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FUTURESELECT PORTFOLIO MANAGEMENT INC II LLC LP IIW LLC V. LLP KPMG LLP

FUTURESELECT PORTFOLIO MANAGEMENT INC II LLC LP IIW LLC

v. LLP KPMG LLP
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Supreme Court of Washington,En Banc.

FUTURESELECT PORTFOLIO MANAGEMENT, INC.; Futureselect Prime Advisor II LLC; The Merriwell
Fund, LP; and Telesis IIW, LLC, Respondents, v. TREMONT GROUP HOLDINGS, INC.; Tremont Partners,
Inc.; Oppenheimer Acquisition Corporation; Massachusetts Mutual Life Insurance Co.; and Ernst &
Young LLP, Petitioners, Goldstein Golub Kessler LLP and KPMG LLP, Defendants.

No. 89303–9.

Decided: July 17, 2014

Timothy J. Filer, Foster Pepper PLLC, David F. Taylor, Cori Gordon Moore, Perkins Coie LLP, Christopher Holm Howard,
Averil Budge Rothrock, Claire Louise Rootjes, Schwabe Williamson & Wyatt PC, Stephen Michael Rummage, Roger
Ashley Leishman, Davis Wright Tremaine LLP, Seattle, WA, Seth M. Schwartz, Jason C. Vigna, Skadden, Arps, Slate,
Meagher & Flom LLP, New York, NY, David A. Kotler, Dechert LLP, Princeton, NJ, Robert B. Hubbell, Morrison Foerster,
LLP, Los Angeles, CA, for Petitioners. Jeffrey M. Thomas, Jeffrey Iver Tilden, Gordon Tilden Thomas & Cordell LLP,
Seattle, WA, Emily AlexanderSteven W. Thomas, Thomas Alexander Forrester LLP, Venice, CA, for Respondents.
¶ 1 Between 1997 and 2008, FutureSelect, a Redmond based nancial company, invested nearly $200 million in
Tremont's Rye Funds, which pooled and fed money into Bernie Madoff's fraudulent securities investment scheme.
These investments were lost when Madoff's fraud unraveled. FutureSelect sued Tremont, Oppenheimer Acquisition
Corp. and MassMutual (Tremont's parent companies), and Ernst & Young and Tremont's other auditors for their failure
to conduct due diligence on Madoff's operations. FutureSelect alleged violations of the Washington state securities act
(WSSA), chapter 21 .20 RCW; negligence; and negligent misrepresentation.

¶ 2 The trial court dismissed on the pleadings, nding Washington's security law did not apply and that Washington
courts did not have jurisdiction over Oppenheimer. The Court of Appeals reversed. Defendants seek to reinstate the
trial court's ndings. Oppenheimer argues that it lacks the requisite minimum contacts with Washington for personal
jurisdiction. The defendants collectively argue that dismissing for failure to state a claim is appropriate because New
York law—which does not provide for a private cause of action under its state securities act, rather than Washington
law, which does—applies. Ernst and Young also contends that it is not a “seller” under the WSSA. We a rm the Court
of Appeals.

FACTS

¶ 3 The lead plaintiff, FutureSelect Portfolio Management Inc., is headquartered in Washington and manages a number
of investment funds. The rst named defendant, Tremont Partners Inc., is headquartered in New York and serves as
the general partner to the Rye Funds,1 whose status as feeder funds to Bernard L. Madoff Investment Securities LLC
(Madoff) is at the heart of this dispute.

