Guzman v. Diamond Candles, LLC (Lawyers Weekly No. 003-018-16, 14 pp.) (Thomas Schroeder, J.) 1:15-cv-00422; M.D.N.C.
Holding: In this putative class action, plaintiffs allege that defendant held an illegal lottery when, inside each candle sold on its website was a ring worth approximately $10 and a code the purchaser could enter on defendant’s website to discover whether she had won an additional ring worth up to $5,000. Any economic injury suffered by plaintiff Guzman most likely occurred in her home state of New York; under either the lex loci test or the most significant relationship test, New York law governs Guzman’s claim.
The court grants defendant’s motion to dismiss Guzman’s claim without prejudice. The court requires further briefing as to whether plaintiff Roberson may maintain this action.
Guzman contends that defendant should be bound by a disclosure on its website that any dispute related to the website will be governed by North Carolina law. She argues that this provision supports applying North Carolina law to her claims because all her interactions with defendant occurred via the website.
However, the nature of the liability allegedly to be imposed by the North Carolina Unfair and Deceptive Trade Practices Act (UDTPA) is ex delicto, not ex contractu. Contractual choice of law provisions should be set aside where, as here, the dispute does not involve any issue of contractual construction, interpretation, or enforceability.
Even if the court were to consider the choice of law provisions on defendant’s website, this factor tends more toward being neutral because the website also states that the “Ring Reveal” promotion “is subject to the federal law, and laws and regulations of the states where the Contest is run.”
The complaint limits recovery to North Carolina law. It appears that this was strategic, as the lawsuit seeks to certify a national class under the application of North Carolina law. Having concluded that New York, and not North Carolina, law applies to Guzman’s claims, the court will dismiss Guzman’s claims without prejudice to her ability to file her claim in an appropriate court under the appropriate law.
The Class Action Fairness Act of 2005 (CAFA) requires at least one member of the putative class to be diverse from the defendant. With the only remaining named plaintiff being a North Carolina resident pursuing only a North Carolina UDTPA claim, there is a question as to whether the court has subject matter jurisdiction under CAFA or otherwise. The court directs the parties to brief this issue.
Motion granted in part.