___________________________________________________________________________________________________________ _ A. The 1. 2. 3. Choice of Law Analysis What's the forum? What are the interested jurisdictions?

What would be the different results? 1) Based on jurisdiction law? 2) Based on characterization? 4. (What law to choose?)

CONFLICT OF LAWS

___________________________________________________________________________________________________________ _ CHAPTER 2 - TRADITIONAL APPROACHES TO CHOICE OF LAW A. TORTS 1st step: Characterize the claim 2nd step: Decide what the decisive event it 3rd Step: Apply the law of the state where the decisive event occurred (territorial principle) 1. Non-intentional Torts 1) Alabama Great Southern Railroad v. Carroll (AL) Statutory remedies may not be pursued in courts of the state having such remedies when the cause of action arises in another state. 2) 1st Rest 377: The State of the wrong is the state where the last event necessary to make an actor liable for an alleged tort takes place. 2. Intentional Torts 1) With intentional torts, the place where the tortious conduct occurred will be considered where the tort occurred (not where the tort/injury is felt by P). Governed by law of place of harmful conduct; not where harm suffered. 2) Marra v. Bushee Negligent torts are usually compensatory in nature, and with intentional torts, compensation is designed to punish and deter so apply the law of the place of the conduct, where consortium follows alienated spouse, that's where injury occurred. 3) 1st Rest 406 - Rights incidental to RELATIVE STATUS [like consortium above] are determined by the law of the state where the person in whom the right is asserted is at the time when the right is alleged to have been violated." (where conduct occurred); can square w/ Alabama: both place of injury but here not place of marital domicile or wife locale but where husband lured away, for conflict purposes that is defined as place of injury. B. CONTRACTS 1. Poole v. Perkins (VA) - law of the domicile ought to govern. Civil law; where K is made, UNLESS it is to be performed in another state, and then that laws common law. 2. Linn v. Employers Reinsurance Corp. - If by telephone, law applies where words of acceptance are spoken. 3. 1st Rest 311- sum and substance - the forum is to ascertain under the general law of K, where the event necessary to make a binding obligation occurs, and then look to the local law of that forum to decide if there is a K (a binding obligation). 4. Generally apply law of place of contracting (lex loci contractus) for Issues concerning validity (capacity, consideration, fraud etc) R 1st 332 BUT for issues concerning performance such as duty to perform, adequacy of performance, discharge, etc. apply the law of place of performance (lex loci solutions) R 1st 361 1) If Acceptance by telephone, apply law of where words of acceptance are spoken. 2) If Acceptance in person, law applies where the words are heard. 3) If Acceptance by mail, law applies where the acceptance is posted or given to the carrier (the state where message of acceptance is sent from). 4) Escape Devices a. SOF - Statute of frauds could be determined to be related to validity of contract and therefore law of place of contracting should be applied; or could be determine to
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relate to procedure only, not related to validity of contract and therefore law of forum should be applied. b. Validation Rule - assume that parties intended to create a valid, binding contract go with law that validates the contract. C. DOMICILE 1. Domicile - Place where person has settled connection for legal purposes, home or place assigned by law 1st Rest 9. 2. White v. Tenant (WV)Must have residency + the intent to remain indefinitely. 1st Rest defines domicile as where a person has settled connection for certain legal purposes, whether his HOME is there or because that place was assigned to him by law. Must have a home and the intent to remain when you have these, your domicile is instant. Once you have a domicile, you dont lose it, even if absent for a period of time, until you acquire a new domicile 3. Rodriguez Diaz v. Sierra Martinez - A persons domicile is the place where he has his true, fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning. Domicile requires two elements: A physical presence of some type and intent of some type to make new dwelling place home. The domicile at the time the suit is filed controls and the fact that the plaintiff changed his domicile with the purpose of bringing a diversity action in Federal Court is irrelevant. D. MARRIAGE 1. In re Mays Estate (NY) - The legality of a marriage between persons sui juris is to be determined by the law of the place it is celebrated. 2. Lanham v. Lanham (WS) - Marriages are validated where celebrated, but there are two exceptions: 1) Marriages contrary to the law of nature 2) Marriage that the forum has declared shall not be allowed validity on ground of public policy. 3. In re Marriage of J.B. and H.B.(TX)- apply law of place of celebration, unless doing so would violate fundamental public policy 4. Absent a statute in the state of domiciliary not permitting certain marriages, the law of the state where the marriage was celebrated shall be applied (invalid everywhere if marriage is invalid in the celebration state) - lex loc celebrationus 1st K 121. Exceptions: If contrary to law of nature as recognized by Christianity or if contrary to public policy as delineated by the legislature of the law of the forum 5. 1st Rest 132 - Although the law of the state of celebration has been complied with marriage will be invalid everywhere in the following cases: 1) Polygamous marriages 2) Incestuous marriages between people so close that it is against strong policy of the domicile 3) Marriage between persons of different races where such marriage are at the domicile regarded as odious. 4) Marriage of a domiciliary which a statute at the domicile makes void even though celebrated in another state. E. PROPERTY 1. Real property - the law of the place where the property is located governs. Situs rule for real property where real property is in dispute, the location of the property determines what jurisdiction applies. Contract for real property Look first to the state where the contract was formed and then to the law of the state where the land is located. If the two conflict, generally the situs rule will apply. 1) Burr v. Beckler (IL) An instrument affecting title to IL real estate will not be valid if, under the law of place it was executed, the instrument was void. 2) Thomson v. Kyle (FL) An otherwise valid encumbrance upon real estate will not be valid if, under the law of the place it was executed, the instrument was void. 2. Personal Property Court will look to the law of the transaction or where the property right was created. This is typically where the property is located at the time of contracting. Rationale- to prevent a creditor from moving the property to forum shop. Exceptions - to the situs rule for movable property for divorce and wills. 1) Blackwell v. Lurie (NM) Jointly held property is exempt from all but joint creditors.
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2) Morson v. Second National Bank of Boston (MA)- The effectiveness of a transfer of shares of stock shall be analyzed by reference to the law of the state of incorporation, not that of the situs of transfer. F. CORPORATIONS 1. Rule 1: A foreign corporation may make assignments of property which are legal in the state of incorporation, even if local law prohibits such assignments. Must interpret statutes to see if applies to foreign corps or just domestic corps. 2. Rule 2: Internal Affairs Doctrine relationship amongst the corporation and its officers, directors, or shareholders; internal affairs are regulated by the place of incorporation; law of state of incorporation regulates internal affairs of corporation. 3. Irving Trust Co. v. Maryland Casualty Co. The court found that the New York court could not void the transfers of property outside New York, but could direct defendants to re-convey the property transferred. 4. McDermott Inc. v. Lewis (DE) A foreign corporation may allow a subsidiary to own voting shares of its stick if local law so allows. 5. Vanderpoel v. Gorman Local law which prohibited the transfer of assets by domestic corporations facing insolvency, did not prohibit such a transfer by a foreign corporation where that corporation's state of domicile permitted the transfer, and where the transfer was not prohibited by New York's public policy. G. WRINKLES IN THE THEORY: Escape Devices from strict lex loci rules of 1st RS 1. Characterization before the rules of the 1st Rest may be applied, one must know what kind of case it is (tort, K, etc); often treating tort as another issue to avoid harsh lex loci rules that many courts saw as imposing an unjust result 1) Haumschild v. Continental Casualty Co.(WI) - Interspousal immunity for tort actions is a rule of family law and not of tort law, and the law of spouses domicile governs, not the law of the place of wrong 2) How do we characterize a suit (e.g. contract, tort, property, etc.) to determine what set of common law rules applies? a. Primary characterization what is the basic claim or the basic cause of action b. Secondary characterization sometimes even after choosing contract or tort the court must determine what is the specific issue within that is. 2. Renvoi A forums choice of law rules may refer to a foreign law for decision 1) Rule 1: 1st Rest rejects doctrine except in cases involving questions about title to land or the validity of divorce decrees. 2) Rule 2: The disposition of deposit accounts will be governed by the sub law of the location where the accounts are created, however the conflict of law rules of that state is not a body of sub law to be applied by a forum state. Thus a forum state will apply its own COF rules. 3) Rule 3: When a K does not designate a law to be applied, the law to be applied will be that where the K is to be performed; with a promissory note, the place of delivery to the lender is where the K is to be performed (made by mail, delivery is made at place of mailing, not receipt). 4) In Re Estate of Damato (NJ) - In an action involving foreign deposit accounts, but not its conflict-of-law rules, will be applied. 5) The forum state will apply the whole law (which includes that states conflict of law rules as well as internal law) of the other state in conflict of law problems . a. Basic issue is when a state decides it is going to apply the law of another state, will it apply the whole law or that states internal law? 6) Once a court determines which states law should apply, should the court look only to that states substantive law or to the states choice of law rules as well? a. Common law rule (First Restatement) Courts should reject the renvoi and look only to the substantive law of the foreign state. a) Exceptions: 1. Real property accepting the renvoi always applies situs law. 2. Divorce accepting renvoi always returns to domicile law, which is typically the state with the most interest in ensuring the validity of the divorce.
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b. Problems with accepting renvoi a) Infinite regression If the forum state should apply foreign choice of law, and foreign choice of law says apply the forum law, an infinite regression occurs. This might be resolved by only going around once, back to forum law. 1. Lack of uniformity 2. Depecage party receives the benefits of some aspects of a states laws without the accompanying burdens and policy compromises 3. Substance and Procedure: procedural issues governed by law of the forum BUT how to classify as procedural? 1) Rule 1: A federal court sitting in diversity should follow state law regarding BOP. 2) Rule 2: The sub law of the site where a COA arises is that which should be applied; Procedural local law may be applied. 3) Rule 3: If issue is procedural, forum law applies, if issue is substantive, can look to foreign state. 4) Forum law generally applies to procedure; Courts are generally always entitled to apply their own procedural rules. 5) Sampson v. Channell A federal court sitting in diversity should follow state law regarding BOP. BOP is substantive law, not procedural. Massachusetts law as to burden of proof should be applied. BOP is likely to have a decisive influence on the outcome of the litigation. Substantive law = outcome determinative. 6) OLeary v. Illinois Terminal RR (MO) When the law of the site of an accident is that the plaintiffs due care is an element of the negligence cause of action, that law should be applied by the forum state. Court found BOP to be procedural, not substantive. If law is substantive, law of state of injury will be applied; if procedural, law of forum will be applied. Look to the forum state to see how they classify the law: substance or procedure. 7) Grant v. McAuliffe (CA) Plaintiffs, passengers and driver, were injured in an Arizona automobile accident with the deceased tortfeasor. All parties were domiciled in California. The passengers and driver brought an action against defendant administrator for injuries sustained as a result of the tortfeasor's negligence. The question was whether the causes of action survived the tortfeasor's death and were maintainable against his estate. The court held that (1) in California, causes of action for negligent torts survived the death of the tortfeasor and could be maintained against the administrator of his estate, (2) in Arizona, if a tort action was not commenced before the death of the tortfeasor a plea in abatement was to be sustained, and (3) survival was not an essential part of the cause of action itself but related to the procedures available for the enforcement of the claim for damages. California, the law of the forum, prevailed. On the issue of survival of a tort action against a decedent, the law of the forum applies. California follows 1st Rest 390 survival of a COA is a substantive matter and that the law of the place where the tortious acts occurred must be applied to determine the question AZ law would be applied under that standard BUT Ct declines to follow. Survival is not an element of a cause of action, but rather related to enforcement of a cause of action. 4. Statute of Limitations - long SOL makes a forum attractive for litigation. Enaction of a borrowing statute creates uniformity, comity, judicial economy, and discourages forum shopping. 1) Rule 1: Generally if the SOL is specific to the cause of action it is substantive, otherwise it is viewed as procedural. 2) Rule 2: Effect of a borrowing statute - SOL of place where cause of action arose applies. If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred in the forum state. 3) Duke v. Housen (WY) Appellee sued appellant for gross negligence for infecting her with a venereal disease. On appeal, appellant alleged that the statute of limitations barred the action. Considering only the statute of limitations issue, The court held that the action was barred by the statute of limitations. The court articulated that the evidence demonstrated that there was no sexual contact between the parties in Wyoming and that the cause of action arose in New York. In a personal injury action, the SOL of the place of injury should apply; Wyoming had a borrowing statute proving that the place of injury SOL will apply
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a. 1st step, For the borrowing statute to apply, the COA must have arisen somewhere other than Wyoming b. 2nd step, must determine where the COA arose. Court decided NY since this was the last place the couple had sexual intercourse. 5. Public Policy: Where two states have different laws and those states have made different policy determinations on the issue, 612 provides a narrow exception a forum can use to decline the application of substantive foreign law. This is intended to apply only where some deep rooted tradition of the forum state is offended. 1) Rule 1: Direct action is a substantive right and generally the sub law of a state where the COA arises will be applied, UNLESS this conflicts with the public policy of the forum state. 2) Rule 2: Law of the country where the K was made must be respected and if that country provides for a defense to breach, forum must follow that law. 3) Rule 3: If a forums choice of law provision takes them to the law of another state, and applying the law of that state is contrary to the public policy of the forum, the court will not apply the law of the foreign state. 4) Marchlik v. Cononet Insurance (IL) Plaintiff brought an action under the Wisconsin statute which authorized original suits against defendant insurance companies provided the injuries were sustained in Wisconsin. Plaintiff, a Wisconsin resident, brought the action in the Illinois courts because all parties in a Wisconsin collision in which she was injured had Illinois insurance policies with clauses against direct carrier actions. The primary issues were whether the public policy of Illinois precluded direct action against an insurer for tort liability where the policy had a "no action" clause; and whether the federal full-faith-and-credit clause forced a state to enforce a foreign statute. Court determined the Wisconsin statute was substantive, thus entitled to comity provided there was no compelling Illinois public policy to the contrary. Viewing public policy as judicial decision, constitutions, customs, and morals, the court determined public policy precluded Illinois courts as a forum for cases under the Wisconsin direct action statutes. 5) Holzer v. Deutsche - The parties, a German corporation and an employee who was a German national, entered into an employment contract for services to be performed in Germany and other locations outside New York. The employee's causes of action alleged that the employment contract provided that in the event that he "became unable," without fault on his part, to serve during the period of the contract the corporation would pay to him the sum of 120,000 marks, in discharge of their obligations. The first cause of action alleged that the corporation discharged the employee on the sole ground that he was Jewish. The second cause alleged that, due to incarceration in a concentration camp, the employee was unable to continue his employment. The employee sought damages due to lost income. In an action based on breach of an employment contract it may be raised as a defense by the employer that such breach was mandated by law. If application of foreign law is against public policy in the forum, the forum will dismiss the case. a. Act of State Doctrine - Every sovereign State is bound to respect the independence of every other sovereign State and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Oetjen v. Central Leather. 6. Penal Laws 1) Penal laws of one state will NOT be enforced by another forum. A penal law is one in which as penalty is awarded to the state as compensation for some public wrong, as distinguished from damages as redress for private wrong. 2) Paper Products Co v. Doggrell (TN) - Appellant creditor petitioned the court for a rehearing of its judgment in light of a decision by the United States Court of Appeals for the Sixth Circuit on the identical Arkansas law and question. The court had held that the Arkansas law was penal and was not enforceable under the full faith and credit clause. In denying the petition for rehearing, the court noted that in Tennessee the stockholders of a de facto corporation were not liable for its debts, and that corporations de facto were those which had made a bona fide effort to comply with the provisions of law and had inadvertently failed in some particular, and in good faith had exercised the franchises of such corporation. The court found no purpose of the Arkansas law other than that of the better procuring compliance with a technical requirement of the Arkansas statute by inflicting a penalty merely because of a failure to so comply. The court would not give effect
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7. Proof 1) 2)