¶ 4 The relationship between FutureSelect and Tremont began when a Tremont representative visited FutureSelect's
Redmond o ces in 1997 to solicit FutureSelect's investment in the Rye Funds. This initiated a series of discussions
between FutureSelect and Tremont regarding the Rye Funds. Tremont claimed that it was offering FutureSelect a rare,
and potentially eeting, opportunity to invest with Madoff. Tremont also made assurances about its oversight and
understanding of Madoff's operation. Relying on these assurances and the audit opinions of the accounting rm hired
by Tremont, FutureSelect decided to invest in the Rye Funds in 1998. FutureSelect and Tremont had monthly ongoing
communications about Madoff and the performance of the Rye Funds. Tremont claimed that its ongoing oversight and
testing of Madoff proved satisfactory. Tremont also provided FutureSelect with purported facts proving the health of
the Rye Funds.
¶ 5 Between 1998 and late 2008, when Madoff's Ponzi scheme nally came to light, FutureSelect continued to invest
more funds in the Rye Funds as a result of the representations it regularly received from Tremont and its auditors. In
all, FutureSelect invested $195 million with Tremont. But, Madoff never invested any of the capital he received through
the Rye Funds or any other feeder. FutureSelect lost its entire investment. Believing that Tremont had signi cantly
misled it, FutureSelect sued Tremont; MassMutual and Oppenheimer (Tremont's parent companies); and Ernst &
Young, KPMG,2 and Goldstein Golub Kessler (Tremont's auditors).3

¶ 6 In its complaint, FutureSelect alleged that the defendants are liable for (1) violating RCW 21.20.0104 and RCW
21.20.430, (2) negligence,5 and (3) negligent misrepresentation.6 According to the complaint, Tremont's liability is
based on the direct misrepresentations made by Tremont to FutureSelect that FutureSelect relied on in making,
maintaining, and adding to its investment in the Rye Funds. It alleged that Tremont acted as MassMutual and
Oppenheimer's agent or apparent agent.7 It alleged Ernst & Young made direct misrepresentations8 that FutureSelect
relied on in maintaining and adding to its investment in the Rye Funds. The defendants led separate motions to
dismiss on the pleadings. Without stating the speci c grounds for dismissal, the trial court granted these motions in
full after conducting a hearing and considering a number of pleadings, declarations, and briefs. FutureSelect obtained
a CR 54(b) order granting nal judgment on the dismissals, allowing this appeal.

¶ 7 The Court of Appeals reversed in part and a rmed in part, nding that (1) Washington has the most signi cant
relationship to the state securities act claims, negligent misrepresentation claims, and agency claims; (2) the
complaint su ciently alleged personal jurisdiction over Oppenheimer; and (3) the trial court properly dismissed the
apparent agency claim against Oppenheimer and negligence claim against Tremont. FutureSelect Portfolio Mgmt., Inc.
v. Tremont Grp. Holdings, Inc., 175 Wn.App. 840, 890–95, 309 P.3d 555 (2013). We granted review and now a rm the
Court of Appeals.

ANALYSIS

I. Standard of review

¶ 8 We review CR 12(b)(6) dismissals de novo. Kinney v. Cook, 159 Wn.2d 837, 842, 154 P.3d 206 (2007) (citing Tenore
v. AT & T Wireless Servs., 136 Wn.2d 322, 329–30, 962 P.2d 104 (1998)). “Dismissal is warranted only if the court
concludes, beyond a reasonable doubt, the plaintiff cannot prove ‘any set of facts which would justify recovery.’ “ Id.
(quoting Tenore, 136 Wn.2d at 330). All facts alleged in the complaint are taken as true, and we may consider
hypothetical facts supporting the plaintiff's claim. Id. “Therefore, a complaint survives a CR 12(b)(6) motion if any set
of facts could exist that would justify recovery.” Hoffer v. State, 110 Wn.2d 415, 420, 755 P.2d 781 (1988) (citing
Lawson v. State, 107 Wn.2d 444, 448, 730 P.2d 1308 (1986); Bowman v. John Doe Two, 104 Wn.2d 181, 183, 704 P.2d
140 (1985)). But, “[i]f a plaintiff's claim remains legally insu cient even under his or her proffered hypothetical facts,
dismissal pursuant to CR 12(b)(6) is appropriate.” Gorman v. Garlock, Inc., 155 Wn.2d 198, 215, 118 P.3d 311 (2005).
Similarly, we review a CR 12(b)(2) dismissal de novo. In re Estate of Kordon, 157 Wn.2d 206, 209, 137 P.3d 16 (2006)
(citing State v. Squally, 132 Wn.2d 333, 340, 937 P.2d 1069 (1997)).

