Modern Approaches to Conflicts of Law

1. Statutory Solutions

   1. Administerability, uniformity BUT statutes may be no more determinative then common law.

   2. Foreign Executed Wills: most states have wills executed outside their state of administration

   3. UCC

      1. When a transaction bears a reasonable relation to this state and also to another state or notion, the parties may agree that the law either of this state or the other may govern the rights and duties- Act applies to transactions bearing a reasonable relation to the state.

      2. Skinner- UCC-

         1. Court must characterize issues to select the appropriate choice of law provision.

         2. The mere fact that suit is brought in this state does not make it appropriate to apply the substantive law of that state.

   4. Insurance: Most states no-fault insurance plans delimit their scope in multi-state situations.

   5. Borrowing Statutes-

      1. directs the forum to dismiss claims under foreign statutes of limitations in appropriate circumstances

      2. 2^nd R- §142- Forum will apply its own SOL barring a claim unless exceptional circumstances of the case make such results unreasonable.

      3. tolling statutes- suspend the running of the SOL against out of state defendants.

      4. West v. Thesis- limitations are procedural and avoiding forum law controlled procedure

2. Party Autonomy and Rule of Validation

   1. Why is Rule of Validation a bad idea?

      1. against public policy of forum state

      2. lets the party commit legislative act by displacing law of the sovereign

      3. Need substantial relation to one of the states

      4. regime based on party autonomy will undermine local laws.

      5. Inconsistent with vested rights: Vested laws are displaced by party autonomy

   2. Pritchard v. Norton

      1. Contract from railroad company- P (LA) posted appeals bond- posted when loser wants to appeal and winner wants compensation for delay

      2. N (NY) and M (DE)- indemnify P against all loss arising from appeal

      3. Appeal was unsuccessful so P had to pay, contract was unenforceable in NY, but valid in LA.

      4. Sup. Ct. applied LA law- center of gravity, where litigation occurred.

      5. Presumption of validity- contract is made to be enforced therefore parties would have chosen LA law, because K would be unenforceable under NY laws.

      6. Parties can chose laws to govern concern- implicit intent of parties to chose the law where it would be valid.

   3. Siegelman v. Cunard White Star

      1. Injuries on ship from NY to England

      2. Clause: litigation cannot be started one year and one day after injury, decided under British law, agent could not waive conditions without official notice.

      3. D tried to get P to settle, tricked P – 2 years later, P sued. (there was no explicit waiver of periods of limitation)

      4. The contract is held- explicit choice of the party- respect party autonomy

      5. Rule: In every forum a contract is governed by the law with a view to which it was made and be governed by its laws if there is nothing in the execution inconsistent with that tradition.

      6. Parties relieve court of decisions, reduce litigation

      7. Dissent- this is a contract of adhesion

   4. Interpretation v. Validity:

      1. Interpretation- look at intention of the parties- deal with party’s expectations under the contract.

      2. Validity- afford them an artificial device to encourage forum shopping.

   5. For Intention to Prevail, Choice of law must be:

      1. bona fide/ good faith

      2. law chosen must have some relation to the agreement

      3. Cannot be contrary to evade U.S. policy

      4. no existence of contrary statute

      5. cannot be oppressive to passengers

   6. 2^nd R- §187-

      1. Party autonomy is OK if parties could have resolved this by an explicit provision of agreement- no characterization

      2. Party autonomy may not be respected even if parties may not have been able to resolve by own explicit provisions unless:

         1. No substantial relationship, reasonable basis (i.e. contract with bizarre, immature legal system)

         2. Chosen law is contrary to fundamental policy of the state which has a material greater interest then the chosen state

         3. In the absence of contrary indication of intention, the reference is to the local law of the state of the chosen law. (or most significant relationship)

   7. Alternative Choice of law rules for Contracts

      1. Validity of a contract is to be decided by the law of the place where contract is made, unless it is to be performed in another country. If it is to be performed in any other place, the intention of the parties that the contract- re: validity, nature, obligation, and interpretation is to be governed by the place of performance.

      2. freedom of contract remains dominant in most states- with some restrictions (i.e. 2^nd R)

      3. Juenger- Parties should be free to select their own rules that reflect commercial practice and the best law without regard for the desires of any particular sovereigns.

