5. Special Settings and Recurring Problems

   1. Federal State Conflicts

      1. Erie Doctrine

         1. Erie R.R. v. Tompkins

            1. No federal common law (not bound up in statute) in diversity cases, apply substantive law (statutes and precedent) of state where court sits.

            2. Does not apply in federal question – except as governed by statutes or Constitution

            3. There is no federal general common law- refers to all judge made law- too mush of a delegation of lawmaking authority to judges

            4. Federal Common Law exists by judges filling in the gaps: i.e. Sherman Antitrust Act, Alien Tort Claims Act

            5. Implications on Choice of Law: Klaxson- federal court sitting in diversity does have to apply choice of law regime of the state where they are sitting.

         2. Swift v. Tyson

            1. Common law contract case. Rules of Decision Act- federal court should apply law of state where no federal law- did not apply to judge made law

            2. Held that federal courts sitting in diversity need not apply the unwritten law of the state, can develop common law interpretation

            3. Disadvantages

               1. Forum Shopping- Discriminate against residents by non-residents

                  1. criticized in Black and White Taxi Cab but stare decisis was powerful when dealing with statutory interpretation (RDA)

               2. Lack of uniformity in the common law-

                  1. tried to create a center of gravity in federal common law- did not work.

                  2. differences in law even within the same state.

               3. Decision was unconstitutional

                  1. Congress nor federal courts had power to declare the law for the states. General law making authority rests with the states unless there is an express grant of legislative authority

         3. Is there a federalism issue?

            1. Federal Courts have no inherent lawmaking power unless authorized by Congress or Courts

            2. Diversity Clause does not empower Congress to make substantive law or delegate power to federal courts.

            3. Is Erie a limitation on general federal power? Historical Interpretation- Rise of realism, political check on states rights/ federal power.

         4. Guaranty Trust v. York

            1. York sued Guaranty Trust for self-interest- suit would have been barred by SOL but federal court allowed suit, SC reversed

            2. In equity, federal court must use SOL of state where it sits

            3. Outcome Determinative Test- If outcome would change if use federal law then Erie then use state law.

               1. no longer a substance/ procedure distinction

               2. this was too broad- isn’t everything outcome determinative

            4. Federal court in diversity is only another court of the state, but this was unworkable, makes no sense that federal court must learn 2 sorts of laws- one for federal ? and one for diversity.

         5. Byrd v. Blue Ridge

            1. WC case- Diversity: Should the case be decided by a judge (state) or jury (federal)?

            2. This is not clear as to whether it is outcome determinative but must look at strong counterveiling interests (Amend. VII)- Balancing test

            3. Blunts powerful deference of York, too little deference to federal rules

            4. RDA- does not give broad endorsement to state law, tilt applies only if:

               1. Weak federal interest (not federal questions)

               2. Outcome determinative

         6. Hanna v. Plumer

            1. OH resident serves Decedent’s wife in MA in accordance to FRCP 4(d)(1)- but MA required personal service, federal law applies.

            2. Since everything can be outcome determinative look at twin aims of Erie

               1. Discourage forum shopping

               2. Administerability

            3. This rule is not going to affect how this case is litigated (therefore Erie is the wrong test)

            4. Rules Enabling Act: Accords special protection to FRCP- delegates power to Sup. Ct. to enact rules of procedure, forms of process, writs, pleadings and motions for federal district courts- therefore state law must yield.

            5. Is FRCP valid? (If there is a clash for federal law to apply, it must be…)

               1. Is it valid under REA?

               2. Is it constitutional, could it be case as arguably procedural?

         7. Sibbach v. Wilson:

            1. Test for Determining FRCP validity- A rule is valid under REA if a rule really regulates procedure- the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for disregard or justification.

            2. REA must not abridge, enlarge, or modify any substantive right

         8. Test:

            1. Stat Law and FRCP

               1. Valid under REA? If yes, then no Erie analysis

               2. If State and Federal law- Erie Analysis

         9. Walker v. Armco Steel

            1. Injury in 8/75, FRCP suit in 8/77 under 2 year SOL- under OK law an action is not commenced until service

            2. Court held that State law applied because this was not an unavoidable conflict

            3. Clear Statement Rule: If there is a direct conflict between a state and federal right then Hanna applies, if not direct clash then apply federal law only if it clearly states that it should apply.

         10. Burlington Northern v. Wood:

             1. Is FRCP sufficiently broad as to create direct collusion with state law?

             2. Does this FRCP represent a valid exercise of congress’ powers under REA?

         11. Gasperini v. Center for Humanities

             1. Sued under diversity for breach. Conversion, and negligence

             2. NY law §5501 gives power to appellate court to reduce jury award if it is excessive- standard of “material deviation”

             3. Used Byrd balancing test of counterveiling federal policies- here, does not completely displace jury therefore interest balancing leading to compromise.

                1. This is a procedural law with a substantive objective

             4. Amend. VII- right to trial by jury preserved, no fact shall be re-examined in any court- “shock the conscience” standard

                1. “Shock the Conscience” std at trial level

                2. Abuse of discretion std of appellate court

             5. Scalia’s Dissent:

                1. Amend. VII would not permit appellate review – procedural rule

                2. This is not an Erie test because of counterveiling federal interests and Fed. Rule should apply

                3. This case contradicts itself, it is not a cap on damages (substantive) just on review

         12. Semtek v. Lockheed Martin

             1. Sued Lockheed in state court, moved to federal court for diversity, dismissed on merits with prejudice on state SOL

             2. P then sues in MD state court- D argues that claim is precluded b/c of previous action

             3. No longer true that all judgments on their merits are entitled claim preclusive effects

             4. Federal common law governs the claim preclusive effect of a dismissal by a federal court sitting in diversity- no uniform federal rule- must adopt law that would be applied by state courts in the state in which the federal court sits.

                1. Must be no counterveiling federal interest

      2. Federal Courts/ State Law

         1. Klaxon v. Senator Electrical

            1. Senator- NY, K- DE corp with a contract made in NY- S sued in DE district courts to enforce the contract

            2. DE dist. Ct. applied NY substantive law (1^st R) - reversed by supreme court

            3. Cannot apply federal common law- federal district court sitting in diversity must apply law of the state where it sits- treat state choice of law questions like state substantive law questions.

               1. Uniform administerability of the laws- there is no federal choice of law regime

               2. Prevents forum shopping- but federal courts in different states are not uniform, could encourage P to bring suit in certain places.

         2. Idea of Federal Common law for Conflicts:

            1. Avoids renvoi

            2. Uniformity- involvement of federal law

            3. Disinterested forum- not overly bound up with parochial rules

         3. Van Dusen v. Barrack- Problems with Klaxon

            1. D seeks transfer to another court and transferee court must apply the state law that would have been applied if there is no change of venue

            2. Same rule applies if P transfer case (Ferens v. John Deere)

      3. Federal Law in State Courts

         1. Testa v. Katt

            1. §205(e) of th Emergency Price Control Act- may sue the seller in any court for not more then three times the overcharge the attorneys fees- can bring suit concurrently in state and federal courts- filed in state court,

            2. State Court only gave damages for amount of overcharge because statute was penal and public policy exception not to enforce penal statutes of other jurisdiction/ which is foreign in the international sense (Robinson)

            3. This is an act of Congress/ Supremacy Clause of the Constitution mandates enforcing U.S. law- U.S. does not bear the same relation to states as foreign jurisdictions- federal act is the counterveiling policy in every state

            4. Hughes v. Fetter- If relative to sister state then should be relative to federal case.

         2. Dice v. Akron, Canton & Youngstown R.R.

            1. Fraudulent settlement of Federal Employers Liability Act, sued in OH state court- JML no recovery because OH law precluded award

            2. Supreme Court reversed- this is a federal question to be determined by federal law

            3. OH splits factual issue of fraud split into fragments to be split between judge and jury, determined by federal law

   2. International Conflicts

      1. Extraterritorial regulation

         1. Limits of Legislative Jurisdiction in Int’l Law

            1. Jurisdiction to proscribe/ Legislative Jurisdiction: Authority of state to make its substantive laws applicable to conduct relationships or status.

            2. U.S. v. Yunis

               1. Violation of hostage taking act, Destruction of Aircraft Act- certain people on plane were from U.S.

               2. D was never in U.S. territory

               3. Territorial Bases for jurisdiction over extra-territorial crimes under International Law:

                  1. territoriality: where the offense was committed

                     • Subjective- conduct occurs in the territory

                     • Objective- effects felt within a territory

                  2. National- nationality of the actor- apply laws wherever in the world you may be

                     • Is there jurisdiction to enforce?

                     • Conflict between the states

                  3. Protective- jurisdiction based on injury to national interest

                     • Narrow construction- offenses against secretary of state, integrity of gov. functions, (i.e. counterfeiting, espionage, passport fraud)

                  4. Universal: Jurisdiction when physical custody of D that committed offenses, impacts entire world, dangerous to world order

                  5. Passive Personal- nationality of the victim

                     • Controversial- Spain’s application to crimes to Pinochet in Chile- territorialist attacks based on nationalitry

                     • Moderated in usage/ resisted in U.S.

                     • Nationality must e the target of the wrong

                     • Qualified application to serious and universally condemned crimes, which will not raise the specter of unlimited and unexpected criminal liability

                  6. Expansion Beyond Territoriality:

                     • Alcoa-

                       1. Intent- actor intended to harm U.S.

                       2. actual Effects/ not de minimis

               4. Yunis was prosecuted under universal and passive personal

                  1. Universal- Acts were heinous- violations of conventions that denounce destruction of airplanes, hijacking

                  2. Passive personality principle- Americans abroad flight- not targeted because of U.S. citizenship

                  3. Could this lead to infinite criminal liability for .S. Citizens abroad?

            3. Bases of Jurisdiction to prescribe -§402

               1. 1. Jurisdiction to prescribe law:

                  1. conduct within territory

                  2. person/ interests within territory

                  3. Conduct within territory that has or is intended to have substantial effects within territory

               2. Nationality of the Actor- outside or outside of territory

               3. Security of the state (protective principle) or limited class of other state interests (universality? Passive personality?)

            4. §404- Universality Principle- Certain offenses recognized by international community of universal concern (i.e. privacy, state trade, hijacking, war crimes etc)- even where none of the elements of §402 are present

            5. §403

               1. Even if §402 applies, no jurisdiction if exercise of such jurisdiction is unreasonable

               2. Methods to define unreasonableness

                  1. link of activity of territory to regulatory state

                  2. connection

                  3. Character of activity to be regulated important to regulatory state

                  4. justified expectation

                  5. importance of regulations to international political, economic, and legal system

                  6. consistency of regulation with traditions of international legal system

                  7. when other state has intent in regulatory act

                  8. likelihood of conflict with another state’s regulation

            6. Comity- reduce international friction, less then an obligation, more then charity

               1. Problems with §403:

                  1. Does balancing test lead to provincialism

                  2. are these factors beyond the competence of the judge

                  3. Court also have to use legislative history, extra statutory materials, canons of stat. Construction

               2. Foley Brothers Presumption- Legislation of Congress, unless a contrary intent appears is only meant to apply within the territory jurisdiction of the U.S., must be clearly stated

                  1. congressional intent &

                  2. reasonableness/ comity analysis

            7. Extraterritorial Application of U.S. Law

            8. EEOC v. Arabian Oil

               1. U.S. Citizen works for Aramco (DE corp) in Saudi Arabia- P brings suit in TX under state and federal law (Title VII)

               2. Dismissed for lack of SMJ- Title VII does not apply to U.S. employed by U.S. employers abroad- S.Ct. the act does not have extraterritorial application

               3. Statute is not clear enough- burden on P to show intent to apply extraterritorially (use Foley Bros. For statutory construction)

               4. Alien Exception Clause- does not apply to employer with respect to employment of aliens outside any state. P uses negative inference but this is too broad of a reach employers employing U.S. nationals abroad

               5. Congress acted by applying law extraterritorially with statutory language

            9. Steele v. Bullova Watch- Lanham Act- broader definition of commerce clear enough to regulate extraterritorial application.

            10. Moderation in Extraterritorial Application of U.S. Law- direct conflict between U.S. and Foreign law

                1. Timberland-

                   1. U.S. law is not extended abroad- Jurisdictional rule of reason, before §403’s factors to calculate which law is applied,

                   2. Never specifically overruled- maybe §403 is currently best approach

                      • degree of conflict between U.S. traditions and foreign law or policy:

                      • Nationality or allegiance of parties, PPB/ Connections

                      • How would enforcement achieve compliance- courts do not want to issue laws they don’t want to enforce

                      • Effects on U.S. and elsewhere, compared to those effects elsewhere

                      • Is there a purpose to harm U.S. commerce (Alcoa test)

                      • Relative Importance to violation within U.S. v. conduct abroad

                   3. Forseeability of affects

            11. Overcoming Presumtion- Lauritzen, Romero- Policy choice by Congress to enact legislation

         2. Antitrust and Extraterritoriality

            1. Hartford Ins .v CA

               1. Conspiracy by insurers and reinsurers, foreign and domestic, violation of Sherman Antitrust Act- ARAMCO does not apply to antitrust actions

               2. Foreign Insurers- although acts were lawful in Britain, they were in violation of Sherman Antitrust Act

               3. Comity does not apply because there is a true conflict, there are substantial affects in the U.S.- Alcoa test

               4. For Comity:

                  1. Is there a true conflict- i.e proscription in U.S. v. requirement in UK- here, person can subscribe to both laws

                  2. Problems:

                     • Public policy exception- most deference to law that is most different

                     • Don’t want to step on toes of foreign governments

                     • Agreements between nations may handle conflicts instead of courts

               5. Scalia’s Dissent:

                  1. Cuts against application of U.S. law- state law overrides federal law in insurance minimizes U.S. interest in regulating conflict. Works through§403 factors.

                  2. Charming Betsy Principle: construe domestic statutes in light of customary international law/ stds- never should be construed to violate law of notions if another construction exists- can be overridden by Congress

                     • Foley Bros- jurisdictional

                     • CB- substantive law

         3. Extraterritorial Reach of the Constitution

            1. Reid v. Covert-

               1. Uniform Code of Military Justice allowed wives of servicemen to be court martialed abroad for crimes committed on base

               2. D seeks declaratory judgment that wife is deprived of trial by jury

               3. An executive order or treaty cannot get out of constitutional requirements- Congress and President could not provide for court marital abroad, could not violate free of constitution

               4. Cannot deprive U.S. citizen of Constitution even if in foreign land, extra-territorial effects.

            2. U.S. v. Verdugo-Urquidez

               1. Citizen and resident of MX searched by US government without a warrant- this is OK

               2. There is no extraterritorial application of the 4^th Amend.- extended only to “the people” (even though 5^th and 6^th – trial related rights)

                  1. Protects U.S. people from arbitrary actions of their own government

                  2. class of persons with national community – may not have to be a citizen but at least purposeful availment of U.S. laws (not just prosecution)

                  3. Insular cases- Constitution does not apply in unincorporated territory

                  4. aliens not entitled to 5^th Amend protection outside U.S. sovereign territory.

                  5. Do not want to impede on foreign policy implications.

                  6. Reid does not apply because P was a U.S. Citizen in Reid, not here.

               3. Kennedy Concurrence-

                  1. There is too much weight on “the people” but here territorial application would be impracticable

                  2. Searches and Seizures are better imposed initially by political branches- court should reject clear blanket of Constitution to be applied extra-territorially

                  3. Amendments must be assessed ad hoc, individually

               4. Dissent- Should Constitution be applied as a limit on government where ever it acts, or should rights be specified

            3. 4^th amendment would apply: (not in Verdugo)

               1. territoriality- searches conducted in U.S.

               2. nationality- searches directed against U.S. citizens regardless of location

      2. European Perspective A Comparative Perspective

         1. Sources of Law

            1. US- approaches, open-ended methodology

            2. Eur- brightline rules in statutes/ treaties, civil law system

            3. Swiss Federal Statute of Private Int’l law:

               1. Art. 14- Renvoi- against accepting reference back except when specified, i.e. personal law

               2. Art. 17- Public Policy Exception- must be compatible with Swiss public policy, more fundamental

               3. Art. 116- characterization chosen by the parties

               4. Art. 117- like most significant relationship test

               5. Torts- assumption of interest analysis- want to offer determinative rule- more open ended and escape devices- more narrow then American conflicts law

         2. W. v. Ms. W-

            1. Divorce in Swiss forum with U.S. contacts that moved 11 times to 5 different countries in 16 years.

            2. Rule: Art. 61- Swiss law applicable when D spouse is domiciled in Switzerland, or P spouse is domiciled for one year, if other common nationality that law should apply.

            3. If common foreign nationality Swiss law should apply if foreign connection is attenuated or slight or if greater connection to Swiss law- here Swiss law applied (significant to MSR test)

         3. Importance of Rules and Methods of Analysis

      3. Act of State Doctrine

         1. Courts will refrain from judging acts of a foreign government within their own territory

            1. Territoriality: extraterritorial effects to a foreign state action

            2. Diplomacy- to foreign relations to comprise with governments that don’t even exist

            3. Clear Law- if clear local law prohibits the act the doctrine does not apply

            4. Congressional override of the Doctrine- Hickenlopper amendment

            5. Executive suggestion- Bernstein letter

            6. Not solely limited to government parties,

            1. Abstention- this is a negative doctrine. If doctrine applies, courts do not adjudicate- presumes validity of foreign act

            2. Must respect foreign law- opposite of public policy exception

            3. Doctrine at War with itself- federal common laws created by judges- judges can also be hostile to them.

         2. Underhill v. Hernandez-

            1. Act of State Doctrine in its whole- actions by military commanders during a revolution.

            2. Redress of grievances by reason of such acts must be obtained of by sovereign powers as between themselves, i.e. executive action.

            3. Every state is bound to respect the independence of every other sovereign state and the courts of one country will not sit in judgment of he acts of the government of another country within its own territory.

         3. Banco Nacional de Cuba v. Sabbatino

            1. Cuba nationalized property of U.S. citizens in Cuba. Payment was made to the company that had its property nationalized rather then to Banco national.

            2. Cuba involved act of state doctrine- domestic courts must presume validity of foreign acts- applies when foreign country in its own territory, country must be recognized a time of suit in absence of treaty.

            3. Constitutional underpinnings/ separation of powers- do not want courts interfering in foreign relations.

            4. The Judicial branch will not examine the validity of a taking of property within its own territory by a foreign sovereign, extant and recognized by this country at the time of suit, in the absence of a treaty or unambiguous agreement even if international aw is violated.

            5. Trigger to Act of State Doctrine: official act on behalf of a foreign government, lawful sovereignty ratified by state itself.

               1. Can be imposed on private parties if there is a law on the books

               2. This is not a prophylactic rule- balancing test leads to pick a foreign law where there is a disgression.

            6. Congress can override act of state doctrine (Hickenlopper amendment)

            7. Choice of law:

               1. Strict territoriality

               2. Override of public policy exception

               3. Connect to international choice of law- hard to reconcile act of state doctrine with §403 (more legislaive)

         4. Bernstein letters- Executive Branch suggestions to override act of state doctrine because contrary to public policy- it is a significant not dispositive factor in the analysis

         5. W.S. Kirkpatrick v. Environmental Tectonics

            1. Kirkpatrick used a 3^rd party to bribe Nigerian officials to get a government contract- losing parties sued 3^rd party and Kirkpatrick

            2. SC- no application of act of state doctrine because bribery was illegal- this was an action for damages not upon validity of the contract

            3. If there is a law in that country making bribery illegal there is no reason for an act of state

            4. Too formalistic to determine legality of Nigerian executive with Kirkpatrick’s act.

            5. This case was a death to the doctrine- it has not been used in over 30 years.

      4. Recognition of Judgments

         1. Hilton v. Guyot

            1. 2 NY citizens were sued by a French firm/ liquidator (Guyot) in France- judgment against Hilton

            2. Guyot sued to enforce in NY- Supreme Court would not allow

            3. Comity of Nations- one court gives deference to foreign decision, not an obligation- here since there is no reciprocity because French courts would not enforce U.S. judgment in France, therefore re-litigation of the merits.

               1. Induce change of behavior abroad

               2. Forgoes emphasis on finality to discourage forum shopping.

            4. This is no longer controlling in Most states- may apply if there is some other reason not to enforce

            5. Requirements to recognize judgment (dicta): preconditions to acceptance of comity:

               1. Full and fair trial

               2. Court of competent jurisdiction

               3. Trial conducted through regular proceedings

               4. Adequate notice to defendant (English)

               5. Impartial justice between citizens and aliens

               6. No prejudice in court or system of laws

                  1. difference between French and U.S. system will be a due process violation but will not block enforcement of French procedure

                  2. less demanding std then international measure of due process

               7. No fraud in procuring judgment

               8. No other special reason for denying comity.

         2. Uniform Foreign Money Judgment Recognition Acts

            1. Mandatory Defenses v. discretionary defenses- foreign judgment is entitled to FFC if certain requirements

               1. Foreign judgment rendered under a system which did not provide impartial tribunals o procedures compatible with due process requirements

               2. No personal jurisdiction over the D

               3. No subject matter jurisdiction

            2. Discretionary Factors:

               1. No notice within sufficient time

               2. Judgment obtained by fraud

               3. Violation of public policy

               4. Judgment conflicts with another final and conclusive judgment

               5. Violation of agreement between parties

               6. Inconvenient forum

         3. Semportex-

            1. British co sued Philadelphia co in UK- Phila co made special appearance to challenge PJ then attempted to withdraw, jurisdiction sustained and judgment entered

            2. Abandons reciprocity requirement of Hilton- can be enforced in US

            3. Req. of full and fair trial is malleable

         4. Impact of Erie on Hilton:

            1. Includes state rule of recognition of foreign judgment- can establish own rules

            2. Hilton abandons uniformity considerations

            3. State to state judgment unless federal legislation.

Public Policy- Is it too elastic to be meaningful?

• Yahoo v. La Ligue Contre Le Racisme

  • In a Judgment based on a different type of speech. How would we deal with an interconnected world with free speech issues?

  • 2 French nonprofits opposed to nonprofits, sued Yahoo because Auction cite allows Nazi propaganda.

  • Originally French Court allowed either French citizens to be denied access to this material, a warning of breaking the law, and a penalty.

  • Yahoo said they could restrict posting on Yahoo French cite, but not full Yahoo.com.

  • Modified order- Yahoo could take some of the items off.

  • Yahoo sued for declaratory judgment that order is not enforceable. To get rid of all material would violate Yahoo’s first amendment rights.

  • Court found that yahoo’s first amendment right outweighed comity and this could not be enforced in the U.S. Privilege of First Amendment when it comes to Public Policy.

  • There is no less restrictive alternative

  • Public Policy defense has been limited in FFC cases- no equivalent (Baker v. GM)- Under Uniform Act should Supreme Court interpretations also be brought in.

  • Does a Public Policy have to be Constitutional to derail a foreign judgment? What else can suffice? Must undermine public interest or confidence.

    • Gambling debt- probably not

    • What about collusive familial issues? May be overcome because of the family unit

    • Antitrust issue- Sherman Act is less restrictive- may trigger P.Pol exception in tune with Sherman Act

  • Why is this French judgment not considered a foreign act of state?

    • Even on its own terms this is a court judgment and act of state should not apply

    • Territorial authority cannot work in a global economy. Where is the content exactly?

• Tachiona v. Mugabe

  • Contrasts mechanical choice of law of Carroll v. AL

  • Victims of Human Rights abuse in Zimbabwe- campaign for violence, sued major political party.

  • Case dismissed against Mugabe, gives absolute immunity.

  • Sued under Alien Tort Claims Act for Torts, violated international Human Rights norms

  • Choice of Law problem- all acts occurred in Zimbabwe, all parties in Zimbabwe.

  • Must insure that case will be treated the same way wherever it is brought: avoidance of forum shopping.

  • Public Policy rhetoric, not final judgment- protect human rights law- court concerned with overriding federal policy- why is there not a federal deference.

  • This is an act of state by Mugabe- but does not work here because of a clear violation of law by treaty, not lawful under Zimbabwean law.

  • Depecage- issues are broken up and different laws are applied to each issue- result orientation “with a vengance”

  • Using weird sources of law- i.e. law of Guatemala for sibling law