145 N.J. 478 (1996) 679 A.2d 106

SAMUEL GANTES, ADMINISTRATOR AD PROSEQUENDUM OF GRACIELA GONZALEZ, ON BEHALF OF THE ESTATE OF GRACIELA GONZALEZ AND ON BEHALF OF THE HEIRS-AT-LAW OF GRACIELA GONZALEZ, PLAINTIFF-APPELLANT,
v.
KASON CORPORATION, DEFENDANT-RESPONDENT, AND OTTO CUYLER ASSOCIATES AND XYZ CO. I-V (BEING FICTITIOUS BUSINESS ENTITIES WHOSE IDENTITIES ARE CURRENTLY UNKNOWN), DEFENDANTS.

The Supreme Court of New Jersey.

Argued October 10, 1995. Decided July 23, 1996.

*481 Alan Y. Medvin argued the cause for appellant (Medvin & Elberg, attorneys).

Peter B. Van Deventer, Jr., argued the cause for respondent (Robinson, St. John & Wayne, attorneys; Douglas H. Amster and John S. Wisniewski, on the brief).

The opinion of the Court was delivered by HANDLER, J.

In this case, a young woman, working in a chicken processing plant in Georgia, was killed when struck in the head by a moving part of a machine. The machine had been manufactured more than thirteen years before the fatal accident by a New Jersey corporation with its principal place of business in Linden, New Jersey.

Representatives of the decedent, asserting that the machine was defective, brought this personal-injury action based on claims of survivorship and wrongful-death against the New Jersey manufacturer *482 in the Law Division in Union County. The action was filed within New Jersey's two-year statute of limitations for personal-injury actions, but beyond Georgia's ten-year statute of repose applicable to products-liability claims against manufacturers. Because of the conflict between the two statutes, the case poses a fundamental choice-of-law issue over which statute applies and whether, depending on that choice, the action will be barred.

I

Graciela Gonzalez was a twenty-two year-old who lived in Georgia with her husband and two small children. She was employed at a chicken processing plant called Dutch Quality House in Gainesville, Georgia. On February 27, 1991, Ms. Gonzalez was killed at work when she was struck in the head by a moving part of a shaker machine. Plaintiff Samuel Gantes, also a Georgia resident, is the administrator ad prosequendum for the estate and heirs of the decedent.

The shaker machine was manufactured by defendant Kason Corporation, which is a New Jersey corporation with its principal place of business in Linden, New Jersey. It was disputed below whether the machine was manufactured at defendant's New Jersey plant, or at one of its plants in New York. However, for purposes of the disposition by summary judgment, the courts below assumed that defendant manufactured the machine in New Jersey.

Evidence indicating New Jersey manufacture included the original certification to the trial court of Kason's president, Lawrence H. Stone. This certification expressly stated that defendant manufactured the shaker machine, a forty-eight inch "Kason Vibroscreen," in the Linden, New Jersey plant. In addition, numerous documents affixed to Stone's original certification, consisting of correspondence, invoices, receipts, and the like, indicate that the machine was manufactured in and shipped from New Jersey. They indicate that defendant originally sold the shaker machine in 1977 to Salvo Corporation of Fall River, Massachusetts, for shipment *483 to Snyder's Potato Chips in Berlin, Pennsylvania. Thus, all of the correspondence from defendant regarding that original sale and shipment to Snyder's Potato Chips contain a New Jersey return address. With one exception, all of the receipts, invoices and other similar documents regarding that sale and shipment contain defendant's New Jersey letterhead. In addition, the "purchase order" sent from Salvo Corporation to defendant was directed to a New Jersey address belonging to defendant. Finally, the Federal Express invoice that documents the shipment of the machine to Snyder's Potato Chips reflects that defendant made that shipment from its offices in Linden, New Jersey. The "Instruction Manual" for the Kason Vibroscreen, another document affixed to Stone's original certification, also supports the conclusion that defendant manufactured the machine in New Jersey. That manual lists defendant's Linden, New Jersey address and telephone number as the point of contact for "additional information or assistance."^[1]

It is undisputed that defendant placed the shaker machine into the stream of commerce in November 1977 when it shipped the machine to Snyder's Potato Chips in Pennsylvania. After April 1985, Snyder's Potato Chips sold the machine to Otto Cuyler Associates. Otto Cuyler Associates later sold the machine to Dutch Quality House, Ms. Gonzalez's Georgia employer.