      4. If the parties fail to chose applicable law- use whichever law upholds the contract (used re: usury cases, §203- substantial relationship and cannot be greatly in excess to the general usury law of the state)

      5. Does the rule of validation make sense when it leads to a law different from that chosen by the parties in their contract- assume that the choice of invalidating law is always inadvertent.

   8. Wyatt v. Fulrath

      1. Parties have presumptive control over transaction where planning/ reliance is at maximum- choice of law/ party autonomy will be honored.

3. Most Significant Relationship

   1. Modern Approach- 2^nd Restatement- most significant relationship test- issues are separated and law of state with most significant relationship applied. State is the center of gravity.

   2. Most popular single approach to conflicts- because of manipulation, presumptions and principles.

   3. Favored by judges because of the great discretion given.

      1. §6- Choice of Law

         1. Court will follow stat. Directive of own state

         2. (2)- Where no directive, look at: (not exclusive, and not listed in order of importance)

            1. Needs of interstate and international system

            2. Relevant policies of the forum

            3. Relevant policies of other interested states

            4. Justified expectations of the parties (not really applied in tort cases)

            5. Basic policies of the field of law- when policies of the interested states are largely the same but there are minor differences- best to apply local law which will best achieve the basic policy.

            6. Certainty, predictability, and uniformity-

               1. discourage forum shopping

               2. more important when parties give advance thought to legal consequences of their transaction.

            7. administerability

      2. §145- Tort, §188- Contracts- local law with most significant relationship to parties under principles of §6

         1. (2)- other elements to determine MSR.

            1. §145-

               1. place where the injury occurred,

               2. place where the conduct causing the injury occurred

               3. domicile, residence, nationality, PPB, incorporation of parties

               4. place where relationship between parties is centered

            2. §188

               1. Place of contracting

               2. place of negotiation

               3. place of performance

               4. location of subject matter of the contract

               5. domicile of parties

         2. §188(3)- If place of negotiation and performance are in same state- local law will usually be applied.

      3. §156- Law of §145 will determine if actors conduct was tortuous- but will usually be the law of the estate where injury occurred- presumption subject to msr test

      4. §149- Defamation- local law where publication occurs unless another state has a msr

      5. §196-

         1. in the absence of choice of law by the parties, the local law of the state where the contract requires that the services, or a major portion be rendered unless some other state has a more significant relationship.

         2. Presumption that state where services are performed has the MSR- could be overcome

   4. Wood Bros Homes v. Walker Adjustment Bureau (Contract)

      1. P is an agent for CA res (Gagnon), D (Wood) is a DE corp with PPB in CO. – suit in CO

      2. Contract was signed in CO- negotiations in NM, CO, and CA. – halted because Gagnon had no NM license- recovery in CO, not NM, NY treat complaint as invalid.

         1. Look at where negotiations occurred

         2. Look at where construction is done- when performance is illegal in the place of performance, the contract will usually be denied enforcement.

         3. Here, NM has a regulatory scheme for Licensing/ Construction

      3. NM law applies- does no allow estoppel

   5. Phillips v. GM (Torts)

      1. Truck purchased in NC, then moved to MT, drove back across country- accident in KS. P Phillips is the representative o Estates/ legal guardian- lives in NC.

      2. used 2^nd R- Which states laws should apply?

         1. P- MT- no limit on Product liability, strict liability – Court agrees

            1. §146, §175- Rights and liabilities are determined by the laws of the state where injury occurred unless another state had an msr-

            2. here they were residents of MT at the time of injury, statute prevents injury to MT residents, deter future sales of defective products in MT- concern arises as soon as a product is either sold in MT or causes injury to an MT resident.

         2. D- KS- comparative injury statute, restrictions on punitive damages, different defenses available.

            1. Overriding policy of KS Stat. To protect KS residents- case does not involve conduct that KS was attempting to punish or deter through punitive damages provisions.