II. Personal jurisdiction

¶ 9 Oppenheimer argues that it lacks the requisite minimum contacts with Washington and our courts' exercise of
personal jurisdiction would offend due process. See Suppl. Br. of Oppenheimer at 7. It is mistaken. At this stage of
litigation, the allegations of the complaint establish su cient minimum contacts to survive a CR 12(b)(2) motion.
However, Oppenheimer may renew its jurisdictional challenge after appropriate discovery has been conducted.

A. Speci c jurisdiction

¶ 10 For the exercise of speci c jurisdiction under Washington's long arm statute to be proper, the defendant's conduct
must fall under RCW 4.28.185 and the exercise of jurisdiction must not violate constitutional principles. Grange Ins.
Ass'n v. State, 110 Wn.2d 752, 756, 757 P.2d 933 (1988) (citing Werner v. Werner, 84 Wn.2d 360, 364, 526 P.2d 370
(1974)). “In order to subject nonresident defendants and foreign corporations to the in personam jurisdiction of this
state under RCW 4.28.185(1)(a),” Washington's long arm statute, we must nd the following factors:

“(1) The nonresident defendant or foreign corporation must purposefully do some act or consummate some
transaction in the forum state; (2) the cause of action must arise from, or be connected with, such act or transaction;
and (3) the assumption of jurisdiction by the forum state must not offend traditional notions of fair play and
substantial justice, consideration being given to the quality, nature, and extent of the activity in the forum state, the
relative convenience of the parties, the bene ts and protection of the laws of the forum state afforded the respective
parties, and the basic equities of the situation.”

Shute v. Carnival Cruise Lines, 113 Wn.2d 763, 767, 783 P.2d 78 (1989) (quoting Deutsch v. W. Coast Mack Co., 80
Wn.2d 707, 711, 497 P.2d 1311 (1972)). This inquiry encompasses both the statutory and due process concerns of
exercising personal jurisdiction.
¶ 11 FutureSelect alleges jurisdiction is proper under RCW 4.28.185(l)(a), which extends jurisdiction arising out of
“[t]he transaction of any business within this state,” on the theory that Oppenheimer transacted business in
Washington through Tremont, its agent. RCW 4.28.185(1) explicitly permits Washington courts to exercise jurisdiction
over a principal based on the actions of its agent.9 We apply the Shute factors to the allegations contained in
FutureSelect's complaint, which we accept as true given the procedural posture of this case.

B. Shute factors

¶ 12 First, we nd the complaint su ciently establishes that Tremont acted as Oppenheimer's agent for purposes of
the CR 12 motion. The complaint asserts that Oppenheimer (1) owned, directed, in uenced management, and provided
support services10 to Tremont; (2) directed Tremont to change its auditor from Ernst & Young to KPMG; (3) placed its
own president and director, who was also a vice president at MassMutual, on Tremont's board of directors;11 and (4)
actively managed and used its image to help Tremont with marketing and soliciting investment activity. For the
purposes of the motion to dismiss, we nd agency.

¶ 13 Accepting the agency relationship, we nd the complaint also adequately alleges that Tremont's
misrepresentations, which we presume without deciding were made on Oppenheimer's behalf and received in
Washington, satisfy the rst two Shute factors. Tremont directed numerous representations at FutureSelect. As a
result of these representations, FutureSelect maintained and contributed millions of dollars to its initial investment in
the Rye Funds. Much of this occurred after Oppenheimer's acquisition of Tremont. Accordingly, the allegations in the
complaint su ciently establish that Oppenheimer transacted business with FutureSelect in Washington through its
agent.

¶ 14 We turn now to whether the assumption of jurisdiction offends traditional notions of fair play and substantial
justice. Weighing (1) the quality, nature, and extent of Oppenheimer's activity in Washington, (2) the convenience of the
parties, (3) the bene ts and protection of Washington law, and (4) the basic equities of the situation, we conclude it
does not.

