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      "BARBARA\u2019S SALES, INC., et al., Indiv. and on Behalf of All Others Similarly Situated, Plaintiffs-Appellants and Appellees, v. INTEL CORPORATION, Defendant-Appellant and Appellee (Hewlett-Packard Company et al., Defendants)."
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        "text": "JUSTICE GOLDENHERSH\ndelivered the opinion of the court:\nPlaintiffs, Barbara\u2019s Sales, Inc., Donald Braddy, Michael Bundy, Bundy & Associates, Inc., Rhonda Byington, Rebecca S. Chandler, Vernon Anthony Due\u00f1as, Christopher R. Grout, Deanna L. Neubauer, Sandra Pyle, and Richard Rodriguez, individually and on behalf of all others similarly situated, filed a class action lawsuit in the circuit court of Madison County against Intel Corp. (Intel). Plaintiffs are purchasers of computers containing Intel Pentium 4 computer processors. In their nationwide class action suit, plaintiffs alleged that Intel engaged in unfair business practices through \u201cthe omission, suppression^] and concealment from the public of the material fact that the Pentium 4 processor does not perform to the expectations of a reasonable consumer (i.e., is no faster than the Pentium III, Celeron[,] and AMD Athlon processors).\u201d The circuit court entered a class certification order granting in part and denying in part plaintiffs\u2019 motion for class certification. Plaintiffs and Intel filed a joint motion for an interlocutory appeal pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308). Hewlett-Packard Company and HP Direct, Inc., take no part in this appeal. The questions certified for appeal are (1) 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 (2) 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\u2019s decision on the choice-of-law issue, vacate the class certification, and remand with directions.\nBACKGROUND\nThe named plaintiffs reside in Illinois or Missouri, and most purchased their computers from either Illinois or Missouri retailers. Some of the named plaintiffs purchased their computers over the telephone from Dell, which is located in Texas. However, due to the nationwide sales of computers with Pentium 4 processors, all 50 states potentially have a relationship to this litigation.\nIntel is the world\u2019s largest manufacturer of microprocessors. Intel began manufacturing them in 1971, starting with the 80286 microprocessor. Since that time, Intel has manufactured the following processors, inter alia: 80386, i486, Pentium, Pentium Pro, Pentium II, Pentium III, and Pentium 4. The title changes for the microprocessors represent advances over the previous microprocessor.\nIntel\u2019s principal place of business is in California. Its headquarters, executive offices, and legal department are all located in California. Intel is incorporated under Delaware law. Intel\u2019s press relations group is located in California, and Intel launched its billion-dollar advertising campaign for its new Pentium 4 processors from California. Likewise, the group responsible for testing the performance of the Pentium 4 processors is located in California. The groups responsible for the design of the Pentium 4 processor are based in California and in Oregon.\nIntel\u2019s Pentium 4 advertising campaign was based on its claim that the Pentium 4 is the highest performance processor ever developed and vastly superior to its Pentium III processor. The \u201cIntel Inside\u201d campaign was communicated to consumers through both television and print ads, along with the \u201cIntel Inside\u201d sticker that accompanied virtually every computer sold with a Pentium 4 processor. Intel\u2019s decision to designate the \u201cWillamette\u201d generation of processors as the Pentium 4 was made by Intel\u2019s corporate marketing group and branding strategy group, both of which are located in California. Marketing activities relating to Pentium 4 processors, including presentations at trade shows and training at retail stores, took place at local stores throughout the country.\nIntel\u2019s marketing strategy was based upon ensuring a consistent message about the Pentium 4 that would cross \u201call forms of communication and every point of customer contact.\u201d Intel taught computer manufacturers such as Dell and Gateway and retailers such as Best Buy and CompUSA how to advertise and market computers built with Pentium 4 processors, thereby ensuring consistency in its message to consumers. Intel also sought to control independent organizations responsible for testing microprocessors\u2019 performance.