1) 2)

to a law penal in nature. Generally, shareholder liability for debts of a corporation is to be determined by the law of the state of incorporation, except when contrary to public policy of the forum state. of Foreign Law When a forum state cannot ascertain the law of the state whose law should be applied, it may apply local law. Tidewater Oil Co. v. Waller When a forum state cannot ascertain the law of the state whose law should be applied, it may apply local law unless it can be shown that the two states laws would not be similar on a given issue. In absence of proof of foreign law, take 3 approaches: a. Dismiss claim for failure to make out a prima facie case b. Apply the law of the forum c. Indulge in presumptions as to the foreign law and apply is accordingly. (civilized law) Walton v. Arabian American Oil Co Trial judge gave plaintiffs counsel an opportunity to prove Arabian law and indicated that he would rule against plaintiffs without such proof. Notes Tidewater - a presumption of forum law because there was insufficient evidence of what foreign law said.

___________________________________________________________________________________________________________ _CHAPTER 3 - MODERN APPROACHES TO CHOICE OF LAW A. INTRODUCTION 1. SIGNIFICANT CONTACTS 1) The law of the state with the greatest interest (most contacts) will be applied, so long as it does not offend the public policy of the forum. 2) Auten v. Auten (NY) The parties married and lived in England. Defendant later obtained a Mexican divorce. Plaintiff went to New York City to talk to defendant, which resulted in the separation agreement upon which the action was predicated. Defendant was obligated to pay support to plaintiff and the children. The agreement also provided that the parties were to continue to live separate and apart and not instigate any suits regarding the marriage or divorce. Plaintiff returned to England and defendant failed to live up to his agreement. Plaintiff later filed a petition for separation in an English court to enforce the agreement. Defendant was served with process in New York. Plaintiff brought suit when past efforts were ineffective. Defendant claimed that the institution of the separation suit in England was a repudiation of the agreement and effected a forfeiture of her right to any payments under it. NY Court of Appeals held that the law of England controlled because it had the most interest in the problem and paramount control over the legal issues. a. Court abandoned the First Restatement contracts rule and instead applied the law of the place with significant contacts to resolve the matter. b. Under the "center of gravity" or the "grouping of contacts" theory of the conflict of laws, instead of regarding as conclusive the parties' intention or the place of making or performance, emphasis is upon the law of the place that has the most significant contacts with the matter in dispute. 3) Haag v. Barnes (NY) In defense to a child support action, D invoked a prior agreement to waive such support; the waiver was valid under the law of the state where the agreement was made. Agreement executed in Chicago and contained a waiver of any child support action, and the terms were to incorporated Illinois law (choice of law clause). The parties agreed that the laws of the state of Illinois would govern their agreement. a. The court held that the motion to dismiss was properly granted. Appellant could not upset a support agreement, which was itself perfectly consistent with the public policy of New York, which was entered into in Illinois with the understanding that it would be governed by the laws of that state and which constituted a bar to a suit for further support under Illinois law. The agreement, in so many words, recited that it "shall in all respects be interpreted, construed and governed by the laws of the state of Illinois" and, since it was also drawn and signed by appellant in Illinois, the traditional conflicts rule would treat those factors as conclusive and result in the application of Illinois law.

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2. State 1) 2) 3) 4) 5)

6)

7)