      3. Public policy is not a factor according to the 2^nd R- focus on policies of the forum, would be redundant.

4. Interest Analysis

   1. Interest Analysis v. 2^nd R-

      1. may reach different results (see Tooker)

      2. judges will use these approaches together to show that they will have the same result

      3. none of the presumptions of 2^nd R- designed to get away from characterization

      4. directness/ intellectual honesty- tries to apply law directly

   2. Criticism- post-hoc reconstruction of legislative intent, usually a legal fiction.

   3. Marek v. Chesny, Chesny v. Marek:

      1. cases try to reconcile statutory interpretation of §1988- attorney fee recovery provision of FRCP 68

      2. Posner: legislature interpreted in light of purposes was passed to bring meritorious civil rights claims, should prevail after settlement

      3. Supreme Court: Language, not purpose should be analyzed- must keep civil rights suits on par with all other lawsuits

      4. Interpretation- looking at different ways determines how law will be applied- domestic conflicts

   4. Currie’s Theory/ Governmental Interest Analysis

      1. Interest Analysis should only be triggered when stat’s domiciliary is concerned- must distinguish between true and false conflicts

      2. Courts should determine the applicability of a law by examining the law’s purposes- application must achieve the policy goals sought by a sovereign which passed the law.

      3. 1^st R never achieved uniformity because of escape devices- but we should value justice over uniformity.

      4. False Conflicts:

         1. All policies end up on one side of the ledger

         2. OR it does not matter which policy is applied because they will all dictate the same result.

         3. In some cases, depecage will separate true and false conflicts

         4. Miliken- false conflict occurs when creditor and woman are from the same state.

      5. Renvoi: not taken into account, procedural provision can show lessened interest

      6. In a true conflict- policies of each state would be furthered if the law was applied

         1. Courts should re-examine the law of each state, it may be possible to avoid a conflict through a moderate or restrained interpretation of the policy or interest of one state.

         2. If not, the forum may apply its own law

         3. If the forum has no interest of its own but must chose between the laws of 2 other states:

            1. Use own forum law if it is similar to one of the states

            2. Resolve the conflict like a supreme legislative body (compromise)

         4. forum shopping is OK- if the results are just, may bias the results for the P.

      7. Used Miliken v. Pratt to illustrate:

         1. ME- married woman could bind herself to a contract

         2. MA- married woman could not bind herself by contract as surety for husband or any 3^rd party

         3. BUT at the time of the suit, a ME like proposal was introduced in MA and decisively defeated- it is not the business of the courts to substitute their judgment for that of the legislature.

   5. Difficulties of interest Analysis:

      1. myth of legislative intent

      2. replaces territorialism with emphasis on domicile

      3. promotes forum shopping

      4. BUT results may be less arbitrary- why should a law apply if its policies will not be advanced?

   6. False Conflicts

      1. Tooker v. Lopez

         1. MI student in MI car accident, NY resident, car registered and insured in NY- NY is the forum

         2. False Conflict- MI guest statute prohibited recovery by guest statute against host driver unless gross negligence-

            1. to prevent collusion- NY insurance company, covers out of state injury,

            2. assure priorities of driver in recovery- not efficient as those finding negligence can sue anyway.

            3. docket clearing- NY forum

         3. Interests of MI:

            1. Regulation of their own roads- this is a suit about recovery

            2. MI does not protect the passenger, even though a MI resident, why should NY

         4. Dissent: 2^nd R tests yields opposite results- should apply the law of the place where accident occurred- goals of uniformity.

      2. Schultz v. Boy Scouts

         1. Sexual molestation and wrongful death case by a scout master

            Jurisdiction	NY	NJ	TX	OH
            Contacts	-Conduct started on trip -forum	-Conduct continued in NJ -Suicide - domicile of Parents and Boy Scouts	Boy Scouts changed domicile after case	Franciscan Bros incorporated.
            Law	No charitable immunity	Charitable immunity	No charitable immunity	Qualified charitable immunity
            Policies	-Deterrence/ regulate conduct -compensation	-Encourage charitable org -allocate losses -docket control

         2. Loss Allocation Rules

            1. Post-hoc compensation for tortuous conduct, usually apply the law of the common domicile.

            2. Situs has a minimal interest in determining the right of recovery or the extent of the remedy in an action by a foreign domiciliary.

            3. See Neumeier rules

         3. Conduct control- deterrence, apply law of the place of the tort

            1. Protect medical creditors who serviced injured parties in that state- this and wards do not apply in this case.

            2. Prevent injured tort victims from becoming public wards in the locus state

            3. Deterrent effect on future tort feasors. NY’s deterrent interest is less because none of the parties is a resident and rule is loss allocating, rather then conduct-regulating.