\nThe testing of computer processors is called \u201cbenchmarking.\u201d Intel sought to educate the press on benchmarking and to influence consumer and technology analysts in an attempt to get them to champion the Pentium 4 processor. Internal documents reveal that Intel specifically set out to show that the Pentium 4 was the best processor to date: \u201cThe most important thing is our Brand and what it stands for. We have taught the market that four is better than three.\u201d\nAfter purchasing computers with Pentium 4 processors, the named plaintiffs were disappointed. Plaintiffs dispute Intel\u2019s claims about the Pentium 4 being vastly superior to the Pentium III. Plaintiffs\u2019 concerns are mainly with the early version of the Pentium 4, the \u201cWillamette\u201d generation. Intel\u2019s own documents reveal problems with the Pentium 4. For example, Intel revealed that most benchmarks showed a negative or zero performance gain for the Pentium 4 and that the performance of the Pentium 4 was not as high as expected. These low benchmark results were not disseminated to consumers.\nPlaintiffs filed a nationwide, three-count, class action lawsuit against Intel. Count I of plaintiffs\u2019 third amended complaint was filed under the California Consumers Legal Remedies Act (Cal. Civ. Code \u00a71750 et seq. (West 2002)). Count II was filed under California\u2019s unfair competition law (Cal. Bus. & Prof. Code \u00a717200 et seq. (West 2002)). Count III was pled as an alternative count under the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2002)).\nOn December 16, 2002, plaintiffs filed a motion for class certification. Intel opposed plaintiffs\u2019 motion. Plaintiffs and Intel submitted briefs, stipulations, affidavits, deposition testimony, and documentary evidence on behalf of their respective positions on the issue of class certification. On July 12, 2004, after a two-day hearing on plaintiffs\u2019 motion, the trial court entered a class certification order, granting in part and denying in part plaintiffs\u2019 motion.\nFirst, the trial court held that California law was inapplicable. The trial court found that the question to be answered was, \u201cDoes Illinois have a legitimate interest in applying California law to adjudicate this dispute and to insure [sic] that California residents (Intel) comply with California consumer-protection laws while serving Illinois and out-of-state consumers?\u201d The trial court found that Illinois does not have a legitimate interest in applying California law to adjudicate the dispute because California does not have the \u201cmost significant relationship\u201d with this action. The trial court denied class certification for count I and count II of plaintiffs\u2019 third amended complaint. Those counts were based upon California statutes.\nSecond, the trial court found 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. Plaintiffs and Intel both appeal from the trial court\u2019s order regarding class certification. Briefs, reply briefs, supplemental briefs, and amicus curiae briefs have been submitted by and in support of the parties.\nANALYSIS\nWe begin our analysis by first addressing plaintiffs\u2019 choice-of-law arguments. Plaintiffs assert the trial court misapplied Illinois choice-of-law principles when it held that Illinois has no interest in applying California law. According to plaintiffs, the standard is whether California has an interest in having California law applied to this dispute and whether California\u2019s interest is superior to Illinois\u2019s interest. Plaintiffs contend California law, rather than Illinois law, applies because Intel\u2019s conduct with regard to the Pentium 4 processor took place in California. Plaintiffs point out, for example, that Intel named, promoted, marketed, tested, and priced the Pentium 4 processor in California.\nIntel replies that California law should not be applied because a state court\u2019s application of another state\u2019s law to the claims of a nationwide class would be both unconstitutional and a \u201cnovel expansion\u201d of choice-of-law jurisprudence. The Chamber of Commerce submitted an amicus curiae brief on behalf of Intel in which it asserts that, under the Restatement (Second) of Conflict of Laws (1971), when a consumer resides in a state, receives a representation there, and purchases a product there, it is that state, not the state of a defendant\u2019s principal place of business, that has the \u201cmost significant relationship\u201d to the parties and to the transaction, and the Chamber of Commerce argues that the same choice-of-law principle applies in this nationwide class action. Intel and its supporters insist that the trial court correctly applied the Restatement choice-of-law principles in the instant case and that its decision should be affirmed.