b. The courts, instead of regarding as conclusive the parties' intention or the place of making or performance, lay emphasis rather upon the law of the place which has the most significant contacts with the matter in dispute. Interests GUEST STATUTE TRILOGY look to the purposes of the respective law. Guest Statute bars a nonpaying passenger (guest) in a non-commercial vehicle from suing the driver (host) for damages due to the drivers ordinary negligence. Law of the place of the accident does not invariably govern a personal injury action; when the forum's interests are greater than those of the state of the accident, that law will be applied. If rules are conduct regulating, the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders. Where the rules are loss allocating and the parties share the same domicile , the loss allocating rules of the common domicile will apply (Nuemier Rules). Babcock v. Jackson (NY) Personal injury action, accident occurred in Ontario, P and D are NY residents. Trip was going to end in NY, care licensed/insured in NY. Canada has a guest statute saying a driver of a car will not be liable for the injuries his passenger receives in a car wreck absolute bar. Defendant moved to dismiss the complaint on the ground that the law of the place where the accident occurred governed, and asserted that Ontario's guest statute barred recovery. Appellant sought review of the judgment affirming the order granting defendant's motion to dismiss. The reviewing court reversed its prior choice of law rule for torts, which was based on the law of the place of the tort, and held that the applicable choice of law rule should also reflect a consideration of other factors relevant to the purposes served by the enforcement or denial of the remedy. Comparison of the relative "contacts" and "interests" of New York and Ontario in the action made it clear that the concern of New York was unquestionably greater and more direct, and the interest of Ontario was at best minimal . a. Forum states interest is greater than place of accident look to parties contacts with the forum; grouping of contacts and center of gravity. NY no longer applies this law. a) Center of Gravity Test - state law of the state with the most significant contacts with the parties and their transaction applies. (Haag, Babcock, Tooker). Tooker v. Lopez (NY) Two NY girls living together and attending Michigan State University. Car accident and one dies. The victim's father brought a wrongful death action in New York and the driver asserted as an affirmative defense the Michigan guest statute which permitted recovery only by showing willful misconduct or gross negligence. NY has greater interest and app of law would offend NY policy requirement of driver having to have liability insurance to protect passengers. a. Court held that: in determining the choice of law to apply, it was necessary first to isolate the issue, next to identify the policies embraced in the laws in conflict, and finally to examine the contacts of the respective jurisdictions to ascertain which had a superior interest in having its policy or law applied, reviewing the facts in light of the policy considerations underlying ostensibly conflicting laws, it was clear that New York had the only real interest in whether recovery should be granted, and application of Michigan law would have defeated a legitimate interest of the forum state without serving a legitimate interest of any other state. b. Next case restricts Tooker to cases where the passenger and driver were domiciled in different states, the law of the place where the accident occurred should be applied. Nuemier v. Kuehner (NY) Guest residing in the place of injury. The intermediate appellate court had reversed a decision from the trial court that denied plaintiffs motions to dismiss affirmative defenses on the ground that the asserted Ontario statute was not available in an action brought in a New York court. On appeal, the court noted that although the host-driver was domiciled in New York, the guest passenger, for whose estate plaintiff was suing, was a domiciliary of Ontario. The court further noted that the place of the accident was Ontario, which also was the jurisdiction that had enacted the Act to protect the host from liability for ordinary negligence. The court found that New York had no legitimate interest in ignoring the public policy of a foreign jurisdiction and legislation that was
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addressed to a resident of that jurisdiction who was riding in a vehicle traveling within its borders. The court reversed and reinstated the judgment of the trial court, finding that plaintiff's motion should have been denied because the guest statute was applicable to the action. a. For the forum state to apply its own law and not the law of the place of the injury, the P must show the forums connection with the action is sufficient to justify displacing the law of the place of injury. b. When the guest-passenger and the host-driver are domiciled in the same state, and the car is registered there, the law of that state should control and determine the standard of care that the host owes to his guest. c. Court says since the guest-host statute resolutions vary, there needs to be some fundamental principles (less rigid than 1st RS BUT will provide some predictability and uniformity): a) When the guest-passenger and the host-driver are domiciled in the same state, and the car is there registered, the law of that state should control and determine the standard of care which the host owes to his guest. b) (a) When the driver's conduct occurred in the state of his domicile and that state does not cast him in liability for that conduct, he should not be held liable by reason of the fact that liability would be imposed upon him under the tort law of the state of the victim's domicile. (b) Conversely, when the guest was injured in the state of his own domicile and its law permits recovery, the driver who has come into that state should not -- in the absence of special circumstances--be permitted to interpose the law of his state as a defense. In the absence of special circumstances not in 2(a); no case law telling us what these special circumstances are. c) In other situations, when the passenger and the driver are domiciled in different states, the rule is necessarily less categorical. Normally, the applicable rule of decision will be that of the state where the accident occurred but not if it can be shown that displacing that normally applicable rule will advance the relevant substantive law purposes without impairing the smooth working of the multi-state system or producing great uncertainty for litigants. d. Third one applies in Neumeier, but still must ask if applying NY law and displacing the law of Ontario would advance the relevant substantive law purposes without impairing the smooth working of the multi-state system or producing great uncertainty for litigants. Court held that it did not. (Might be un-provided for case w/ no conflicts in Currie analysis below: Ontario had no interest in protecting NY D and no reason to apply NY law to help Ontario P, but court developed special rules) (Cooney v. Osgood: characterizes almost as public policy escape device but not normally considered in Modern Interest Analysis) 8) Cooney v. Osgood (note case) P sued D for injuries received by piece of equip in MO, and then D sought contribution from Mueller. P sued D in NY. MO barred contribution in Worker's Comp cases, NY allowed it. Court noted contribution rules are loss allocating and there was split domicile. Court held true conflict existed. MO law was applied because accident occurred there a. Neumeier rules assume that injury and conduct are going to occur in the same place. b. Public Policy exception: interest analysis - court can invoke exception in certain circumstances for foreign laws that are truly obnoxious. 9) Schultz v. Boy Scouts of America (NY) Plaintiffs, parents and administrators of estate, filed a complaint against defendant charities for injuries to themselves and their sons following their sons' sexual molestation by defendants' employee. Plaintiffs and defendants were domiciled in New Jersey, but some of the molestation occurred in New York. The lower court granted defendants' motions for summary judgment and the appellate court affirmed. The court affirmed, holding that interest analysis had become the relevant analytical approach to choice of law in tort actions in New York and the law of the jurisdiction having the greatest interest in the litigation would have been applied
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and the only facts or contacts which obtain significance in defining state interests were those which related to the purpose of the particular law in conflict . Under this formulation, the significant contacts were, almost exclusively, the parties' domiciles and the locus of the tort, thus the law of New Jersey had to be applied. The court held that the issue presented was barred by the New Jersey charitable immunity statute and had been actually litigated and determined by a final judgment of its courts. a. When standard of conduct is at issue, the law of the place of conduct is important; when case involved allocation of loss, domicile is much more important. a) Rule that allocates loss after a cause of action arises is loss allocating. 1. Guest/Host laws are loss allocating 2. Charitable immunity laws are loss allocating b) Rule creating a cause of action is conduct regulating. b. There are persuasive reasons for consistently applying the law of the parties common domicile: a) Reduces forum shopping. b) Rebuts charges that forum locus is biased in favor of its own laws and in rules permitting recovery. c) Concepts of mutuality and reciprocity support consistent application of the common-domicile law. d) Produces a rule that is easy to apply and brings modicum of predictability and certainty to an area of law needing both. c. Followed Neumeir rule #3: Law of place of tort will normally apply, unless displacing it will advance the relevant substantive law purposes without impairing the smooth working of the multi-system or producing great uncertainty for litigants. 10) Padula v. Lilarn Properties Corp. (NY) - The subcontractor sustained injuries when he fell from a scaffold while performing work on the owner's property. Both parties were New York residents; however, the injuries occurred in Massachusetts. The subcontractor filed an action for damages, alleging violations NY law and the rules and regulations. The owner's motion for partial summary judgment dismissing the subcontractor's causes of action was granted by trial court and affirmed by the appellate court. The issue on further appeal was whether the provisions of New York State Labor Laws were applicable to the action. The court held that, while NY law embodied both conduct-regulating and loss-allocating functions, they were primarily conduct-regulating rules requiring that adequate safety measures be instituted at the worksite and should not have been applied to the resolution of the tort dispute, which arose in Massachusetts . In affirming the dismissal, the court concluded that the law of Massachusetts, the jurisdiction where the tort occurred, applied because the laws at issue were conduct-regulating. 11) Un-provided for case when none of the jurisdiction has a basis for applying their law/policies the matter in dispute 12) False conflict when all the laws are in agreement or the laws are in disagreement but one jurisdiction and one jurisdiction only has an leg basis for application of its law (Babcock) 13) True conflict the laws clash and all the jurisdictions have a legal basis for applying their laws (apply forum law). 14) Policy Tensions in NY - rules and standards, conduct v. loss allocation (criticism: isn't this just a new issue of characterization), territoriality and personal connections (supporters of conduct/loss-allocation description support), predictability and just results, accommodating state interests in light of uncertain state policies . B. INTEREST ANALYSIS: IN THEORY AND IN PRACTICE 1. Theoretical Foundations of Interest Analysis 1) Curries first method of interest analysis a. Step 1: The Court will apply the law of the forum, unless a party suggests that the law of another forum should be applied. b. Step 2: If the law of another forum is suggested, the Court will determine if the forum has an interest in the case; look at policy of that state.

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If the court finds that the foreign state has an interest in the case, but the forum does not, than the forum will apply the foreign states law False Conflict b) If the forum has any interest in having its rules applied to the suit, the court will apply the rules of the forum in every instance regardless of whether the other state has any interest or not (if both have an interest) True Conflict 2) Curries second method of interest analysis a. Step 1: Court will apply the law of the forum, unless a party suggests that the law of another forum should be applied. If the law of another forum is suggested, the court will determine the interests of the forum state and the suggested states. b. Step 2: If the court finds that one state has an interest in the case, and the other has none, it should apply the law of the only interested state c. Step 3: If the court finds an apparent conflict between the interests of the two states, it should use a more moderate and restrained interpretation of the policy of one state in order to avoid a conflict. d. Step 4: If the court finds that a conflict between the legitimate interests of the two states is unavoidable, the court should apply forum law. e. Step 5: If the forum is disinterested, but an unavoidable conflict exists between the laws of the two other states, and the court cannot decline to adjudicate the case, it should apply the law of the forum. 3) Currie later restated his principles and added provisions dealing with the disinterested forum and objections that had been raised by others. a. 1 - When a court is asked to apply the law of the foreign state different from the law of the forum, it should inquire into the policies expressed in the respective laws, and into the circumstances in which it reasonable for the respective states to assert an interest in the application of those policies. In making these determinations the court should employ the ordinary processes of construction and interpretation. (See what every states policy is and determine who has an interest b. 2 - If the court finds that one state has an interest in the application of its policy in the circumstances of the case and the other has none, it should apply the law of the only interested state. (False conflict) (Babcock and Tooker were false conflicts) c. 3 - If the court finds an apparent conflict between the interests of the two states it should reconsider a more moderate and restrained interpretation of the policy or interest of one state or the other may avoid conflict. (Reconsider and make it a false conflict) d. 4 - If, upon reconsideration, the court finds that a conflict between legitimate interests of the two states is unavoidable, it should apply the law of the forum (true conflict). e. 5 - If the forum is disinterested, but an unavoidable conflict exists between the laws of the two other states, and the court cannot with justice decline to adjudicate the case, it should apply the law of the forum, until someone comes along with a better idea. (True conflict) f. 6 - The conflict of interest between states will result in different dispositions of the same problem, depending on where the action is brought. If with respect to a particular problem this appears seriously to infringe a strong national interest in uniformity of decision, the court should not attempt to improvise a solution sacrificing the legitimate interest of its own state, but should leave to congress, exercising its powers under the full faith and credit clause, the determination of which interest shall be required to yield 2. Judicial Application of Currie approach 1) False Conflict when only one state has a legitimate interest in applying its law (thus, no conflict); the forum should apply that states law. 2) True conflict - When two states have an equal balance of interests in application of its own law and the laws are conflicting: a. Preference for forum law - the forum law should be applied. b. Comparative impairment (Baxter approach) Federal court will assume jurisdiction and apply the law of the state whose underlying policies would be most impaired by a failure to apply its law.
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a)