         4. Reasons for Applying law of common domicile: NJ

            1. Reduce forum shopping

            2. Rebuts idea of a biased forum

            3. Uniformity/ mutuality- contradicts Pro-P bias

            4. Administerability

            5. But does NJ really want to protect a charitable organization that has since moved out of state

         5. Franciscan Bros- Choice between NY and NJ law- although law of the place of the tort would usually apply, further enforcement and NY has no interest- enhance smooth working of the multi-state system.

         6. Court has ever decided when interests should be determined, i.e. conduct, beginning of litigation

            1. Change of domicile for Boy scouts gives no greater interest to any state.

      3. Neumeier Rules for loss allocating cases: arise mostly in guest statute cases- these are standards

         1. If there is a common domicile of P & D, and the car is registered there, then apply that state’s law because the law of the place of injury will have no connection- false conflict (Tooker, Schultz)

            1. Reduces forum shopping

         2. Where D is in a pro-D state and conduct occurred there, even if P is from a state that is pro-P, or if P is from a pro-P state and conduct occurred there, even if D is from a pro=D state- apply the law of the state where the conduct occurred.

            1. Place of injury is a neutral factor- and rebuts pro-forum presumption.

         3. Other circumstances- no common domicile, usually apply the rule of where the conduct occurred unless it should be displaced to advance substantive purpose/ multi-state interests (Schultz)

            1. This provides an avenue for disregard of the basic goals.

         4. These rules were drafted for guest statutes but could be applied in other cases- must be a conflict between laws that allocate loss after a tort has occurred.

         5. Many rules serve both loss allocating and conduct regulating purposes

         6. Apply in tort cases only, contract cases use the center of gravity test- no policy analysis needed

      4. Cooney v. Osgood Machinery

         1. Kling whose interest succeeded to Hill sold machine to American Std. (NY) through a NY sales agent (Osgood)

         2. Mueller (MO) got machine, and his employee Cooney got hurt and sued entire chain

         3. MO law- there is no tort liability for workers comp

            1. Contacts- P’s dom, employer, Pro-D, injury

         4. NY law- contribution claims against employees

            1. Contacts- claimant for contribution, pro-Claimant

         5. This is a true conflict (2^nd Neumeier rule) , therefore MO law was applied because conduct happened there.

            1. Protection of reasonable expectations- Mueller could hardly expect to b haled before a NY court for injuries to a MO employee in MO.

   7. Unprovided For Case

      1. Erwin v. Thomas-

         1. P (WA) was injured in WA by D (OR)- P’s wife sued D for loss of consortium, allowed in OR, not WA.

         2. If neither state has an interest, the law of the forum is applied because of convenience, administerability

         3. If forum is committed to interest analysis:

            1. Apply the law that is more enlightened or humane

            2. Apply law that aids local litigant

            3. Treat foreign claimants as they would be treated in their own state

            4. Law of the forum ** (best)

   8. Resolving True Conflicts

      1. Lilienthal v. Kaufman

         1. 2 promissory notes made by OR spendthrift with official guardian

            Jurisdiction	CA	OR
            Contacts	P’s domicile, contract made and performed	D’s domicile, forum
            Law	Does not recognize disability of a spendthrift to contract	Spendthrift statute (protection)
            Policy	Contracts are enforceable, avoid fraud	Protect D and family

         2. Under interest analysis, OR law applies- although there are many CA contacts protection of family and spendthrift are most important.

         3. Resolve true conflicts by law of the forum- to consistently advanced the policy of its state where there is no solution. Courts cannot adequately discern which state has a more significant legislative interest.

         4. OR has interest in promoting citizens of other states to conduct business with OR

         5. In interest analysis, look only at policies of laws in conflict, tight focus.

         6. Dissent- this broad deference to legislation may prove too much- - OR legislature may have balanced law differently if they knew that this would affect out of state residents.

      2. Law of the Forum- Criticisms

         1. End of rule of validation

         2. Discrimination against non-residents- or is the real source of discrimination the unequal treatment of similarly situated residents if the forum departs from forum law.

         3. Forum Shopping

         4. If a true conflict is brought in a disinterested third state- that state should attempt to dismiss for Forum non convieniens, then apply the most humane law or one most similar to their own.