¶ 15 First, the quality, nature, and extent of Tremont's activity in Washington were signi cant. The business relationship
with FutureSelect extended from 2001 until 2008; involved the solicitation, offer, and sale of securities; and resulted in
ongoing transfers of extremely large sums of money from Washington to Oppenheimer via Tremont.

¶ 16 Second, nothing in the record suggests that Washington courts exercising jurisdiction would pose an undue
burden on Oppenheimer.

¶ 17 Finally, the bene ts and protections of Washington law as well as the equities of the situation cut squarely in favor
of our courts exercising jurisdiction. Our law explicitly protects investors from fraud and misrepresentations made by
sellers of securities. See RCW 21.20.010. Not allowing Washington courts to enforce our statutes and regulations
against nonresident companies that solicit, offer, and sell securities in this state would undermine the e cacy of this
regulatory regime and create a perverse incentive for principals to insulate themselves from liability by operating
exclusively through agents.

¶ 18 Given these considerations, we reverse the trial court and remand for further proceedings. Though we leave open
Oppenheimer's ability to renew its motion, we nd the trial court dismissed prematurely. Some limited discovery and a
resolution of disputed jurisdictional facts are warranted. The trial court should determine whether an agency
relationship existed between Oppenheimer and Tremont at any point during the relevant time period and, if so, whether
jurisdiction is proper under the Shute factors.

III. Choice of law

¶ 19 Next, we turn to whether Washington or New York law applies to this case. Defendants argue that New York law
applies because New York has the more signi cant relationship to the dispute and that dismissal on the pleadings was
warranted because there is no private cause of action under New York's state security law. On this record, we
disagree.12 The allegations in the complaint are su cient to survive the defendants' CR 12(b)(6) motion.

A. Actual con ict

¶ 20 As a preliminary matter, when choice of law is disputed, “there must be an actual con ict between the laws or
interests of Washington and the laws or interests of another state before Washington courts will engage in a con ict
of laws analysis.” Seizer v. Sessions, 132 Wn.2d 642, 648, 940 P.2d 261 (1997) (citing Burnside v. Simpson Paper Co.,
123 Wn.2d 93, 100–01, 864 P.2d 937 (1994)). Here, an actual con ict exists between the WSSA, ch. 21.20 RCW, and
New York's Martin Act, N.Y. Gen. Bus. Law art. 23–A, §§ 352–359. Speci cally, the WSSA provides for a private right of
action, see RCW 21.20.430, while New York's Martin Act does not, see N.Y. Gen. Bus. Law art. 23–A, §§ 352–359.

B. Signi cant relationship test.

¶ 21 To settle choice of law questions, Washington uses the most signi cant relationship test as articulated by
Restatement (Second) of Con ict of Laws § 145 (1971).13 Johnson v. Spider Staging Corp., 87 Wn.2d 577, 580–81,
555 P.2d 997 (1976). FutureSelect argues we should also formally adopt § 148, which re nes the § 145 factors for the
fraud and misrepresentation context. See Suppl. Br. of Resp'ts at 6. Defendants, on the other hand, urge us to take an
orthodox interpretation of Haberman v. Washington Public Power Supply System, 109 Wn.2d 107, 135–36,744 P.2d
1032 (1987),14 and apply § 145 exclusively. See Suppl. Br. of Tremont et al. at 5; Ernst & Young LLP's Suppl. Br. at 2–3.
We agree with FutureSelect.

¶ 22 Haberman and § 145 provide a basic framework for choice of law questions.15 But we have not shied from
applying a different, more speci c section of the Restatement when warranted by a particular tort. E.g., Williams v.
Leone & Keeble, Inc., 171 Wn.2d 726, 735 n. 6, 254 P.3d 818 (2011) (“On remand the Court of Appeals will have to
review the trial court's choice of law ruling, giving application to the Restatement (Second) of Con ict of Laws § 146
[Personal Injuries]”). Given the nature of misrepresentation, we nd the factors in § 148 to be more helpful than those
in § 145.