On February 23, 1993, plaintiff filed this action on behalf of the estate and heirs of Ms. Gonzalez against defendant Kason Corporation and Otto Cuyler Associates and various unidentified business *484 entities. The complaint seeks money damages based on strict liability. Defendant filed an answer that contained a general denial of liability, as well as numerous affirmative defenses, crossclaims for contribution and indemnification against all co-defendants. The trial court, in a published opinion, 278 N.J. Super. 473, 651 A.2d 503 (Law Div. 1993), determined that Georgia's statute of repose applies and bars plaintiff's action, and granted defendant's motion for summary judgment. The Appellate Division affirmed that judgment. 276 N.J. Super. 586, 648 A.2d 517 (App.Div. 1994). Based on a dissent in the Appellate Division, the appeal is before us as of right. R. 2:2-1(a)(2).

II

The issue before the Court is whether to invoke the Georgia statute of repose or the New Jersey statute of limitations. Because the action was brought in New Jersey, the issue must be determined in accordance with this State's choice-of-law rule. New Jersey's rule applies a flexible "governmental-interest" standard, which requires application of the law of the state with the greatest interest in resolving the particular issue that is raised in the underlying litigation. Veazey v. Doremus, 103 N.J. 244, 247-49, 510 A.2d 1187 (1986); see State Farm Mutual Automobile Ins. Co. v. Estate of Simmons, 84 N.J. 28, 36-37, 417 A.2d 488 (1980); O'Keeffe v. Snyder, 83 N.J. 478, 490, 416 A.2d 862 (1980).

A.

The initial prong of the governmental-interest analysis entails an inquiry into whether there is an actual conflict between the laws of the respective states, a determination that is made on an issue-by-issue basis. Veazey, supra, 103 N.J. at 248, 510 A.2d 1187. The particular issue to be resolved in this case — whether the action was filed timely — is subject to an obvious and direct conflict between Georgia's ten-year statute of repose and New Jersey's two-year statute of limitations.

*485 The Georgia statute of repose bars the commencement of strict products-liability actions "after ten years from the date of the first sale for use or consumption of the personal property causing or otherwise bringing about the injury." O.C.G.A. § 51-1-11(b)(2). See Chrysler Corp. v. Batten, 264 Ga. 723, 450 S.E.2d 208, 212 (noting "strict-liability actions filed more than ten years after the `date of the first sale for use or consumption of' the product are completely barred"), rev'd on other grounds, 264 Ga. 723, 450 S.E.2d 208 (1994); LFE Corp. v. Edenfield, 187 Ga. App. 785, 371 S.E.2d 435, 436 (1988) (ruling that where statute of repose was enacted both before injury occurred and before complaint was filed, statute applies even if first sale occurred before statute's enactment). Ms. Gonzalez's accident occurred more than ten years after defendant made its "first sale for use" of the shaker machine, in November 1977. It is undisputed that this action is barred by Georgia's ten-year statute of repose applicable to products-liability actions.

New Jersey law provides that personal-injury actions, including those based on strict-products liability, are governed by a two-year statute of limitations. N.J.S.A. 2A:14-2. It is clear that under New Jersey's statute of limitations, plaintiff's suit would not be barred because the complaint was filed less than two years after Ms. Gonzalez' accident.

B.

The second prong of the governmental-interest analysis seeks to determine the interest that each state has in resolving the specific issue in dispute. That analysis requires the court to "identify the governmental policies underlying the law of each state and how those policies are affected by each state's contacts to the litigation and to the parties." Veazey, supra, 103 N.J. at 248, 510 A.2d 1187. We look first to the policies that underlie the respective state statutes that are in conflict in this case.