      3. Bernkraut v. Fowler

         1. P and Decedents made oral contract to forgive a debt, D did not put it in his will. D dies in CA, forum in CA- all other contacts in NV.

         2. CA law says this is not valid- valid under NV law

         3. Court relies on NV law to protect the reasonable expectations of the parties

         4. CA policy- moderate and restrained interpretation based on justifiable expectations of the parties- does not apply its own law

         5. Statutory interpretation usually does not look to expectations of private parties but used to see policy behind the law- reaching out beyond the 4 corners of the law.

      4. Bernhard v. Harrahs (CA)

         1. Myers (CA) got drunk at Harrah’s in NV then collided with P in CA, P sued Harrahs for sale and furnishing alcohol

         2. NV law- denies recovery of tavern owner/ favorable to business

         3. CA law- recovery if proximate cause of injury/ protect general public from injury

         4. CA Comparative Impairment Policy for true conflicts- CA must be able to enforce their own laws to businesses that solicit to out of state- NV purposefully availed itself onto CA law.

         5. Here, NV law would be less impaired because NV had criminal liability on books already had duty. CA imposes their own civil liability on NV- but not an entirely new remedy

      5. Comparative Impairment and policy Selecting Rules-

         1. Whichever jurisdiction is more impaired, subordinated by policies of another state- their law is applied.

         2. Does not always lead to application of the law of the forum (Offshore Rental- applies law of the place where the accident occurs)

         3. Better Law- Minimize effects by applying the stronger policy.

   9. Leflar’s Choice Influencing Considerations- impressions, not rules

      1. Predictability of Results- more consensual transactions, not torts

      2. Maintenance of interstate and International Order- do not apply law of the state if no interest- avoid false conflicts

      3. Simplification of the Judicial task- substantive v. procedural

      4. Advancement of Forum’s Governmental Interests

      5. Application of Better Rule of Law

   10. Milovich v. Sarai-

       1. ON residents drove to MN and had accident- applied MN law as better law.

          Jurisdiction	ONT	MN
          Contacts (Is this a false conflict b/c of common domicile)	Auto insurance, domicile of P and D	Accident, forum, medical creditors
          Law	Guest statute	No guest statute
          Policy	No collusion	compensation

       2. Choice Influencing Considerations

          1. Predictability- accidents cannot be planned

          2. Maintenance of Interstate Order- Does state have substantial connection to the forum- both states have connections, more connections with ON

          3. Simplification of judicial task- both are easy to apply

             1. ON- gross negligence

             2. MN –no guest statute

          4. Advancement of Forum’s Government:

             1. Repayment of MN creditors/ compensation

             2. D is injured in MN- deterrence

             3. Justice administering state- courts should not administer rules inconsistent with MN stds of justice

          5. Application of the Better Law

             1. States are co-equal sovereigns to make value judgments- cannot judge another’s result

             2. Justice exists in the law- if not liked, can be changed through the political system

             3. Better law could chose something other then forum’s law for a more fair result.

       3. Dissent- forum shopping- Here, the MN court does not think that guest statutes were consistent with MN’s policy

   11. Jepson v. General Casualty Insurance Co. of WI

       1. MN resident has accident in AZ, with Business in ND insurance policy.

       2. MN- allowed stacking- could get $ for each car involved in the accident

       3. ND- no stacking (applied by MN court- case by case determination)

       4. Choice of Law Considerations

          1. Predictability of Result-

             1. Both contract and tort principles apply

             2. Mutual expectation that they had negotiated a ND contract- paid no rates- MN rates were higher

             3. Would other states apply MN laws in these circumstances

          2. Maintenance of Interstate Order

             1. Forum shopping- subvert insurance where state to state tension

             2. Would impede ND’s policy/ movement of people and groups

          3. Administerability in both cases

          4. Advancement of Forum’s Governmental Interest-

             1. MN policy to uphold contracts

             2. What is MN \’s interest now that J lives in AZ

             3. Do not want to interfere with policies of sovereign states

          5. Better Rule of Law

5. Problem Old and New

   1. Depecage-

      1. # of issues in the case are divided and different laws are applied

      2. example:

         1. P injured in BC (1 year statute of limitations) sues car owner in AK (no liability to car owners that were not drivers, longer SOL)

         2. AK gave BC law on liability but BC law dictated SOL

         3. This remedy could not be achieved under the substantive law of either state.

      3. Marie v. Garrison-

         1. NY court- is oral agreement barred under Statute of Frauds under MO or NY

         2. Contract was enforceable because declared void anything not written

         3. MO- procedural, therefore unenforceable

         4. Court enforced K, did not apply either law.

      4. Adams v. Knickerbocker Society (imaginary case)

         1. Griswold- use 1^st R because it is absurd to reach a result not applying the internal law of either state, apply law of only one jurisdiction

         2. Currie- use governmental interest analysis, does not like premise of splitting law to get a result not contemplated by laws of either state.