\nWe first point out that a circuit court\u2019s determination on a choice-of-law issue is reviewed de novo. Morris B. Chapman & Associates, Ltd. v. Kitzman, 307 Ill. App. 3d 92, 99, 716 N.E.2d 829, 836 (1999), aff\u2019d, 193 Ill. 2d 560, 739 N.E.2d 1263 (2000). In deciding which substantive law to apply, we look to our own choice-of-law rules because Illinois is the forum state. Kitzman, 193 Ill. 2d at 568, 739 N.E.2d at 1269. Illinois follows the Restatement (Second) of Conflict of Laws (1971) in making choice-of-law decisions. Section 221 requires that the law of the state with \u201cthe most significant relationship to the occurrence and the parties under the principles stated in [section] 6\u201d controls. Restatement (Second) of Conflict of Laws \u00a7\u00a7221, 6 (1971).\nWhile the trial court recognized that its analysis should be conducted pursuant to section 6, it is clear to us that it did not properly apply a section 6 analysis because it did not first consider which state has the most significant relationship to the occurrence. Instead, the trial court determined that the initial question to be answered is, \u201cDoes Illinois have a legitimate interest in applying California law to adjudicate this dispute and to insure [sic] that California residents (Intel) comply with California consumer-protection laws while serving Illinois and out-of-state consumers?\u201d The trial court answered this question in the negative, finding, \u201cIllinois does not have a legitimate interest in applying California law to adjudicate this dispute.\u201d Because the trial court\u2019s analysis was fatally flawed, its order regarding class certification must be vacated and the cause remanded with the following in mind.\nAs previously stated, section 221 of the Restatement (Second) of Conflict of Laws (1971) requires that the law of the state that has \u201cthe most significant relationship to the occurrence and the parties under the principles stated in [section] 6\u201d controls. Restatement (Second) of Conflict of Laws \u00a7\u00a7221, 6 (1971). Section 6(2) sets forth that when two or more jurisdictions have an interest in applying their law to a case, the following factors are relevant in choosing which rule of law to apply:\n\u201c(a) the needs of the interstate and international systems,\n(b) the relevant policies of the forum,\n(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,\n(d) the protection of justified expectations,\n(e) the basic policies underlying the particular field of law,\n(f) certainty, predictability!,] and uniformity of result, and\n(g) ease in the determination and application of the law to be applied.\u201d Restatement (Second) of Conflict of Laws \u00a76(2) (1971).\nIn addition to the broad general factors found in section 6 of the Restatement, section 148(2) provides specific rules regarding the tort of fraud and misrepresentation.\n\u201c(2) When the plaintiffs action in reliance took place in whole or in part in a state other than that where the false representations were made, the forum will consider *** the following contacts *** in determining the state which *** has the most significant relationship ***:\n(a) the place, or places, where the plaintiff acted in reliance upon the defendant\u2019s representations,\n(b) the place where the plaintiff received the representations,\n(c) the place where the defendant made the representations,\n(d) the domicil, residence, nationality, place of incorporation!,] and place of business of the parties,\n(e) the place where a tangible thing which is the subject of the transaction between the parties was situated at the time, and\n(f) the place where the plaintiff is to render performance under a contract which he has been induced to enter by the false representations of the defendant.\u201d Restatement (Second) of Conflict of Laws \u00a7148(2) (1971).\nIn essence, the locale with the most significant relationship with the occurrence and with the parties determines their rights and liabilities. Ingersoll v. Klein, 46 Ill. 2d 42, 47, 262 N.E.2d 593, 596 (1970). 