If I may draw on my (necessarily narrow) experience as a class-action litigator, a rising number of class actions are asserting nationwide contract claims, and specifically claims for the breach of the duty of good faith and fair dealing. I could speculate on the reason for that (new class-action theories come into vogue; there has been no judicial opinion thoroughly examining whether a good-faith claim can be certified on a nationwide basis), but I’m really just mentioning it to explain why, as a defense lawyer, I’m glad to see Geoffrey Miller’s latest article in the Cardozo Law Review: "Bargains Bicoastal: New Light on Contract Theory."
Miller is a consummate empiricist, which makes him a great resource for class-action defense lawyers. Where other professors look at doctrine or theory, Miller usually zeroes in on data. In this article, he starts from one data point–more corporations choose New York law for their choice-of-law clauses in contracts–and asks why that might be so. His findings are particularly interesting to lawyers who defend multi-state class actions:
This Article … compares New York and California across a range of contract law issues. As would be expected, the laws are similar in broad outline. Each state respects freedom of contract and each recognizes other social and moral objectives that occasionally trump private agreements. Each state’s law grows out of a dialectic process in which competing values are reconciled in different settings. Yet a closer analysis reveals substantial differences in tone and substance. New York and California are close siblings—children of the common law and a shared legal and political tradition. But they are far from identical twins.
The differences between New York and California contract law turn out to align with the formalist-contextualist distinction in contract theory. New York judges are formalists. Especially in commercial cases, they have little tolerance for attempts to re-write contracts to make them fairer or more equitable, and they look to the written agreement as the definitive source of interpretation. California judges, on the other hand, more willingly reform or reject contracts in the service of morality or public policy; they place less emphasis on the written agreement of the parties and seek instead to identify the contours of their commercial relationship within a broader context framed by principles of reason, equity, and substantial justice.
(Emphasis added.) Why does this matter to class action defendants? Because it shows, in concrete fashion, why Judge Posner was right that "nuance can be important," even in contract law.
Class-action plaintiffs who bring contract claims often quote Judge Tjoflat’s statement in Klay v. Humana that
A breach is a breach is a breach, whether you are on the sunny shores of California or enjoying a sweet autumn breeze in New Jersey.
Miller, by demonstrating why more corporations choose New York law to govern their contracts, provides a thorough examination of how these two states apply many of the same principles in completely different ways. In the process, he shows that, depending on the place, a breach may not be a breach; it may be a valid rejection of a contract against public policy, or a violation of the duty of good faith, or any number of other things. And that is a valuable starting point for someone defending a multi-state class acton.