¶ 23 Previously, we developed a two-step analysis for the signi cant relationship inquiry under § 145. Southwell v.
Widing Transp., Inc., 101 Wn.2d 200, 204, 676 P.2d 477 (1984). Our adoption of § 148 does not alter this approach.
Accordingly, rst, courts will continue to evaluate the contacts with each interested jurisdiction. Id. The “approach is
not merely to count contacts, but rather to consider which contacts are most signi cant and to determine where these
contacts are found.” Johnson, 87 Wn.2d at 581 (citing Ba n Land Corp. v. Monticello Motor Inn, Inc., 70 Wn.2d 893,
900, 425 P.2d 623 (1967)). Second, courts will continue to evaluate the interests and public policies of potentially
concerned jurisdictions. Southwell, 101 Wn.2d at 204. “The extent of the interest of each potentially interested state
should be determined on the basis, among other things, of the purpose sought to be achieved by their relevant local
law rules and the particular issue involved.” Id. (citing Johnson, 87 Wn .2d at 582).

1. Evaluation of contacts

¶ 24 Under § 148, to determine the jurisdiction with the most signi cant relationship to the dispute, we must consider
(1) the place where plaintiff acted in reliance on the representations; (2) the place where the plaintiff received the
representations; (3) the place where the defendant made the representations; (4) the domicile, residence, nationality,
place of incorporation, and place of business of the parties; (5) the place where a tangible thing, which is the subject of
the transaction between the parties, was situated at the time; and (6) the place where the plaintiff is to render
performance under a contract that he has been induced to enter by the false representations of the defendant.
Restatement § 148.

¶ 25 Much like in Southwell, this case has “not presented this court with a record that is su ciently developed to
enable us to undertake the factual analysis necessary for proper resolution of the con icts issue involved.” 101 Wn.2d
at 205. But for purposes of reviewing dismissal under a CR 12(b)(6) motion, we look to the complaint and conclude
that FutureSelect could show that (1) Washington was the place where FutureSelect acted in reliance on the
representations, (2) Washington was the place where FutureSelect received the representations, (3) Washington and
New York were the places where the defendants made the representations, (4) Washington and New York were the
primary places of business of the parties, and (5) it cannot be determined either way where FutureSelect was to render
performance under the contract that it had been induced to enter by the false representations of the defendant.16

¶ 26 To complete this analysis, we must “consider which contacts are most signi cant” in addition to nding out where
they are found. Johnson, 87 Wn.2d at 581 (citing Ba n Land Corp., 70 Wn.2d at 900). The record is insu cient to
permit us to engage in this inquiry, and so we leave it open.

¶ 27 In short, we nd the contacts pleaded by FutureSelect to be su cient to survive the defendants' CR 12(b)(6)
motions on the choice of law issue.17

2. Interests and public policies of jurisdictions

¶ 28 Next, we turn to the second step of our analysis, which asks us to evaluate the interests and public policies of the
jurisdictions. Southwell, 101 Wn.2d at 204. Here, Washington has a more compelling interest in protecting its investors
from fraud and misrepresentation than New York does in regulating sellers of securities that may have perpetrated
fraud or misrepresentation in another state.

¶ 29 At its core, this case does not involve a generalized regulation of securities sales, but the weighing of speci c
representations and assurances that allegedly targeted Washington investors. Washington has a strong interest in
giving Washington investors the bene t of Washington law and in requiring the sellers of securities to comply with it.

