in the conduct of Intel is the most significant.

"Our decision today should not, however, be considered a new rule requiring our courts to always apply the consumer fraud law of a foreign state to adjudicate the claims of Illinois residents for products purchased in Illinois if the defendant's place of business is outside Illinois and the alleged misconduct originated from the defendant's place of business.

"Today's decision is a narrow one that focuses only on the facts of the instant case."

The case

Barbara's Sales, Inc., Donald Braddy, Michael Bundy, Bundy & Associates, Inc., Rhonda Byington, Rebecca S. Chandler, Vernon Anthony Duenas, Christopher R. Grout, Deanna L. Neubauer, Sandra Pyle, and Richard Rodriguez filed a nationwide, three-count, class action lawsuit against Intel alleging it engaged in unfair business practices through the omission, suppression, and concealment from the public that the Pentium 4 processor does not perform to the expectations of a reasonable consumer.

Counts one and two of the complaint were filed under the California Consumers Legal Remedies Act and California's unfair competition law, while count three was pled as an alternative count under the Illinois Consumer Fraud and Deceptive Business Practices Act.

Mendelsohn ruled that California law was inapplicable and found that the question to be answered was, "Does Illinois have a legitimate interest in applying California law to adjudicate this dispute and to insure that California residents (Intel) comply with California consumer-protection laws while serving Illinois and out-of-state consumers?"

Mendelsohn found that Illinois does not have a legitimate interest in applying California law to adjudicate the dispute because California does not have the "most significant relationship" with this action.

He also ruled that Illinois law could not be applied to a nationwide class and that, thus, class certification extended only to consumers who lived in or purchased a computer with a Pentium 4 processor in Illinois.

After his ruling, both parties appealed Mendelsohn's class certification order.

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