a) NOTE: California is the only state that uses this. 3) Disinterested forum when the forum has no interest in applying its law and a. False conflict if the conflict between the other two states is false, forum will apply the law of only one interested state. b. True conflict in disinterested forum dismiss if forum non conveniens is available or apply law of one of the interested states. c. Un-provided for cases Where neither the forum nor another state has an interest, the forum should apply its own law unless it decides to apply the law it prefers on the merits. 4) TRUE CONFLICTS a. Lilienthal v. Kaufman (OR) - Plaintiff brought an action against defendant to collect on two promissory notes. Defendant argued that he had previously been declared a spendthrift by an Oregon court and placed under a guardianship. The guardian declared that the obligations under the notes were void. The plaintiff contended that the notes were executed and delivered in California, which did not recognize the disability of a spendthrift, and that the Oregon court was bound to apply the law of the location where the contract was made. The appeals court held that the law of the place of the making of the contract would usually apply unless the forum state had a strong public policy interest in applying its own laws. The court concluded that Oregon had a strong public policy interest in applying its laws protecting spendthrifts from liability. Where two states have an equal balance of interest in application of their own laws to an interstate contract dispute, the forum is privileged to apply its own law so as to advance its own public policy. a) Rule of validation - if the contract is valid under the law of any jurisdiction having significant connection with the contract, i.e., place of making, place of performance, etc. the law of that jurisdiction will be applied. BUT when two jurisdictions with a substantial interest, which will be served or thwarted depending upon which law is applied, the choice of law rule will advance the policies or interests of the forum state. b) If forum law has interest, then apply forum law. Oregon Court, P sued Oregonian, there is Oregan law. 5) TRUE CONFLICTS V. APPARENT CONFLICTS a. Bernkrant v. Fowler (CA) - The buyers purchased an apartment complex in Nevada. By agreement of the parties, the buyers refinanced their obligations and paid a substantial part of their indebtedness to the seller in exchange for the seller's promise that he would provide in his will that upon his death all their indebtedness to him would be canceled. When the seller died in California, he did not provide for the cancellation of the buyers' balance and the buyers continued to make regular payments under protest. The buyers brought an action against the executrix to have the note cancelled and the property re-conveyed to them. The trial court entered judgment in favor of the executrix. On appeal, the court reversed the judgment, reasoning the laws of Nevada applied and that the lower court improperly determined that the parties' contract was subject to the California statute of frauds. Local statute of frauds will not be applied to an extraterritorial oral agreement a) To determine whether the contract is subject to CA statute of frauds, consider both the policy to protect the reasonable expectations of the parties and the policy of statute of frauds. Since CA would have no interests in applying its own SOF unless the Defendant remained in CA until his death, the plaintiffs were not bound to know that CA statute might ultimately be invoked against them. 4) UNPROVIDED-FOR CASES a. Situation occurs when policy of no state would be advanced by applying its law in the case at bar. Currie believed that such cases are rare and he suggested that forum apply its own law because there is no important policy reason to displace the normal presumption in favor of forum law. b. Governmental interest approach forum applies its own law if it has an interest in doing so.
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c. Hurtado v. Superior Court (CA) - The trial court stated that under CA law it would
apply the law of California with unlimited damages and not Mexican law, which limited damages to an accident in California with resident defendants in the lawsuit. The lower appellate court granted a writ of mandate to preclude the trial of the lawsuit under California law. In discharging the lower appellate court's writ of mandate, the court held that the superior court was correct in applying California law to the action. The court stated that the proper test, the governmental interest approach, required an analysis of the respective interests of the states involved, the objective of which was to determine the law that most appropriately applied to the issue involved. The court found that in wrongful death actions, there were completely independent state interests that created a cause of action to provide some recovery and deter conduct and limited the amount of that recovery to avoid the imposition of excessive financial burdens on defendants. However, a state would not have an overriding interest in denying its own residents unlimited recovery against nonresidents in another state. CA, as the forum state, should apply its own law unless another state has a greater governmental interest in having its law applied. a) When the defendant is a resident of California and the tortious conduct giving rise to the wrongful death action occurs in CA, CAs deterrent policy of full compensation is clearly advanced by application of the law. 3. Recent Theoretical Criticisms of Interest Analysis 1) No good resolution of true conflicts 2) Definition of interest seems somewhat discriminatory; turns all common domicile cases into false conflicts 3) Maybe goal of modern choice of law theory should not be effectuation of legislative policy (legislative purpose v. legislative motivation) C. COMPARATIVE IMPAIRMENT 1. In true conflicts situation apply law of state whose policies would be most impaired by rejection of its rules. 1) Weighing of interests is rejected 2) Weighing of harm that would be caused by refusing to carry out the interests in particular cases is OK 3) This can only apply in case of true conflict 4) Based on fact that states have external objectives to have their policies respected by other states 2. Bernhard v. Harrahs Club (CA) - Plaintiff was injured by a drunk driver who became intoxicated at defendant's tavern. The trial court found that the law of defendant's state (Nevada) was applicable and that the law precluded plaintiff's recovery against defendant for injuries sustained in California that were proximately caused by the selling of alcohol to an intoxicated person. On appeal, the court reversed the trial court's judgment and remanded with instructions that defendant be given a reasonable time to answer plaintiff's complaint. The court found California's law regarding liability for selling alcohol to an intoxicated person should be applied to defendant because California had a legitimate concern in the protection of its citizens to warrant applying its law in controversies where two separate states were involved with conflicting laws. The court held that it was proper that California's law be applied to defendant who advertised and solicited California residents to come to his establishment for the purpose of drinking and gambling and with the knowledge that they could become intoxicated and would then use the public highways to go home. 1) Analysis Steps: 1st step does a true conflict exist? If so, 2nd step apply the law of the state whose interest would be more impaired/policies would be more burdened if its laws were not applied (comparative impairment). 2) Rule: True conflicts should be resolved by applying the law of the state whose interest would be more impaired if its law were not applied. 3. Kearney v. Salomon Smith Barney (CA)- The clients, Kearney, who resided in California, sought injunctive relief and monetary damages or restitution, alleging that SSB had a continuing practice of recording telephone conversations made to a branch office in Georgia without the callers' knowledge or consent. The trial court sustained a demurrer asserting that the alleged practice was
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permissible under Georgia law. The court found a true conflict between California and Georgia law. Under a comparative impairment analysis, the court determined that California had a strong and continuing interest in protecting the privacy of its residents and that the application of California law would not severely impair Georgia's interests under because a Georgia company that had a valid business justification for recording telephone calls could comply with California law by disclosing at the outset of a call made to or received from a California customer that the call was being recorded. Georgia did, however, have a legitimate interest in protecting its companies from unexpected liability based on past actions that were lawful in Georgia. The state with the more significant impairment absent the application of its laws should have its laws applied in a conflict-of-law analysis. D. The Better Rule (rubbish) 1. Note that this is a methodology and not a rule. Minnesota departed from this methodology. 2. Choice-Influencing Considerations: 1) Predictability of results - protects expectations and allows parties to plan their transaction. This relates more to contract that tort law. 2) Maintenance of interstate/international order - Important in commercial law, important for free flow of people and goods. 3) Simplification of the judicial task - Favors procedure over substantive, one forum should not have a problem in applying other states law. 4) Advancement of the forums governmental interests - apply law of state who has most interest. If theres a genuine interest, state courts should be expected to act in accordance with that concern. If the circumstances show that this exists, its a preference. 5) Application of the better rule of law; this can be determined on a facial view of the law, e.g. Milkovich, p. 233 2. Milkovich v. Saari (MN) - The car owner, the driver, and the passenger all were residents of Ontario, Canada. The car accident occurred in Minnesota. The car owner and the driver claimed that the law of Ontario should have applied and that their motion to dismiss should have been granted because Ontario had a guest statute that required proof of gross negligence, which was not alleged. The car owner and the driver also claimed that their affirmative defense that the law of Ontario should have applied was erroneously stricken by the district court. On appeal, the court held that the passenger should have been allowed to proceed with the action under the common law rules of negligence and that she should not have been bound by the guest statute requirements of the Ontario. In so holding, the court indicated its preference for the better-law approach and its rejection of the guest statute concept of various jurisdictions. Rule: Forum law usually is better law, but if a judge feels that a states law is better than the other, he has should apply the better law 1) Lex Loci approach has been replaced with an analysis involving 5 factors: a. Predictability; Not important no one plans on getting in an accident b. Interstate satisfied as long as state w/ substantial connection to problem selected c. Ease for Judge; Easy to apply any law d. Forum Interest; Advanced by applying its law b/c it was the administering state; No note made on better law; e. Application of better rule of law 2) Dissent: The "center-of-gravity-of-the contacts" theory of conflict of laws has been adopted in this state, and we have applied it in situations where an automobile trip started and was intended to terminate in this state, where the host-guest relationship was formed in this state, or where the place of registration or garaging of the automobile was in this state, Until today, the court has not considered the mere happening of an automobile accident in this state a sufficient contact with the forum to establish the center of gravity. The center of gravity is in Ontario, not Minnesota. E. THE RESTATEMENT 2ND AND THE MOST SIGNIFICANT RELATIONSHIP 1. When applying the most significant relationship approach, apply 6 generally, and then apply the factors in 145 in light of the relevant policies of the forum and other interested states. The places in 145 are the places that are presumed to be interested. MISSOURI courts apply this. 2. Restatement 145: The General Principle (Contacts analysis prong/Rule-like)
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3.

3. 4.

5.

4.