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\u2019 domiciles, nationality, place of incorporation, and place of business, and (4) the place where the parties\u2019 relationship is centered. Ingersoll, 46 Ill. 2d at 47-48, 262 N.E.2d at 596.\nHere, the injury to plaintiffs, in paying for a computer with a Pentium 4 processor that is allegedly no better than a Pentium III, occurred throughout the country. In reality, all 50 states and the District of Columbia bear some relationship to this litigation by virtue of the nationwide sales of computers containing Pentium 4 processors. The question is whether the relationship of each state where the computers were purchased is more significant to the parties and this litigation than that of the State of California, the principal place of business of Intel and the place where the conduct leading to the injury occurred almost exclusively. Not only is California home to Intel\u2019s headquarters, but its corporate marketing group and press relations group are located in California. The billion-dollar Intel Inside campaign was devised and launched in California. Intel\u2019s 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.\nThe Intel group responsible for the design of the Pentium 4 is also located in California. In addition, Intel tested the Pentium 4 in California and disseminated many of those results, accurate or not, or chose not to disseminate those results from California. Under these circumstances, we conclude that California\u2019s interest in having its regulatory schemes applied to the conduct of Intel is most significant. California is clearly the only state where conduct relevant to all the potential class members occurred.\nCalifornia law takes on added significance when the relevant factors stated in section 6 of the Restatement are considered. The needs of the interstate system and the basic policies of predictability and uniformity of result require one forum with one result rather than results in 51 jurisdictions with the distinct possibility of conflicting decisions. We recognize that some of the contacts listed in section 148(2) of the Restatement clearly favor each plaintiffs home state. Likewise, we respect the interest of each home state in applying its local law. Nevertheless, as we have previously stated:\n\u201c \u2018[C]ontacts obtain significance only to the extent that they relate to the policies and purposes sought to be vindicated by the conflicting laws.\u2019 [Citations.] Instead of a mere counting of contacts, what is therefore required is a \u2018consideration of the interests and public policies of potentially concerned states and a regard as to the manner and extent of such policies as they relate to the transaction in issue.\u2019 [Citations.]\u201d Mitchell v. United Asbestos Corp., 100 Ill. App. 3d 485, 493, 426 N.E.2d 350, 355 (1981).\nWith this in mind, we conclude that California\u2019s interest in the conduct of Intel is the most significant.\nWe disagree with Intel\u2019s assertions that applying California law would be unconstitutional and a novel expansion of choice-of-law jurisprudence. Our conclusion that California law is applicable is consistent with the constitutional requirement \u201c \u2018that for a State\u2019s substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.\u2019 \u201d Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 818, 86 L. Ed. 2d 628, 646, 105 S. Ct. 2965, 2978 (1985), quoting Allstate Insurance Co. v. Hague, 449 U.S. 302, 312-13, 66 L. Ed. 2d 521, 531, 101 S. Ct. 633, 640 (1981). We fail to see how another state\u2019s interests, including our own, would be jeopardized by applying California law. Applying the law of Intel\u2019s home state is a sensible choice that cannot be said to be fundamentally unfair.\nIn support of our decision, we rely on Martin v. Heinold Commodities, Inc., 117 Ill. 2d 67, 510 N.E.2d 840 (1987). In Martin, the Illinois Supreme Court expressly approved of applying the law of a defendant\u2019s home state in a consumer fraud action brought by a class of plaintiffs consisting of both Illinois and non-Illinois residents. The plaintiffs brought suit against an Illinois company that served as a broker for the plaintiffs in commodities transactions. The broker relationship was established by a contract that contained allegedly deceptive statements. The Illinois Supreme Court allowed the certification of both Illinois and non-Illinois plaintiffs\u2019 claims under the Illinois Consumer Fraud and Deceptive Business Practices Act. Martin, 117 Ill. 2d at 80-83, 510 N.E.2d at 846-47. Likewise, our decision that the law of defendant\u2019s principal place of business is applicable in this multistate class action lawsuit is neither unconstitutional nor a novel expansion of choice-of-law jurisprudence.