¶ 30 We recognize the legislature's directive to interpret the WSSA to promote uniformity with federal securities law
and those of others states. RCW 21.20.900. But “[o]ur examination does not end there.” Kinney, 159 Wn.2d at 844. “The
Washington Act is unique; special emphasis is placed on protecting investors from fraudulent schemes.” Id. at 844
(citing Hoffer v. State, 113 Wn.2d 148, 152, 776 P.2d 963 (1989) (Hoffer II)). Indeed, we have stated that “the ‘primary
purpose’ of the Act is ‘to protect investors from speculative or fraudulent schemes of promoters.’ “ Go2Net, Inc. v.
Freeyellow.com, Inc., 158 Wn.2d 247, 253, 143 P.3d 590 (2006) (emphasis omitted) (quoting Cellular Eng'g, Ltd. v.
O'Neill, 118 Wn.2d 16, 23, 820 P.2d 941 (1991)). “The Act ‘is remedial in nature and has as its purpose broad protection
of the public.’ “ Id. (emphasis omitted) (quoting McClellan v. Sundholm, 89 Wn.2d 527, 533, 574 P.2d 371 (1978)).
Applying New York rather than Washington law, which would deprive FutureSelect of a private cause of action, would
necessarily frustrate this purpose. We decline to do so without clear evidence that New York has the more signi cant
relationship to the dispute, which does not necessarily follow from this record.

IV. De nition of “seller” under WSSA

¶ 31 The nal question at issue involves whether Ernst & Young can be considered a seller under the WSSA. Ernst &
Young argues that because FutureSelect refers only to its audits and audit reports, which are purely professional
services, and nothing related to the sale of securities, the trial court properly granted its motion to dismiss. Ernst &
Young LLP's Suppl. Br, at 17–18. We disagree.

¶ 32 The WSSA imposes civil liability on anyone who sells a security in violation of certain provisions of the act. RCW
21.20.430(1). A “seller” includes any party whose acts were a “substantial contributive factor” to the sale. Haberman,
109 Wn.2d at 131. This is meant to be an expansive de nition. Even so, we do require plaintiffs to establish “
‘something more’ “ in addition to the provision of routine professional services. Mines v. Data Line Sys., Inc., 114 Wn.2d
127, 149–50, 787 P.2d 8 (1990). Because it is possible that FutureSelect can establish the requisite “something more,”
dismissal on the pleadings was inappropriate.

¶ 33 In Hines, we found that there was no evidence to indicate that the attorneys that were being sued under the WSSA
had any personal contact with any of the investors or were in any way involved in the solicitation process. Id. at 149.
There, we found “[t]he advice given by Perkins Coie to Data Line was not a catalyst in the sales transaction between
Data Line and the investors.” Id. at 150. This meant that Perkins Coie could not be held liable as a seller. Id.

¶ 34 The situation here is different. Among other things, Hines was resolved on summary judgment, not on a CR 12(b)
(6) motion. Id. at 148. Because the question of whether someone was a substantial contributive factor is “necessarily
a question of fact,” Haberman, 109 Wn.2d at 132, it is not easily resolved on the pleadings as long as the complaint
contains su cient allegations.

¶ 35 Here, FutureSelect has met this requirement. Its complaint alleges that FutureSelect “would not have invested in
the Rye Funds if the funds were not audited” by Ernst & Young. Clerk's Papers at 37. Moreover, FutureSelect has also
alleged that Ernst & Young “knew that its audits would be used by Tremont to solicit investors [and] also knew and
intended that current investors would rely on the audits when deciding to maintain and increase their investments in
the Rye Funds.” Id. Finally, Ernst & Young asked FutureSelect to verify its investment in the Rye Funds and addressed
its audits directly to the partners of the Rye Funds, which included FutureSelect. Id. at 23.

¶ 36 FutureSelect is entitled to an opportunity to prove what it alleged. We reverse the trial court's CR 12(b)(6)
dismissal.

CONCLUSION

¶ 37 Because FutureSelect has met its initial burden of production, we reverse the trial court's dismissal on the
pleadings. On remand, the trial court shall (1) allow limited discovery on the jurisdictional issue and, if necessary,
conduct a jurisdictional hearing to resolve any contested material facts and (2) give the parties an opportunity to fully
develop the record surrounding the sale of securities to FutureSelect so that the trial court can properly consider the
Restatement § 148 factors as they apply to the various defendants and determine whether Ernst & Young's acts were a
substantial contributing factor to FutureSelect's decision to continue investing in the Rye Funds. We a rm the Court of
Appeals and remand to the trial court for further proceedings consistent with this opinion.