In 1978, the Georgia legislature enacted its statute of repose, O.C.G.A. § 51-1-11(b)(2), as an amendment to its strict products-liability *486 statute. Daniel v. American Optical Corp., 251 Ga. 166, 304 S.E.2d 383, 384 (1983). In Love v. Whirlpool Corporation, 264 Ga. 701, 449 S.E.2d 602 (1994), the Georgia Supreme Court explained that its legislature adopted the statute of repose to serve the dual purposes of stabilizing insurance underwriting and eliminating stale claims. In so concluding, the court indicated that the statute of repose was the legislature's response to a 1978 report of the Senate Products Liability Study Committee that addressed insurance-industry problems generated by the open-ended liability of manufacturers, and recommended "that a ten-year statute of repose be enacted." Id. 449 S.E.2d at 605. Just one month after its decision in Love, the Georgia Supreme Court again had occasion to address the statute of repose. Chrysler Corp., supra, 450 S.E.2d at 211-13. There the court reiterated: "The ten-year statute of repose was enacted in order to address problems generated by the open-ended liability of manufacturers so as to eliminate stale claims and stabilize products liability underwriting." Id. at 212.

New Jersey's statute of limitations applicable to personal-injury actions reflects well-articulated policy. In Rivera v. Prudential Property & Casualty Ins. Co., 104 N.J. 32, 39, 514 A.2d 1296 (1986), the Court stated the rationale for statutes of limitation:

The purposes of statutes of limitations, oft-repeated by this Court, are two-fold: (1) to stimulate litigants to pursue a right of action within a reasonable time so that the opposing party may have a fair opportunity to defend, thus preventing the litigation of stale claims, and (2) `to penalize dilatoriness and serve as a measure of repose.' E.g., Ochs v. Federal Ins. Co., 90 N.J. 108, 112, 447 A.2d 163 (1982) (quoting Farrell v. Votator Div. of Chemetron Corp., 62 N.J. 111, 115, 299 A.2d 394 (1973).

The purpose underlying any statute of limitations is "to `stimulate to activity and punish negligence' and `promote repose by giving security and stability to human affairs.'" Savage v. Old Bridge-Sayreville Medical Group, P.A., 134 N.J. 241, 248, 633 A.2d 514 (1993) (quoting O'Keeffe, supra, 83 N.J. at 491, 416 A.2d 862 (quoting Wood v. Carpenter, 101 U.S. 135, 139, 25 L.Ed. 807, 808 (1879))). In addition to encouraging the diligent and timely *487 prosecution of claims, the statute of limitations is subject to the "discovery rule." See Savage, supra, 134 N.J. at 246-50, 633 A.2d 514. That dimension of the statute of limitations incorporates flexible, equitable considerations based on notions of fairness to the parties and the justice in allowing claims to be resolved on their merits. O'Keeffe, supra, 83 N.J. at 491, 416 A.2d 862. We note, further, that New Jersey's statute of limitations applies to all personal-injury actions, including those based on strict products-liability. Apgar v. Lederle Laboratories, 123 N.J. 450, 455, 588 A.2d 380 (1991); Vispisiano v. Ashland Chemical Co., 107 N.J. 416, 426, 527 A.2d 66 (1987). New Jersey has no special rule, similar to Georgia's statute of repose, governing the accrual or limitation of products-liability actions.

Whether the policy that underlies the law of a state gives rise to a governmental interest calling for the application of that state's law depends on the nature of the contacts that the state has to the litigation and to the parties. The kind of analysis of those contacts to be undertaken is exemplified by Heavner v. Uniroyal, Inc., 63 N.J. 130, 305 A.2d 412 (1973) and an earlier decision, Marshall v. Geo. M. Brewster & Son, Inc., 37 N.J. 176, 180 A.2d 129 (1962).

In Heavner, residents of North Carolina sued a New Jersey corporation for personal injury that resulted when a truck tire manufactured by the defendant blew out while one of the plaintiffs was driving a truck in North Carolina. 63 N.J. at 133-34, 305 A.2d 412. The defendant was a national corporation whose only contact with New Jersey was that it was incorporated here. Id. at 134, 305 A.2d 412. There was no allegation that defendant had actually manufactured the allegedly defective tire in New Jersey. The Court concluded that New Jersey had "no substantial interest in the matter," and consequently the statute of limitations of North Carolina would be applied. Id. at 141, 305 A.2d 412.