\nOur 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\u2019s place of business is outside Illinois and the alleged misconduct originated from the defendant\u2019s place of business. Today\u2019s decision is a narrow one that focuses only on the facts of the instant case. Here, after (1) isolating the issue and defining the conflict, (2) identifying the policies embraced in the conflicting laws, and (3) examining the contacts of the respective jurisdictions in order to determine which has a superior connection with the occurrence and a superior interest in having its policy or law applied (see Kitzman, 307 Ill. App. 3d at 101, 716 N.E.2d at 838, aff\u2019d, 193 Ill. 2d 560, 739 N.E.2d 1263 (2000)), we conclude that California law is applicable. However, in another factual situation, this analysis might very well produce a different result.\nFinally, we note that the parties submitted supplemental briefs regarding the applicability of Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill. 2d 100, 835 N.E.2d 801 (2005), to the instant case. While Avery is an important case in the development of class action litigation, its holdings are not relevant to the instant appeal because of our determination that California law applies. Avery in no way breaks with choice-of-law precedent and does not change the choice-of-law analysis to be applied.\nCONCLUSION\nAfter careful consideration, we find that the trial court failed to employ the proper analysis and misapplied our state\u2019s choice-of-law rules. We find that California has the most significant relationship to the occurrence and to the parties. California law, not Illinois law, is applicable. Accordingly, we hereby vacate the order of the circuit court of Madison County regarding class certification. We remand with directions for the circuit court to apply California substantive law and to reconsider its class certification order in light of the applicability of California law.\nCertified questions answered; order vacated; cause remanded with directions.\nCHAPMAN and HOPKINS, JJ., concur.",
        "type": "majority",
        "author": "JUSTICE GOLDENHERSH"
      }
    ],
    "attorneys": [
      "Stephen M. Tillery and Aaron M. Zigler, both of Korein Tillery, of St. Louis, Missouri, and Stephen A. Swedlow and Robert L. King, both of Swed-low & King, LLC, of Chicago, for Barbara\u2019s Sales, Inc., et al.",
      "Edward M. Crane, R. Ryan Stoll, and Gregory S. Bailey, all of Skadden, Arps, Slate, Meagher & Flom, LL\u00ed\u00a1 of Chicago, Gordon R. Broom, Troy A. Bozarth, and Wayne D. Skigen, all of Burroughs, Hepler, Broom, MacDonald, Hebrank & True, LLF\u00a1 of Edwardsville, and Terry E. Fenzl, Anthony L. Marks, Timothy J. Franks, and Dan L. Bagatell, all of Perkins Coie Brown & Bain, EA, of Phoeniz, Arizona, for Intel Corporation.",
      "Robert J. Sprague, of Sprague & Urban, of Belleville, and Stephen C. Mudge, of Reed, Armstrong, Gorman, Mudge & Morrissey, EC., of Edwards-ville, for amicus curiae."
    ],
    "corrections": "",
    "head_matter": "BARBARA\u2019S SALES, INC., et al., Indiv. and on Behalf of All Others Similarly Situated, Plaintiffs-Appellants and Appellees, v. INTEL CORPORATION, Defendant-Appellant and Appellee (Hewlett-Packard Company et al., Defendants).\nFifth District\nNo. 5\u201405\u20140078\nOpinion filed July 25, 2006.\nStephen M. Tillery and Aaron M. Zigler, both of Korein Tillery, of St. Louis, Missouri, and Stephen A. Swedlow and Robert L. King, both of Swed-low & King, LLC, of Chicago, for Barbara\u2019s Sales, Inc., et al.\nEdward M. Crane, R. Ryan Stoll, and Gregory S. Bailey, all of Skadden, Arps, Slate, Meagher & Flom, LL\u00ed\u00a1 of Chicago, Gordon R. Broom, Troy A. Bozarth, and Wayne D. Skigen, all of Burroughs, Hepler, Broom, MacDonald, Hebrank & True, LLF\u00a1 of Edwardsville, and Terry E. Fenzl, Anthony L. Marks, Timothy J. Franks, and Dan L. Bagatell, all of Perkins Coie Brown & Bain, EA, of Phoeniz, Arizona, for Intel Corporation.\nRobert J. Sprague, of Sprague & Urban, of Belleville, and Stephen C. Mudge, of Reed, Armstrong, Gorman, Mudge & Morrissey, EC., of Edwards-ville, for amicus curiae."
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  "last_page_order": 1039
}