¶ 38 I fully agree with the majority's well-reasoned analysis and conclusions about jurisdiction and choice of law. I write
separately only to comment on how broadly that opinion construes the word “sell[er]” in RCW 21.20.430(1)—so broadly
that it includes the nonseller accounting rm Ernst & Young.

¶ 39 The majority is correct that in 1987, this court imported into Washington's securities law the majority rule in the
federal circuits for interpreting the word “sell[er]” under federal securities law; we held that “sell[er]” must be construed
broadly to include those whose actions were a “substantial contributive factor” in the sale. Haberman v. Wash. Pub.
Power Supply Sys., 109 Wn.2d 107, 130–31, 744 P.2d 1032, 750 P.2d 254 (1987). But one year after Haberman, the
United States Supreme Court decided Pinter v. Dahl, 486 U.S. 622, 653–54, 108 S.Ct. 2063, 100 L.Ed.2d 658 (1988).
Pinter construed the word “sell[er]” in the related federal securities law, and it expressly rejected the broad
interpretation that most circuit courts had adopted under federal law and that we had adopted under state law.
¶ 40 Predictably, in 1989, we considered a post-Pinter challenge to the Haberman court's interpretation of our state's
securities law. In Hoffer v. State, 113 Wn.2d 148, 152, 776 P.2d 963 (1989), we rejected the argument that the Supreme
Court's analysis was more persuasive than our own and adhered to the “substantial contributive factor” interpretation
of “sell[er]” as adopted in Haberman. The dissent in Hoffer, by contrast, asserted that “RCW 21.20.430(1), by its plain
language, requires privity of the seller and the person buying the security.” Id. at 153 (Pearson, J., dissenting). It also
noted that “[t]he underpinnings of Haberman came from lower federal court decisions which are no longer
authoritative in light of the Pinter ruling.” Id.

¶ 41 The Hoffer dissent made good sense at the time it was written. The very federal cases upon which the Haberman
decision relied were expressly disapproved by Pinter. In fact, that dissent makes even more sense now, 27 years later,
as even more circuits that the Haberman majority relied on have repudiated their earlier adoption of the nontextual
“substantial contributive factor” test. For example, the Haberman majority explicitly relied on a Ninth Circuit case in
adopting our test. Haberman, 109 Wn.2d at 127 (citing Anderson v. Aurotek, 774 F.2d 927, 930 (9th Cir.1985) (per
curiam)). In 2007, that case was repudiated by the Ninth Circuit in light of Pinter. Sec. & Exch. Comm'n v. Phan, 500
F.3d 895, 906 n. 13 (9th Cir.2007).

¶ 42 Nevertheless, the majority is absolutely correct that Haberman is controlling, not the Hoffer dissent. I therefore
concur in the majority's decision. In light of Haberman and Hoffer, FutureSelect has su ciently alleged that Ernst &
Young was a “sell[er]” to avoid dismissal on the pleadings.

FOOTNOTES

1.  Tremont Partners serves as the general partner of the Rye Select Broad Market Fund, LP, the Rye Select Broad
Market Prime Fund LP, and the Rye Select Broad Market XL Fund LP (collectively Rye Funds).

2.  KPMG and FutureSelect have since entered arbitration.

3.  Goldstein Golub Kesseler and FutureSelect have since settled.

4.  FutureSelect believes all the defendants are liable for violations of the WSSA. Under the WSSA,It is unlawful for any
person, in connection with the offer, sale or purchase of any security, directly or indirectly:(1) To employ any device,
scheme, or arti ce to defraud;(2) To make any untrue statement of a material fact or to omit to state a material fact
necessary in order to make the statements made, in the light of the circumstances under which they are made, not
misleading; or(3) To engage in any act, practice, or course of business which operates or would operate as a fraud or
deceit upon any person.RCW 21.20.010.