1) The rights and liabilities of the parties are determined by the law of the state which has the most significant relationship to the occurrence and the parties under the principles stated in 6 2) Most significant relationship approach - Contacts to be considered in applying 6 to determine which law to apply to an issue include: a. Place where the injury occurred b. Place where the conduct causing the injury occurred c. The domicile, 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. Restatement 6: Choice-of-law Principles (Significant interests/policies Prong/Suggested Approach) 1) A court will follow the statutory directive of its own state on choice of law . 2) If there is no statutory directive, the factors relevant to the choice of applicable law include: a. Needs of the interstate and international systems - met by applying law of most interested state. Is the decision acceptable to the other countries? b. Relevant policies of the forum and other interested states and the interests of those states in determination of the issue c. Protection of justified expectations - irrelevant in tort: they're usually not expected (Tooker) d. Policies underlying the field of law - when there are minor policy differences, apply law of state to achieve policy best. e. Certainty, predictability, and uniformity of result. f. Ease in determination and application of the law to be applied. Restatement 186 - Applicable Law (for Contracts) - Issues in contract are determined by the law chosen by the parties in accordance with the rule of 187 and otherwise by the law selected in accordance with rule of 188. Restatement 187 - Law of the State chosen by the Parties - the law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue unless either: 1) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties choice or 2) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of 188 would be the state of the applicable law in the absence of an effective choice of law by the parties. 3) in the absence of a contrary indication of intention, the reference is to the local law of the state of the chosen law. Restatement 188 - Law Governing in Absence of Effective Choice of Law by the Parties. 1) the rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in 6. 2) in the absence of an effective choice of law by the parties, the contacts to be taken into account in applying the principles of 6 to determine the law applicable to an issue include: a. the place of contacting b. the place of negotiation of the contract; c. the place of performance; d. the location of the subject matter of the contract; e. the domicile, residence, nationality, place of incorporation and place of business of the parties. These contacts are to be evaluated according to their relative importance with respect to the particular issue 3) if the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in 189-199 and 203 Restatement 189 - Contracts for the Transfer of Interests in Land
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5. Phillips v. General Motors Corp. (MT) - In product liability cases arising out of a car accident which occurred in Kansas, plaintiffs sought damages related to the deaths of family members in the accident and personal injuries sustained by an accident survivor. Federal district court observed that the case raised significant policy questions involving Montana's choice of law rules, that choice of law questions in tort cases were frequent in diversity litigation in federal court, and that it would have been helpful in resolving this case and others to have a definitive determination of what the Montana choice of law rule was. In responding to the certified questions, the court adopted the Restatement (Second) of Conflict of Laws for tort actions. Given the facts as presented in federal district court's order, Montana's laws applied. It was clear that Montana had the more significant relationship to the issues raised by this dispute. Rule: Applies most significant relationship test. Where there is a potential conflict of laws, follow the most significant relationship test in determining which states substantive law to apply. 1) Adopts 2nd Restatement place of injury (Kansas) will have its law applied unless another state has a more significant relationship (Montana) 2) The public policy of all interested states must be considered in determining which state has more significant relationships. a. Needs of interstate and international system b. policies of interested states c. place of injury d. place of conduct e. residence of the parties f. basic policies underlying the particular field of law. 3) Since lex loci rule has been abandoned for contract disputes, the same choice of law approach should also be applied in tort cases. 4. AOL v. Nat'l Health Care Discount (IA) Contract e-mailers worked to generate leads for defendant, a business selling discount optical and dental service plans. Plaintiff internet provider filed suit against defendant, asserting numerous claims concerning allegations that defendant's contract e-mailers had sent unsolicited bulk e-mail advertisements to plaintiff's members through plaintiff's computer system without authorization. The court denied plaintiff's motion for partial summary judgment on the issue of liability. Summary judgment was not appropriate for plaintiff's claim under the Computer Fraud and Abuse Act, because a disputed issue of material fact existed as to damages. Regarding plaintiff's claims of trespass to chattel and a violation of the Virginia Computer Crimes Act, the court determined that the contract e-mailers violated the statute and committed the tort, but the court could not determine whether defendant was liable for the emailers' actions. The court applied Virginia law to plaintiff's non-statutory claims because it was the only locale in which plaintiff's alleged injury was clearly demonstrable Rule: When there is no clearly demonstrated place where the alleged conduct underlying the cause of action occurred, the law of the state where the injury occurred is the law that will be used. Although no state has a clear relationship to the events giving rise to this action, Virginias relationship appears to be the most significant. F. WRINKLES IN THE THEORY 1. Domicile - Same problem as Traditional method, one problem is after acquired domicile. 1) Reich v. Purcell (CA) - The accident occurred in Missouri, one party resided in Ohio, and the other in California. Missouri limited wrongful death damages, yet California and Ohio did not. The trial court held that the Missouri statute applied where the wrong occurred. The court held that in a complex situation involving multi-state contacts, no single state alone could have been deemed to create exclusively governing rights. Accordingly, when application of the law of the place of the wrong would defeat the interests of the litigants and of the states concerned, the court had not applied that law for all tort actions brought in the courts of the state, and other cases to the contrary were overruled. Considering the interests of all three states involved, the court found that the driver's liability should not have been limited when no party to the action was from a state limiting liability. Giving effect to Ohio's interest in affording full recovery to the injured parties did not conflict with any substantial interest of Missouri. The Missouri limitation did not apply. Rule: the relocation of a party to a state after the event giving rise to a suit is not a factor to be considered in deciding which law to apply. a. If it was considered this would encourage forum shopping
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b. After the fact movement to a state does not give that states interest in having its law applied. 2) Miller v. Miller - took change of domicile into account b/c this is where the accident occurred. 3) Court said the railroad (incorporated in MO, using rails in MO) had more rails in texas, rather than missouri and therefore it was a texas company. Texas has no limitation of damages. MO had limited its damages. 2. Renvoi 1) Pfau v. Trent Aluminum Co. (NJ) - Plaintiff Connecticut domiciliary was injured in Iowa while a passenger in an automobile driven by defendant New Jersey domiciliary and owned by defendant New Jersey Corporation. Defendants pleaded as a defense Iowa's guest statute that relieved a host-driver from liability to his passenger-guest for negligence. The law division struck this defense and held that the New Jersey law that required a host to use ordinary care for the safety of his guest was applicable. The appellate division reversed and reinstated the defense. Plaintiff petitioned for certification. The court granted defendants' motion to dismiss but allowed and granted plaintiff's motion for leave to appeal the interlocutory order. The court reversed and struck the defense. Because Iowa had no interest in the litigation, and the substantive laws of Connecticut and New Jersey were the same, the case presented a false conflict and plaintiff had the right to maintain an action for ordinary negligence. Principles of comity and the equal protection and privileges and immunities clauses of the constitution dictated that plaintiff should have been afforded the same protection a New Jersey plaintiff would have been given. a. A states substantive law may be applied without its choice of law rules being applied. b. When a forum state decides to use renvoi (meaning to take a foreign states substantive and choice of law rules into account) - forum also must consider that the foreign state might itself use renvoi or other escape mechanism - which might send it to yet a third state and so on. 2) Richards v. United States United States Supreme Court held that under the Federal Tort Claims Act, the conflict of laws rule of the state where the negligence occurs is applicable, so that the Oklahoma conflict of laws rule, which applied the Missouri Wrongful Death Act, governed, and the personal representatives were entitled to no further recovery for their wrongful death claims. a. In choosing applicable law under the Federal Tort Claims Act, the whole law of the place of negligence controls. 3. Substance and procedure 4. Statute of limitations 1) Rule 1: A forum states SOL will not necessarily be applied in a tort action (Rest says forum SOL will be applied). 2) Rule 2: SOL of a foreign jurisdiction is used to determine when a nonresident COA accrues, if that limitations period is shorter than the non-foreign jurisdiction (COA usually accrues where the injury occurs) 3) Rule 3: Restatement 2d current approach to statutes of limitations: a. Limitations questions should be determined under 6 interest analysis. b. Unless the exceptional circumstances of the case make the result unreasonable: a) The forum will apply its own statute of limitations barring the claim b) The forum will apply its own statute of limitations permitting the claim unless: 1. Maintenance of the claim would serve no substantial interest of the forum AND 2. The claim would be barred under the statute of limitations of a state with a more significant relationship to the parties and the occurrence. 4) Ledesma v. Jack Stewart Produce, Inc. - Appellants, residents of California, brought an action in a California district court for injuries they sustained in an automobile collision with appellees, residents of Oklahoma. The court held that the district court was to apply the choice-of-law rules of the forum state, and California had adopted the governmental interest approach in resolving such issues. The court determined that a conflict existed between the statutes of limitations of California and Arizona, but California's interests would
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not be greatly impaired by the application of the Arizona statute of limitations while, on the other hand, Arizona's interests would be greatly impaired by application of the California statute of limitations. a. Test involves analysis of whether a conflict in fact exists, and then which states interest will be more impaired if that law not given affect. b. Dissent: The landmark case in California adopting a "governmental interest" approach to the conflict of laws emphasized that the governmental interest should be weighed where "the substantive" laws of the states were in conflict and California has characterized "an ordinary statute of limitations" as procedural, not substantive. c. Substantive determines the result, otherwise it is procedural. 5) Global Financial Corp. v. Triar Corp (NY) - Defendant retained plaintiff to perform certain consulting services. Plaintiff sued defendant to recover its commission and fees. The trial court granted defendant's motion to dismiss the action based on NY statute for failure to comply with the statute of limitations of either Delaware, where plaintiff was incorporated, or Pennsylvania, where plaintiff had its principal place of business. On appeal, the court affirmed because when a nonresident sued on a cause of action accruing outside of New York, NY law required the cause of action to be timely under the limitation periods of both New York and the jurisdiction where the cause of action accrued. When an injury was purely economic, the place of injury was where plaintiff resided and sustained the economic impact of the loss. Thus, the shorter out-of-state statute of limitations applied. d. N.Y law requires New York courts to "borrow" the statute of limitations of a foreign jurisdiction where a nonresident's cause of action accrued, if that limitations period is shorter than New York's. 5. Public Policy 6. Postscript 1) Paul v. National Life (WV)- Appellant, as administrator of passenger's estate, sought review of the trial court's decision applying the doctrine of lex loci delecti and granting summary judgment in favor of appellee, as administrator of driver's estate, by determining that Indiana law precluded appellant from bringing a wrongful death action against appellee. The court held that West Virginia adhered to its traditional conflicts doctrine of lex loci delecti but reversed the judgment of the court below. The doctrine provided consistency, predictability, and ease of doctrine and was not to be lightly discarded. However, the court held that comity did not require the application of the substantive law of a foreign state when that law contravened the public policy of West Virginia. West Virginia never had an automobile guest passenger statute such as Indiana law, and it was the state's strong public policy that persons injured by the negligence of another should be able to recover in tort. Therefore, the court declared that automobile guest passenger statutes violated the policy of the state and that it would no longer enforce those statutes of foreign jurisdictions in West Virginia courts. a. Comity does not require the application of the substantive law of a foreign state when that law contravenes the public policy of West Virginia G. STATUTORY RESOLUTION OF CHOICE-OF-LAW PROBLEMS 1. Salvarria v. National Car Rental System, Inc. (LA) - The injured parties, LA residents, had an accident in LA with a car that was owned by the relator, a FL car rental company, and driven by a FL resident. In the injured parties' negligence action, the trial court denied the relator's motion for summary judgment on the ground that Florida law applied, which was more advantageous to the injured parties. The court reversed the judgment and dismissed the complaint against the relator, ruling that because the accident occurred in LA, LAs standard of care applied. Under LA law, Louisiana had the greatest relationship to the action, and its policies would have been most seriously impaired if its law were not applied . In Louisiana a self-insured rental car company had the right to limit operation of its vehicles to only those individuals to whom it gave express permission, those who were listed as authorized drivers in the rental agreement. The driver of the vehicle was not a party to the contract but was an unauthorized operator, and the contract absolved the relator from liability for such operation. 1) Issues of loss distribution and financial protections are governed , as between a person injured by an offense and the person who causes the injury, by the law designated in the following order: If, at the time of the injury, the injured person and the person who