      5. MD Casualty v. Jacek

         1. NY and NJ do not hold insurance companies liable

            1. NJ- spousal immunity

            2. NY- special provision- no recovery when spouses sue one another unless express provision

         2. Insurer held liable under NY tort law

         3. Multi-state cases yield multi-state results

   2. Renvoi

      1. Pfau v. Trent Aluminum Co. –

         1. College Students arriving in IA, passenger (CT) injured. Car was owned by NJ corp, insured in NJ.

         2. IA normally bars suits against host drivers, CT and NJ do not.

         3. Interest Analysis- IA guest statute does not apply because interests to be protected, i.e. insurance obligations do not occur in IA- therefore CT law is applied because CT and NJ laws are the same

         4. If one state’s substantive law is applied, do not also use choice of law rules- renvoi frustrates government interest analysis, a choice of law rule does not identify a state’s interest in the matter

      2. Interest Analysis and Renvoi

   3. Rules v. Standards

      1. Paul v. National Life

         1. Lex loci is applied- apply rules over standards, contemptuous of modern approaches

         2. Used Public Policy exception because of the strong interest of WV to allow P to recover for negligence.

         3. Even when courts want to apply rules, they can tweak them to their own liking.

   4. Complex Litigation

      1. In Re Air Crash Near Chicago

         Juris.	MO	NY	TX	CA	OK	IL
         Contacts	MDD- PPB	AA- PPB1	AA- PPB2	MDD- Conduct	AA- maintenance, misconduct	Situs, P Dom., forum
         Law	Punitive	No Punitive	Punitive	No punitive	Punitive	No punitive
         Choice of Law		MSR, center of gravity		Comparative impairment		MSR/ Interest analysis

         1. D-

            1. McDonell Douglas- defective design and manufacture

            2. American Airlines- negligent maintenance

         2. Lower Court

            1. used most significant relationship test of ILL- applied Klaxon

            2. Punitive Damages- look to law in each D’s PPB

         3. Reversed: Neither Def. Got punitive damages,

         4. Applied IL law b/c compromise states with conflicts- look for ease of administerability

         5. Domicile of P’s do not matter

         6. Comparitive Impairment:

            1. Is there a true conflict?

            2. Is a restrained and moderate approach possible?

            3. Since law of states would be equally impaired- used IL law

      2. In Re Agent Orange: (2 million Vietnam vets)

         1. Fed common law should govern—struck down by appeals court

         2. Assumes national consensus law

            1. Convergence- not judicially forced upon states with any federal authority

            2. Judges try to prove that despite different methodologies, same application of law would result.

            3. Coerced settlement- judicial wiggling.

      3. Mass Actions

         1. ALI Complex Litigation Project §6.01- clarification, limits etc.

         2. Multi-state Class Actions- choice of law can make or break classifications

            1. If choice of law points to one workable law, that class is certified

            2. Lex loci- (Bridgestone)- State of each D’s action, this is a novelty- financial loss in each of 50 states so class could not be certified

            3. Tobacco- causative misconduct- lead to a principal place of D’s business, where the crimes occurred.

         3. Punitive damages for deterrence and compensation

         4. Klaxon- Fed. Dist. Ct. in diversity- has to apply choice of law rule of state where it sits

         5. Van Dusen- Transfer from one federal district court to another, court to which case is transferred applies law of state from which it is transferred.

The Constitution and Choice of Law

1. Limits of Legislative Jurisdiction

   1. Constitution must provide a baseline for holding before something becomes violation of due process or equal protection

   2. Constitutional Protection for Choice of law:

      1. reduce interstate friction

      2. prevent unfair treatment to parties/ individual fairness

      3. Limits states legislative ability

   3. Can Forum apply its own law: