## Facts

- Tele-Save Merchandising Co., an Ohio corporation, negotiated with Consumers Distributing Co., a Canadian corporation with an office in New Jersey, for Tele-Save to operate a catalog retail showroom program connected to Consumers’ catalog operations.
- The parties reached a contract in July 1981 that included a choice-of-law clause providing the agreement would be governed and construed under New Jersey law.
- Tele-Save opened its Ohio store in September 1981 and sold merchandise sourced through the relationship.
- In January 1982, Consumers canceled its catalog program; Tele-Save sought reimbursement and return of merchandise, and Consumers refused.
- Tele-Save sued in federal court on diversity jurisdiction; the only claim pursued on appeal alleged violations of the Ohio Business Opportunity Plans Act, including failures to provide required written disclosures.
- Consumers moved for summary judgment, arguing the New Jersey choice-of-law clause controlled and prevented application of the Ohio Act; the district court granted summary judgment, and Tele-Save appealed.

## Issues

1. Whether the New Jersey choice-of-law clause was enforceable under Restatement (Second) of Conflict of Laws § 187 so as to displace application of the Ohio Business Opportunity Plans Act.
2. Whether applying New Jersey law would be contrary to a fundamental policy of Ohio, a state alleged to have a materially greater interest in the dispute.
3. Whether the chosen state (New Jersey) had a substantial relationship to the parties or transaction or another reasonable basis for selection.

## Decision

- The Sixth Circuit affirmed summary judgment for Consumers.
- The court held the New Jersey choice-of-law clause was valid and enforceable under Restatement § 187(2).
- New Jersey had a sufficient relationship and reasonable basis for selection because Consumers maintained a New Jersey office and parts of performance were connected to New Jersey.
- Applying New Jersey law was not shown to be contrary to a fundamental Ohio policy, even assuming the Ohio Act would otherwise apply to the transaction.
- Because the clause was enforced, the Ohio Business Opportunity Plans Act did not govern Tele-Save’s statutory claim.

## Legal Principles

- Under Restatement (Second) of Conflict of Laws § 187(2), a contractual choice of law is enforced unless (a) the chosen state lacks a substantial relationship or reasonable basis, or (b) applying the chosen law would violate a fundamental policy of a state with a materially greater interest that would otherwise supply the governing law.
- A forum state’s protective statute does not automatically override a contractual choice-of-law clause; the party resisting enforcement must show a conflict with a fundamental, non-waivable policy.
- The absence of an identical statute in the chosen state does not, by itself, establish that applying the chosen state’s law is contrary to the forum state’s fundamental policy.
- Where general contract and fraud remedies remain available under the chosen law, courts are less likely to treat displacement of a forum statute as a fundamental-policy violation.

## Conclusion

The court enforced the parties’ New Jersey choice-of-law clause and rejected the argument that Ohio’s business-opportunity statute reflected a fundamental policy sufficient to override that contractual selection, thereby foreclosing Tele-Save’s Ohio statutory claim.


Tele-Save Merchandising Co. v. Consumers Distributing Co., 814 F.2d 1120 (6th Cir. 1987)