Marshall involved an action by an Ohio resident against various New Jersey corporations that were part of a joint venture doing construction work on a railroad crossing in Pennsylvania. 37 N.J. *488 at 178, 180 A.2d 129. The plaintiff's decedent was killed in an automobile accident at that railroad crossing. Ibid. The defendants in Marshall were not merely incorporated in New Jersey, but actually had their principal places of business here. Id. at 188, 180 A.2d 129. The Court approved of the application of New Jersey limitations law, rather than Pennsylvania's more restrictive limitations law. Id. at 176, 180 A.2d 129.

The Court in Heavner acknowledged the analysis and result reached in the Marshall case. It noted that Marshall, in contrast to Heavner, "presented a different factual picture," and that Marshall exemplified a case where "there may very well be" a significant interest that could require the application of New Jersey limitations law. Heavner, supra, 63 N.J. at 141 n. 6, 305 A.2d 412. As explained by Judge Pressler in her dissenting opinion below, the critical factual distinction between Heavner and Marshall was that the defendant in Marshall had a significant presence in New Jersey by virtue of its doing business here, while the defendant in Heavner had a "virtual nonpresence" because its only contact with New Jersey was that it was incorporated in this State. 276 N.J. Super. at 593, 648 A.2d 517.

In this case, as in Marshall, the machine causing the fatal injury was manufactured in, and placed into the stream of commerce from, this State. The question thus posed is whether, in the context of this litigation, those contacts give rise to a substantial governmental interest that would be served by applying New Jersey's statute of limitations and permitting this action to proceed.

The courts below acknowledged that, in this case, the only New Jersey interest implicated by its contacts with the parties is that derived from the status of the defendant as a domestic manufacturer. That interest is in deterring the manufacturing of unsafe products within its borders. However, both the trial court and Appellate Division majority determined that a deterrent interest is not significant enough to warrant the application of New Jersey's *489 limitations law. 278 N.J. Super. at 478-79, 651 A.2d 503, 276 N.J. Super. at 589-90, 648 A.2d 517.

This Court has recognized generally that a purpose of the tort laws is to encourage reasonable conduct, and, conversely, to discourage conduct that creates an unreasonable risk of injury to others. E.g., Hopkins v. Fox & Lazo, 132 N.J. 426, 448, 625 A.2d 1110 (1993); People Express Airlines, Inc. v. Consolidated Rail Corp., 100 N.J. 246, 255, 495 A.2d 107 (1985). That deterrent goal of the tort laws is effectuated through the recognition of a duty to exercise reasonable care and the imposition of liability for the breach of such a duty. E.g. Weinberg v. Dinger, 106 N.J. 469, 486-87, 524 A.2d 366 (1987). We note also that Georgia has recognized that "courts are concerned not only with compensation of the victims but with admonition of the wrongdoer" and that the "`prophylactic' fact of preventing future harm has been quite important in the field of torts." Denton v. Con-Way Southern Express, Inc., 261 Ga. 41, 402 S.E.2d 269, 270 (1991) (quoting Prosser & Keeton on Torts § 4 at 25 (5th ed. 1984)), overruled on other grounds, McKin v. Gilbert, 208 Ga. App. 788, 432 S.E.2d 233 (1993).

The interest in deterrence has been recognized as a relevant factor to be considered in choice-of-law decisions. See, e.g., Pfau v. Trent Aluminum Co., 55 N.J. 511, 524, 263 A.2d 129 (1970) (noting "We are not certain that a defendant's domicile lacks an interest in seeing that its domiciliaries are held to the full measure of damages or the standard of care which that state's law provide[s] for."); Mueller v. Parke Davis, 252 N.J. Super. 347, 354-55, 599 A.2d 950 (App.Div. 1991); Seals v. Langston Co., 206 N.J. Super. 408, 412, 502 A.2d 1185 (App.Div.), certif. denied, 104 N.J. 386, 517 A.2d 392 (1986); Pine v. Eli Lilly & Co., 201 N.J. Super. 186, 192, 492 A.2d 1079 (App.Div. 1985); Deemer v. Silk City Textile Mach. Co., 193 N.J. Super. 643, 650, 475 A.2d 648 (App.Div. 1984).

The goal of deterrence, acknowledged generally to be part of tort law, is especially important in the field of products-liability *490 law. In Fischer v. Johns-Manville Corp., 193 N.J. Super. 113, 124, 472 A.2d 577 (1984), aff'd, 103 N.J. 643, 512 A.2d 466 (1986), the Appellate Division noted that since Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960), this State's judiciary has been "in the vanguard of the development of a responsive and progressive products liability law" and "has led the country in its ideological commitment to the protection of consumers and concomitant consequence of inducing those who place products into the stream of commerce to act with social responsibility." Judge Pressler observed in her dissent below "the development of [products liability law in New Jersey] and the consequent imposition of strict liability on manufacturers has been a powerful force — perhaps the most powerful force — in effecting, over the last two and a half decades, product safety and social responsibility by industry." 276 N.J. Super. at 594, 648 A.2d 517.

We conclude that this State has a strong interest in encouraging the manufacture and distribution of safe products for the public and, conversely, in deterring the manufacture and distribution of unsafe products within the state. That interest is furthered through the recognition of claims and the imposition of liability based on principles of strict products-liability law.

Both the Appellate Division majority and the trial court found that the interest in deterrence would be outweighed by the possibility of unduly discouraging manufacturing in New Jersey if products-liability actions were allowed in circumstances where they would be barred in the courts where the cause of action arose. 278 N.J. Super. at 479, 651 A.2d 503 (quoting Deemer, supra, 193 N.J. Super. at 650-652, 475 A.2d 648); 276 N.J. Super. at 589-90, 648 A.2d 517. The courts below relied on Seals, supra, 206 N.J. Super. 408, 502 A.2d 1185.

Seals involved a New Jersey action for damages for injuries caused in Louisiana by a defective machine manufactured in New Jersey by a New Jersey corporation. 206 N.J. Super. at 409, 502 A.2d 1185. The court recognized a "noticeable difference" between Heavner and the case before it, namely, that in Seals, New *491 Jersey was the place of manufacture of the allegedly defective machine. Id. at 411, 502 A.2d 1185. Notwithstanding that difference, the court found Louisiana's limitations law applicable, Ibid., concluding that New Jersey's deterrence interest did not warrant the application of New Jersey's limitations law. 206 N.J. Super. at 413-14, 502 A.2d 1185. It also observed that the court has "no significant interest in exposing New Jersey manufacturers to greater jeopardy in our courts than they would face where a cause of action against them arose, or in a disinterested forum provided by another state," further explaining that "if we were to apply rules that favor foreign plaintiffs against local manufacturers, when we could not do so against foreign ones, we would pointlessly discriminate against our own residents." Id. at 412-13, 502 A.2d 1185.

We disagree with the rationale employed in Seals and the lower courts' reliance on that decision. In light of this State's commitment to protection of the public against the manufacture and distribution of unsafe products and the strong governmental interest in deterrence against such practices, it does not seem "pointless" to apply this State's statute of limitations to resident manufacturers, even if the suit would be barred against foreign manufacturers. The difference in result is grounded in the distinctive policy concerns that each state has in making its domestic manufacturers amenable to suits. A governmental interest based on a policy of deterrence that seeks to discourage domestic manufacturers from the manufacture and distribution of unsafe products through the allowance of a products-liability action is not unnecessarily burdensome nor is it discriminatory or baseless.

It is significant that New Jersey's statute of limitations does not single out manufacturers or distributors of manufactured products as a class meriting special protection from personal-injury tort actions. New Jersey recently enacted a statute that provides and clarifies certain standards in products-liability actions, yet leaves intact many common-law principles that define that cause of action. N.J.S.A. 2A:58C-1 to -11; Senate Judiciary Committee, *492 Statement to Senate Bill No. 2805 at 1 (July 22, 1987). See, e.g., Roberts v. Rich Foods, Inc., 139 N.J. 365, 374-75, 654 A.2d 1365 (1995). That statute does not prescribe a limitations period that is more lenient toward or protective of manufacturers than the general personal-injury limitations law applicable to other tortfeasors. It is also significant in the circumstances of this litigation, a strict-products liability action, that New Jersey does not have a statute of repose that qualifies or limits the liability of manufacturers. Although our Legislature has enacted a statute of repose for certain causes of actions, see N.J.S.A. 2A:14-1.1 (creating ten-year statute of repose for claims arising out of defective and unsafe conditions of improvements of real property), it has not enacted such a statute for personal-injury actions based on unsafe products.

The lower courts also concluded