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causes the injury are domiciled in different states; when both the injury and the conduct that causes it occur in one of those states, by the law of that state. 2) Since the injured persons in this case are Louisiana residents, and the person who caused the injury is a Florida resident, LA law is applicable. Since both the injury and the conduct that caused it occurred in Louisiana, and the plaintiffs are Louisiana domiciliaries, Louisiana law should be applied. If there is a statutory rule, then the statutory rule should apply if the statute specifically abolishes the common rule. ___________________________________________________________________________________________________________ _ CHAPTER 4 CONSTITUTIONAL LIMITATIONS ON CHOICE OF LAW A. Constitutional Limitations on Choice of Law 1. In general, a F1 judgment is entitled to FF&C or comity recognition if the F1 court had proper jurisdiction and the F1 judgment was final and on the merits. 2. Res Judicata rationale behind FFC recognition. If a person had his day in court, the judgment should be conclusive in any future suit on the same cause of action. 3. States are free to adopt conflict of laws rules they choose subject to certain constitutional limitations (mainly Full Faith and Credit clause and due process). FFC sets limits states must follow when enforcing law of sister state; business of court in these cases, not to determine which of states involved has superior interest BUT to determine if forum state choosing to apply its own law has interest sufficient to support application of own law instead of foreign jurisdictions law 4. Whether a forum may apply its own law: 1) Rule 1: Full Faith and Credit Contacts Test/Due Process for a States substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts creating state interest, such that choice of its law is neither arbitrary nor fundamentally unfair. (Hague encapsulation of prior cases). 2) Home Insurance Co. Dick A state may, of course, prohibit and declare invalid the making of certain contracts within its borders. Ordinarily, it may prohibit performance within its borders, even of contracts validly made elsewhere, if they are required to be performed within the state and their performance would violate its laws. A state may not nullify a contractual limitation period in a contract having no relationship to that state. 3) Pacific Employers Insurance Co. v. Industrial Accident Commission - The employee, who regularly worked at the employer's head office in Massachusetts, was injured while he was temporarily in California on the business of his employer. The Court held that California was not required to give full faith and credit to the Massachusetts Act because the application of the Massachusetts Act would have been obnoxious to California's policy of applying its own provisions for compensation to the exclusion of all others. 5. Whether forum must apply any particular foreign law: 1) Rule 2: Full faith and credit/Due process does not require the forum to substitute the laws of another state for its own, as long as the forum has a reasonable basis to apply forum law. (DP side of things) In a given instance, the event giving rise to the action may be such that more than one state could constitutionally apply its law. 2) Watson v. Employers Liability Assurance Corp. - Plaintiffs brought a direct action against defendant liability insurance company after plaintiff wife was injured by a hair product. Plaintiffs were allowed to bring the action based on Louisiana statutes that allowed injured persons to bring a direct action prior to final determination. Another statute allowed injured persons to bring the direct action even though, as here, the insurance contract was made in another state and contained a clause forbidding direct actions. A final statute made foreign insurance companies consent to direct suits in order to do business in Louisiana. The court reversed. Louisiana was allowed to use its own law in plaintiffs' suit, and the statutes were constitutional. Louisiana had a legitimate interest in safeguarding the rights of persons injured in Louisiana. The direct action provisions therefore did not violate due process. The Full Faith and Credit Clause did not compel Louisiana to abandon use of its own law because Louisiana's legitimate interest in protecting people injured there justified use of its law. A state may apply its own law against foreign defendants in suits based on injuries that occurred within that state.
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3) Clay v. Sun Insurance Office, Ltd. - Petitioner purchased insurance policy from respondent in Illinois while he was a citizen and resident of that state. Respondent was licensed to do business in Illinois, Florida, and several other states. Petitioner moved to Florida and became a citizen and resident of that state, and it was there that a loss occurred two years later. Petitioner sought review of a judgment from appeals court holding it was not compatible with due process for Florida to apply its statutes nullifying a 12-month-suit clause in petitioner's insurance policy because it required suit to be filed in less than five years. On appeal, the United States Supreme Court reversed. It saw no difficulty whatever under either the Full Faith and Credit Clause or the Due Process Clause. The Court found they were dealing with an ambulatory contract in which suit could have been brought in any one of several states. Here, Florida had ample contacts with the present transaction and parties to satisfy any conceivable requirement of full faith and credit or due process. Where a suit is brought on an ambulatory contract executed in a state other than the forum, the forum state is not obliged to substitute a conflicting out-of-state statute for its own statute. 4) Allstate insurance v. Hague - The lower court's decision to use Minnesota substantive law was affirmed. The decedent, a Wisconsin resident, died from injuries suffered in an automobile accident in Wisconsin involving another Wisconsin resident. Respondent, the decedent's wife, sought to collect uninsured motorist coverage on all three of decedent's vehicles. Minnesota law allowed stacking of the three uninsured motorist coverages, while Wisconsin law did not. Respondent sued petitioner in Minnesota, which chose to use its own substantive law. The court found that Minnesota's choice of its own substantive law did not violate the Due Process Clause or the Full Faith and Credit Clause. Minnesota's contacts with the parties and occurrence were significant enough to warrant Minnesota choosing to apply its own substantive. The decedent was a member of Minnesota's work force for 15 years. Petitioner was at all times doing business in Minnesota and familiar with Minnesota law. Respondent became a Minnesota resident and there was no evidence she moved there in anticipation of litigation. For a states substantive law to be selected in a constitutionally permissible manner, he state must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair . a. BUT LOOK AT THE NEXT notes case McCLuney v. Jos. Schlitz Brewing Co Prof. fave case. Not enough sufficient contacts because promotion granted in NC and 5) Phillips Petroleum Co. v. Shutts - Petitioner purchased and produced gas from leased land located in 11 states, and sold most of the gas in interstate commerce. Respondents, royalty owners possessing rights to the gas leases, filed a class action suit against petitioner seeking to recover interest on royalty payments that were delayed by petitioner. Respondents resided in all 50 states, the District of Columbia and several foreign countries. Respondents recovered over petitioners' objections that Kansas was prohibited from adjudicating the claims of all respondents and from applying Kansas law to all the transactions. The state appeals court affirmed the ruling. The U.S. Supreme Court affirmed the court's jurisdiction over the claims because the parties were given the opportunity to opt out, but reversed its application of Kansas law to all the transactions because Kansas did not have significant contact with each of the class members. 6) Sun Oil Co v. Wortman - Petitioner oil field lessee sought review, on writ of certiorari of the decision that it was liable to respondent oil field lessors for interest on gas royalties. Interest was sought for a period during which petitioner charged increased gas prices but did not raise royalties to respondents. The court found that the state court properly interpreted the full faith and credit clause and the due process clause as allowing the forum state to apply its statute of limitations even when the substantive law of other states governed in the action. The court also found that the forum state did not misconstrue the clearly established laws of other states that had been brought to the attention of the state court. Statutory provisions governing interest on contracts in Texas, Kansas, Oklahoma, and Louisiana were properly interpreted. The court affirmed the decision. B. THE OBLIGATION AND THE RIGHT TO PROVIDE A FORUM 1. Rule 1: A forum may also refuse to entertain a claim based on the law of a sister state on the ground that it violates public policy. (They must have good reason to refuse to hear the case)
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2. Rule 2: When the state creating the cause of action does not want the action brought in another states courts (Stay at home provisions): 1) Courts say that the state that creates a transitory cause of action cannot destroy the right to sue upon it in any court with jurisdiction. (Tenn. Coal) 2) Crider says that an interest analysis should be used when determining whether to give effect to the provision. (If forum has no interest, it must give effect to provision, if has interest can choose to give effect.) 3. Hughes v. Fetter - Appellant administrator brought an action in a Wisconsin state court to recover damages for the death of his decedent, who was involved in an automobile accident in Illinois. The allegedly negligent driver and his insurer were named as defendants. On their motion the trial court entered summary judgment dismissing the complaint on the merits, holding that Wisconsin Law which created a right of action only for deaths caused in that state, established a local public policy against Wisconsin's entertaining suits brought under the wrongful death acts of other states. The state Supreme Court affirmed, rejecting the administrator's contention that the Wisconsin statute violated the Full Faith and Credit Clause the Court held that Wisconsin's statutory policy excluding the Illinois cause of action was forbidden by the national policy of the Full Faith and Credit Clause, which looked toward maximum enforcement in each state of the obligations or rights created or recognized by the statutes of other states. The Court noted that Wisconsin had no antagonism towards wrongful death suits, as evidenced by their own wrongful death statute. 1) The forum state cannot be required by the FFC to give rise to a sister states law that conflicts with its own policy. 4. Wells v. Simonds Abrasive Co. - Decedent was killed in Alabama when a grinding wheel with which he was working burst. His administratrix brought a wrongful death action against the manufacturer, a Pennsylvania corporation, after one year but within two years after his death. Alabama had a two-year statute of limitations. Pennsylvania had a one-year statute of limitations. Applying the Pennsylvania statute under the Pennsylvania conflict of laws rule, the district court granted summary judgment for the manufacturer. The court of appeals affirmed. On appeal, the Court affirmed. The Court held that the Pennsylvania conflict of laws rule did not violate the Full Faith and Credit Clause. Noting the well-established principle of conflict of laws that if an action was barred by the statute of limitations of the forum, no action could be maintained though the action was not barred in the state where the cause of action arose, the Court decided that a different rule was not required when a foreign statutory right unknown to the common law had a period of limitation included in the section creating the right . The forum state was not compelled to use the period of limitation of a foreign state. 1) FFC does not require Penn to recognize AL SOL. 2) Ct will not recognize an exception to the rule. 3) Constitutionally the forum can apply its own SOL whether longer or short than the other states SOL that gave rise to the claim. 5. State of Nevada v. Hall - The residents suffered severe injuries in an automobile collision in California. The driver of the other vehicle, an employee of the University of Nevada, was killed in the collision. The employee was driving a car owned by Nevada. Nevada placed a limit of $ 25,000 on any award in a tort action against Nevada pursuant to its statutory waiver of sovereign immunity. Nevada argued that the Full Faith and Credit Clause required the California courts to enforce that statute. The trial court affirmed the jury verdict that awarded damages of $ 1,150,000 to the residents. The court affirmed the judgment of the trial court. The court found that to require California either to surrender jurisdiction or to limit residents' recovery to Nevada's $ 25,000 limit would have been contrary to its statutorily based policies of jurisdiction over nonresident motorists and full recovery. The court held that the Full Faith and Credit Clause did not require this result. The court found California's interest was the closely related and equally substantial one of providing full protection to those who were injured on its highways through the negligence of both residents and nonresidents. 1) FFC does not require one state to apply another states law that frustrates the first states public policy. ___________________________________________________________________________________________________________ _