5.  FutureSelect brings the negligence claim against Tremont only.

6.  FutureSelect brings the negligent misrepresentation claim against Tremont and Ernst & Young, not Oppenheimer
and MassMutual.

7.  MassMutual and Oppenheimer purchased Tremont in 2001. FutureSelect believes that these companies exerted
su cient direct control over Tremont that the subsidiary's liability should be imputed to the parent companies. Further,
FutureSelect alleges that both MassMutual and Oppenheimer stood to gain pro t from Tremont's relationship with
Madoff and were complicit in the misrepresentations made to FutureSelect.

8.  Ernst & Young audited the Rye Funds from 2000 to 2003. During that time, FutureSelect continued and enhanced its
investment in the Rye Funds in reliance on Ernst & Young's audit statements. FutureSelect believes that Ernst & Young
falsely claimed that it followed generally accepted auditing standards and that it improperly veri ed Madoff's trades
purportedly made on behalf of the Rye Funds. FutureSelect also claims that Ernst & Young omitted material facts such
as that it could not rely on Madoff's auditor and that it had not actually audited Madoff's own books. Because of a
required veri cation of investment in the Rye Funds and the way the audit statements were addressed, FutureSelect
alleges these misrepresentations were made directly to it and the other partners of the Rye Funds.

9.  In relevant part, the statute provides that(1) Any person, whether or not a citizen or resident of this state, who in
person or through an agent does any of the acts in this section enumerated, thereby submits said person, and, if an
individual, his or her personal representative, to the jurisdiction of the courts of this state as to any cause of action
arising from the doing of any of said acts․RCW 4.28.185 (emphasis added).

10.  These services consisted of compliance, audit, nance, and human resources.

11.  Speci cally, FutureSelect alleges that “all ve of Tremont's board members became MassMutual, Oppenheimer
and/or OppenheimerFunds employees.” Clerk's Papers at 18.
12.  It is important to remember that for choice of law questions “the ultimate outcome, in any given case, depends
upon the underlying facts of that case.” Southwell v. Widing Transp., Inc ., 101 Wn.2d 200, 204, 676 P.2d 477 (1984).
This requires a subjective analysis of objective factors. Id. Though we hesitate to articulate any categorical rules, such
an analysis does not lend itself readily to disposition on a CR 12(b)(6) motion.

13.  In relevant part, § 145 asks us to consider the following contacts:(a) the place where the injury occurred,(b) the
place where the conduct causing the injury occurred,(c) the domicil, residence, nationality, place of incorporation and
place of business of the parties, and(d) the place where the relationship, if any, between the parties is centered.These
contacts are to be evaluated according to their relative importance with respect to the particular issue.Restatement §
145.

14.  In Haberman, we were faced with a choice of law question involving the WSSA and we resolved the issue by
looking exclusively at § 145. 109 Wn.2d at 135–36.

15.  It is worth noting that in Haberman “[n]o party contend[ed] that another state's securities act applie[d].” Id. at 135.
The question was whether the WSSA could apply to “an action brought in a Washington forum where out-of-state
parties are under [Washington's] jurisdiction.” Id. at 134. This is a different dispute than the one we face today, where
parties are disputing whether Washington or New York law applies.

16.  The remaining factor—“the place where a tangible thing which is the subject of the transaction between the parties
was situated at the time,” Restatement § 148—is inapplicable because this transaction did not involve a tangible thing.

17.  Ernst & Young encourages us to run a separate analysis for the choice of laws issue. This is proper because the
record may show different signi cant contacts for the claims against Ernst & Young than for the claims against
Tremont. However, at this procedural stage, a single analysis is su cient because too many facts are in dispute and
we must accept the allegations in the complaint as true. Accordingly, we accept that Ernst & Young can be established
to be a seller of securities under the WSSA, as discussed in the analysis below, and so, the claims against Ernst &
Young have many of the same contacts as Tremont.

GONZALEZ, J.

WE CONCUR: MADSEN, C.J., JOHNSON, OWENS, FAIRHURST, STEPHENS, and WIGGINS, JJ., and KULIK, J.P.T.

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