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CHAPTER 5 JURISDICTION OF COURTS OVER PERSONS AND PROPERTY A. CONSENT AND WAIVER 1. Consent - When parties entering to contracts with forum-selection clauses that state that the parties agree that suit either may or must be brought in the courts of a particular state, the state may exercise person jurisdiction over the parties. 2. Waiver : 1) Special appearance 2) You waive jurisdiction if you get involved in the proceedings. 3) Insurance Corp of Ireland v. Compagnie des Bauxites de Gunee - Petitioners provided excess business interruption insurance to cover respondent's operations in a foreign country. Respondent allegedly experienced mechanical problems, resulting in a business interruption loss. Respondent brought suit when all of the insurers refused to indemnify respondent. When petitioners failed to produce documents requested by respondent during discovery, the district court assumed under FRCP (b) that petitioners were subject to in personam jurisdiction due to their business contacts with the state. The court found that application of a legal presumption to the issue of personal jurisdiction did not in itself violate the Due Process Clause. The court held that application of the sanction was just under the circumstances because petitioners failed to comply with several court orders despite warnings of sanctions, and that the sanction was specifically related to the particular claim at issue in the order to provide discovery because respondent was seeking through discovery to respond to petitioners' contention that the district court lacked jurisdiction. Therefore, the court found that the district court did not abuse its discretion. a. Personal jurisdiction may be established via a discovery sanction under FRCP 37(b) b. Two avenues for contesting jurisdiction: a) make a special appearance b) default and then make a collateral attack whenever plaintiff seeks to enforce default judgment B. ACTIVITIES AS A BASIS FOR JURISDICTION 1. General and Specific Jurisdiction 1) Helicopteros Nacionales de Colombiam S.A. v. Hall - In order to exercise general in personam jurisdiction over a party, the partys contacts with the forum state must be of a continuous and systematic nature. The court held that the defendants contacts with Texas did not satisfy the requirements of the Due Process Clause, and the Texas court therefore could not assert in personam jurisdiction over the corporation . a. A defendants contacts with the forum state must constitute continuous and systematic general business contacts in order for the forum state to exercise personal jurisdiction over it. 2) Burnham v. Superior Corp. v. Woodson Petitioner nonresident challenged an appeals court decision that held that the forum state had a valid jurisdictional predicate for in personam jurisdiction over petitioner in a pending divorce action in the forum state because petitioner had been present in the forum state and personally served with process. In a plurality opinion, the Supreme Court affirmed the decision of the appeals court. The forum state had jurisdiction over petitioner after he was served with process while temporarily in the state for activities unrelated to the pending divorce action. Due process was satisfied because nothing in the line of cases supporting the minimum contacts doctrine supported the proposition that physical presence was itself insufficient to establish jurisdiction. a. A state may exercise personal jurisdiction over a nonresident in a suit unrelated to his activities in that state if he is personally served with process while temporarily in that state. 2. Purposeful Availment and Forseeability 1) Asahi Metal Industry Co. v. Superior Court of California - Petitioner, a Japanese corporation, manufactured a valve that was sold to respondent, a Taiwanese corporation, who used it in the manufacture of a motorcycle tire. When the tire exploded while the motorcycle owner was driving it in California, the driver filed a products liability action against respondent, who filed a cross-complaint for indemnity against petitioner. The trial court denied petitioner's motion to quash the service of summons, the appellate court reversed, and the state supreme court reversed the appellate court. On certiorari, the
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Supreme Court held that the mere fact that petitioner knew that some of its component parts would be used in products that would be sold in the state did not provide the necessary minimum contacts for the state to exercise personal jurisdiction over petitioner, since petitioner did nothing to purposely avail itself of the privilege of conducting activities in the state. Therefore, since there were no minimum contacts, the state was estopped by Fourteenth Amendment due process from exercising personal jurisdiction over petitioner. The Court reversed the judgment of the state supreme court and remanded the case. a. Minimum contacts sufficient to sustain jurisdiction are not satisfied simply by the placement of a product into the stream of commerce couples with awareness that its product would reach the forum state. ___________________________________________________________________________________________________________ _ CHAPTER 6- RECOGNITION OF JUDGEMENTS A. JURISDICTIONAL REQUIREMENTS Sister-State Judgment - 1) whether the court that entered the judgment had proper jurisdiction over the parties or the subject matter (but recall that if the question was litigated by the parties and determined by the court in the prior proceeding, jurisdiction cannot later be challenged); 2)Whether judgment is final; 3)Whether judgment is on the merits. 1. Durfee v. Duke - The United States Supreme Court granted certiorari and reversed the judgment because the federal court in Missouri had the power and, upon proper averments, the duty to inquire into the jurisdiction of the Nebraska courts to render the decree quieting title to the land in petitioners. The Court held that when that inquiry disclosed, as it did, that the jurisdictional issues had been fully and fairly litigated by the parties and finally determined in the Nebraska courts, the federal court in Missouri was correct in ruling that further inquiry was precluded. 1) Full faith and credit generally requires every State to give a judgment at least the res judicata effect, which the judgment would be accorded in the State which rendered it. 2) Res Judicata even erroneous decisions are entitled to res judicata, provided the rendering court had jurisdiction because it appeared. 3) If an issue has been fully and fairly litigated, then another court must recognize its judgment. It is res judicata - fully and fairly litigated and a judgment has been entered. You can appeal it directly, but cannot attack it collaterally thru bringing another state. 2. Fall v. Eastin A Washington state court awarded the wife a judgment of divorce, and the husband was ordered to deed land located in Nebraska to the wife. The husband failed to comply with the order and instead executed a mortgage on the land and eventually deeded the land to the grantee. The wife filed a suit to set the mortgage and the deed aside, but the state supreme court reversed a judgment for the wife. On further review, the court upheld the state supreme court's judgment, holding that the Washington state court had no jurisdiction to dispose of the Nebraska land. The court further held that although the Washington court had jurisdiction over the parties, its jurisdiction did not extend over the Nebraska land. The court also held that because the Washington decree was void to the extent that it attempted to convey title to the land, the grantee was not compelled to part with her title to the land. 1) A court needs not respect a judgment of another state purporting to effect title to land located in the state where the judgment is sought to be enforced. 3. Kalb v. Feuerstein - Appellants were farmers whose mortgage on their farm was foreclosed in state court. After the property was sold, but before confirmation of sale was entered, appellants filed for bankruptcy protection under the Frazier-Lemke Act. The state court entered confirmation of sale, and appellants were evicted. Appellants sued, seeking to have the farm returned to them and cancellation of the sheriff's deed, and for damages for the wrongful acts of the state officials, but on demurrer their actions were dismissed. The state appellate and high courts affirmed. The cases were appealed, and the Court reversed the judgments of the state courts in both cases and the causes were remanded to the state high court for further proceedings not inconsistent with the opinion. The Court held that the state courts lacked jurisdiction to proceed in the state court foreclosure action after appellants had filed for bankruptcy because all state court proceedings were stayed automatically by the federal proceeding . 1) A foreclosure sale effected during the pendency of the mortgagors bankruptcy may be collaterally attacked.
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2) Federal court does not have to grant full faith and credit because federal court has exclusive jurisdiction over bankruptcy laws. B. SUBSTANTIVE INTERESTS OF THE ENFORCING STATE 1. Fauntleroy v. Lum - Plaintiff appealed the Mississippi Supreme Court's ruling that Mississippi courts were not required under U.S. Const. to give full faith and credit to a judgment plaintiff obtained against defendant in Missouri. Plaintiff and defendant, Mississippi citizens, entered into an illegal contract under Mississippi law. Plaintiff then obtained an arbitration award against defendant in Mississippi pursuant to their contract, but sought to enforce the award in Missouri where defendant was temporarily located and served. After the Missouri court entered judgment in plaintiff's favor, based on the Mississippi arbitration award, plaintiff's assignee returned to Mississippi to enforce the Missouri judgment. The Supreme Court reversed, holding that U.S. Const. obligated the Mississippi courts to enforce the Missouri judgment even if the Missouri judgment was based on a misapprehension of Mississippi law where there was no question the Missouri court had jurisdiction when it rendered judgment. 2. Baker v. General Motors Corp. -The company settled an employment action against it in a Michigan state court by paying money to its former engineering analyst in exchange for an injunction prohibiting the analyst from testifying against the company in subsequent litigation without its consent, unless he was court-ordered to do so. The survivors sued the company for wrongful death in Missouri state court, later removed to federal court. Over the company's objections based on the Michigan injunction, the survivors were allowed to subpoena the analyst for deposition and trial testimony. Judgment was subsequently entered for the survivors, but the court of appeals reversed, ruling that the Full Faith and Credit Clause, U.S. Const. art. IV, 1, required enforcement of the Michigan injunction, such that the analyst's testimony should have been excluded. In reversing, the Supreme Court ruled that, although the injunction was claim preclusive between the company and the analyst, it had no control over others. The full faith and credit provision did not apply to evidentiary rulings and did not bar the survivors, non-parties to the Michigan action, from obtaining the analyst's testimony in their Missouri action. 1) A judgment from one state that purports to require an official act within the exclusive province of another state need not be given full faith and credit. 3. The Defense of Marriage Act 4. Foreign Judgments Recognition and enforcement of foreign judgments are primarily by state law C. THE ENFORCING STATES LAW OF JUDGMENT 1. Union National Bank v. Lamb-After petitioner obtained a Colorado judgment against respondent, he revived it in that state and had it served on respondent in Missouri. The Missouri state supreme court refused to enforce it, holding that the Constitution's Full Faith and Credit Clause did not require Missouri to recognize Colorado's more lenient policy on the issue of revival of judgments. The Court concluded that once the court of a sister state had jurisdiction over the parties and of the subject matter, its judgment was valid and could not be impeached in the state of the forum, even though it could not have been obtained there. Any other result would have defeated the aim of the Full Faith and Credit Clause and the statute enacted pursuant to it. 2. Watkins v. Conway- The Georgia trial court and the Georgia supreme court rejected appellant's contention that GA law was inconsistent with the Full Faith and Credit and Equal Protection Clauses of the Federal Constitution. Appellant's complaint was simply that Georgia drew an impermissible distinction between foreign and domestic judgments. The court affirmed the judgment. GA law barred suits on foreign judgments only if the plaintiff could not revive his judgment in the state where it was originally obtained. The relevant date in applying 3-701 was the date of the latest revival of the judgment. All appellant needed to do was return to Florida and revive his judgment. The Florida statute of limitations on domestic judgments was 20 years, so he had ample time to revive his judgment. He could then come back to Georgia within five years and file suit free of the limitations of 3-701. Section 3-701 did not discriminate against the judgment from Florida; it focused on the law of that state. Full faith and credit was insured the law of the judgment state, and there was no denial of equal protection in a scheme that relied upon the judgment state's view of the validity of its own judgments . 3. Hart v. American Airlines Plaintiff contended determination of defendant's liability in a Texas court, under the doctrine of collateral estoppel, was conclusive on the issue of defendant's liability
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for such crash in the actions brought by the plaintiffs. The court stated that the issue of defendant airline's liability for the crash in which plaintiff's decedents perished was identical to the issue of liability litigated in the Texas action where defendant was similarly charged with responsibility for that same accident. Defendant had a full and fair opportunity to contest the issue of its liability in the course of the Texas action, and in order to defeat collateral estoppel on this ground, the burden rested on defendant to show that it had no such opportunity. 4. Treinies v. Sunshine Mining Co. The court affirmed a decree adverse to petitioner, the claimant of certain stock, in a proceeding under the Interpleader Act. The court found that the Act, which was based upon U.S. Const. granted jurisdiction broad enough to cover the present situation where complainant stakeholder and petitioner were citizens of the same state, Washington, while respondent, an adverse claimant, was a citizen of another state, Idaho. The court further found that the Act authorized the enjoining of parties to the interpleader from further prosecution of any suit in any state or federal court on account of the property involved. The issue of jurisdiction vel non of the Washington court could not be relitigated in the interpleader. Because the Idaho court was a court of general jurisdiction, its conclusions were unassailable collaterally except for fraud or lack of jurisdiction. The holding by the Idaho court of no jurisdiction in Washington necessarily determined the question raised here as to the Idaho jurisdiction against petitioner's contention. She was bound by that judgment. 1) If there is a 3rd court and the 3rd court determines not a question of FFC, but determines the second in time court did not have jurisdiction, then the 3rd court is entitled to decide whether it has jurisdiction in the case. 2) A jurisdictional issue decided in one court proceeding may not be re-litigated in an interpleader action. D. DOMESTIC RELATIONS: A SPECIAL PROBLEM OF JUDGMENTS 1. Ex Parte Divisible Divorce 1) Estin v. Estin Husband and wife were married in New York, separated, and the wife was granted a decree of separation and awarded permanent alimony. The husband then moved to Nevada and instituted an action for divorce. The wife was notified by constructive service, did not appear, and the husband was granted an absolute divorce in Nevada. The husband then ceased paying alimony, and the wife sued in New York for arrears. The husband appeared in that action and moved to eliminate the alimony provisions by reason of the Nevada decree. The motion was denied, and affirmed in the appellate court and court of appeals. The husband petitioned for a writ of certiorari, which the Court granted. The husband argued that by the Nevada decree no legal incidence of the marriage remained. The court held that Nevada could not adjudicate the rights of the wife under the New York judgment when she was not personally served and did not appear in the divorce proceeding. Since Nevada had no power to adjudicate the wife's rights in the New York judgment, New York was not required to give full faith and credit to that phase of Nevada's judgment. 2) May v. Anderson - The question presented on appeal was whether, in a habeas corpus proceeding attacking the right of a mother to retain possession of her minor children, an Ohio court had to give full faith and credit to a Wisconsin decree awarding custody of the children to their father when that decree was obtained by the father in an ex parte divorce action in a Wisconsin court which had no personal jurisdiction over the mother. The Ohio probate court decided that it was obliged by the Full Faith and Credit Clause of the United States Constitution to accept the Wisconsin decree as binding on the mother. The court of appeals affirmed the judgment, and the state supreme court dismissed the appeal. The Court reversed the judgments of the lower courts. The Court held that a court of a state where the mother was neither domiciled, resident, nor present, could not cut off her immediate right to the care, custody, management, and companionship of her minor children without having jurisdiction over her in personam. The Ohio court did not have to give full faith and credit to the Wisconsin decree because Wisconsin did not have personal jurisdiction over the mother when the custody determination was made. 2. Bilateral Divorce 1) Johnson v. Muelberger -The daughter attacked the validity of her deceased father's Florida divorce decree. She was his legatee. The divorce was granted in Florida after the father appeared there and contested the merits. The New York Surrogate determined that
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the daughter could not attack the third wife's status as surviving spouse on the basis of the alleged invalidity of the second wife's divorce because the divorce had been a contested one, and because the decree was valid and final in the state of Florida, it was not subject to collateral attack in the courts of New York. The appellate division affirmed, but the court of appeals reversed. The United States Supreme Court reversed the court of appeals. The Court held that Florida would not permit the daughter to attack the Florida decree of divorce between her father and his second wife as beyond the jurisdiction of the rendering court. In that case, New York could not permit such an attack by reason of the Full Faith and Credit Clause. When a divorce could not be attacked for lack of jurisdiction by parties actually before the court or strangers in the rendering state, it could not be attacked by them anywhere in the United States. 3. Modifications: Child Custody and Support 1) Yarborough v. Yarborough - A daughter brought suit against her father, seeking payments for maintenance and education. The father contended that his obligation to support the daughter had already been completed because he had complied with a court support order for the daughter when he divorced the daughter's mother. The lower court rejected this contention and ordered the father to pay support. The Court reversed the decision, finding that it was clear that the support provisions in the divorce decree were intended to absolve the father from further obligation to support her. The Court held that the term "permanent alimony" as used in the decree of the Georgia court meant a final provision for the minor child was shown. The Court ruled that the father had fulfilled the duty that he owed the daughter by the law of his domicile and the judgment of its court. The Court also held that the Full Faith and Credit Clause applied to an unalterable decree of alimony for a minor child. The Court also found that Georgia law did not permit the daughter to bring her own action because she did not have a vested property interest even though she was not served or involved in the divorce support decree. ___________________________________________________________________________________________________________ _ CHAPTER 8- CHOOSING LEGAL REGIMES A. CONTRACTUAL CHOICE OF LAW 1. Nedlloyd Lines B.V. v. Superior Court of San Mateo Country Seawinds Ltd. (CA)Defendant shareholders contracted to purchase the stock of plaintiff shipping company. Plaintiff brought an action against defendants for breach of fiduciary duties and the implied covenant of good faith and fair dealing. The trial court applied California law to plaintiff's claims and overruled defendants' demurrers. The court of appeals affirmed and denied defendants' writ petitions. Defendants petitioned for review. The court reversed and remanded, with instructions to issue a peremptory writ mandating the trial court to reconsider its ruling on defendants' demurrer to plaintiff's first amended complaint in light of Hong Kong law. The court held that the choice-of-law clause requiring that the contract be governed by the law of Hong Kong, the "chosen state" having a substantial connection with the parties, was fully enforceable and applicable to plaintiff's claims related to the shareholders' agreement. The court held that plaintiff's incorporation in the chosen state provided a reasonable basis for the clause and that Hong Kong law was not contrary to any fundamental policy of California. 1) Contractual choice-of-law is enforceable and encompasses all causes of action arising from or related to the agreement. 2. Banek, Inc. v. Yogurt Ventures USA, Inc. - Plaintiff Michigan corporation entered into a franchise agreement with defendant Georgia corporation containing a choice of law provision that provided the rights of the parties were governed by the laws of Georgia. Plaintiff brought a series of state law actions against defendant and subsequently asserted that the choice of law provision was invalid because it violated the Michigan Franchise Investment Law. The court affirmed the lower court's decision and found that the choice of law provision was enforceable. The court noted that contrary to plaintiff's assertions, a law providing that waivers and releases depriving a franchisee of his or her rights were void under Mich. Comp. Laws Ann. 445.1527 and did not void contractual choice of law provisions. The court noted that contractual choice of law provisions governed unless the chosen state had no substantial relationship to the parties or transaction or application of the law of the chosen state would be contrary to the public policies of a state with a greater material
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interest in the position of the case. The court found that this was not the case here because the Michigan and Georgia statutes were similar. 1) Section 187(2) of the Restatement (Second) of Conflict of Laws - The law of the state chosen by the parties to govern their contractual rights and duties will be applied unless either: a. the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or b. application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of 188, would be the state of the applicable law in the absence of an effective choice of law by the parties 2) A choice-of-law clause will be found valid unless the legislature prohibits it. The clause will be enforceable under Michigans choice-of-law provisions if there is a substantial relationship between the parties and the choice-of-law clause state and if Michigans public policy concerns are not offended a. The clause was sufficiently broad to encompass all of the Plaintiffs claims 3. Cook Sign Co. v. Combs (MN)- Upon finding an actual conflict of laws among states in a choiceof-law evaluation, a Minnesota court must next evaluate the choice of law using the 5 Minnesota Supreme Court factors to determine the applicability of the forum or another states law: 1) Predictability of results 2) maintenance of interstate and international order 3) Simplification of the judicial task 4) Advancement of governmental interest 5) Application of the better rule of law 4. Hall v. Sprint Spectrum L.P. (IL) The parties expression selection of a forum will be respected so long as the selected state has a substantial relationship to the parties or the transaction and a state with a materially greater interest in the litigation does not have a fundamental policy contrary to the result of the application of the law of the selected state. B. CHOICE-OF-COURT CLAUSES 1. The Bremen v. Zapata Off-Shore Co. (THIS IS IMPORTANT) The German Corporation contracted with the United States corporation to transport an oil rig from Louisiana to the Adriatic Sea. During transportation, the rig was damaged and was towed to Tampa, Florida, where the United States corporation filed suit. The German corporation, however, asked the district court to enforce the forum-selection clause contained in the contract placing jurisdiction in England. The district court refused to enforce the clause and the lower appellate court affirmed. Reversing the lower appellate court's judgment, the court held that the forum-selection clause should be enforced unless the party resisting the clause could show that enforcement would be unreasonable. Furthermore, the court held that the argument that such clauses ousted a court of jurisdiction was not valid, and the German corporation did not waive operation of the clause by appearing in the federal court. As a result, the court held that the forum-selection clause was valid and the case was remanded for a determination of whether enforcement was unreasonable. 1) The correct approach would have been to enforce the forum clause specifically unless Zapata could clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching. 2. Carnival Cruise Lines, Inc. v. Shute Respondents were residents of the State of Washington, and they boarded petitioner's ship in California. Respondent wife was injured while the ship was in international waters off the coast of Mexico. Respondents filed an action in the U.S. District Court in Washington, which granted petitioner's motion for summary judgment, since the contract between respondents and petitioner provided that all suits were to be brought in Florida. The appellate court reversed the order granting summary judgment. On certiorari, the court held that because respondents had notice of the forum clause, because petitioner's principal place of business was in Florida, and since there was no bad faith motive for the choice of a Florida forum, Florida was not an inconvenient forum. Since the choice of forum did not limit petitioner's liability in any way, petitioner did not violate the Limitation of Vessel Owner's Liability Act . Thus, the choice of forum clause in the contract was valid. The court reversed the decision of the appellate court.
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3. When parties enter into contracts with forum selection clauses that state that the parties agree that suit either may or must be brought in the courts of a particular state, that state may exercise personal jurisdiction over the parties (page 394) 4. Section 1404A Federal court to a different federal court (not state) Change of venue: Housekeeping decisions switching courtroom. Forum nonconveniens only if there is alternative. 5. Hill v. Gateway page 674 6. State courts based decision on the admiralty decision of federal courts (Shute) 7. Capsi v. The Microsoft Network, L.L.C. (NJ) - Plaintiff members of defendants' on-line computer service filed suit for breach of contract, common law fraud, and consumer fraud. Before becoming a member of defendants' service, a prospective subscriber was required to agree to the terms of the membership agreement, which contained a forum selection clause. Members were required to click either "I agree" or "I don't agree" to the membership agreement. A potential subscriber could only use defendants' services after clicking "I agree." Affirming the decision of the lower court granting defendant's motion to dismiss the complaint for lack of jurisdiction, the court held that plaintiffs failed to meet any of the exceptions to the general rule that forum selection clauses were prima facie valid and enforceable. Because plaintiffs were not subject to overwhelming bargaining power, where there were several competitors in the provision of on-line services, and because enforcement of the clause would not violate the strong public policy of New Jersey and would not seriously inconvenience trial, the court agreed that clause was enforceable. 1) When agreeing to a forum selection clause is required in order to use software, and this clause contains adequate clarity and the meaning is plain, then it is a substantial agreement to which the parties are bound 2) Difference in bargaining power does not justify non-enforcement of the forum selection clause 8. America Online Inc. v. Superior Court of Alameda County (CA) - Provider claimed that California was an inconvenient forum in which to litigate a dispute concerning internet service, and sought to rely on a contractual forum selection clause, which designated Virginia as the jurisdiction in which all disputes arising out of the relationship would be litigated. However, enforcement of forum selection and choice of law clauses would have been the functional equivalent of a contractual waiver of the consumer protections under the California Consumers Legal Remedies Act. Virginia law did not allow consumer lawsuits to be brought as class actions and the available remedies were more limited than those afforded by California law. Enforcing the forum selection clause would have violated California public policy by eviscerating important legal rights afforded to California consumers. Unavailability of class action relief was sufficient in and by itself to preclude enforcement of the forum selection clause. Forum selection clauses are honored if they are procured freely and voluntarily, with the place chosen having some logical nexus to one of the parties or to the dispute, and so long as CA consumers will not find their substantial legal rights significantly impaired by its enforcement. 1) The court looked at California law and Virginia law and if there is a diff law less favorable to the plaintiff, then we will not enforce the forum selection clause. 2) States may regulate forum selection clauses 9. Wong v. Party Gaming Ltd. (This is important) When the poker players registered on the poker website, they agreed to the site's terms and conditions, which included an anti-collusion policy and a Gibraltar forum selection clause. The poker players alleged that defendants made false representations regarding the anti-collusion policy. The appellate court determined that the enforceability of the forum selection clause was governed by federal law. The forum selection clause was enforceable because the poker players (1) did not allege that defendants falsely represented the chosen forum, (2) did not allege that they could not bring the suit in Gibraltar, but only that they could not bring it in class form, and (3) failed to show how litigating in Gibraltar would be such an inconvenient forum to yield it unjust or unreasonable. The district court's dismissal for forum non conveniens was not an abuse of discretion, because (1) forum non conveniens was properly raised sua sponte, (2) Gibraltar was an appropriate alternative forum, (3) public and private factors weighed in favor of a Gibraltar forum, and (4) the district court did not abuse its discretion by not giving deference to the poker players' choice of home forum. 1) Number of courts decided Zapata and shuts is applicable despite eirie railroad in decisions in federal courts 2) Difference from piper, here the plaintiffs are suing in their state. 3) Enforcement of forum selection clause is different from forum non conveniens.
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4) In the context of admiralty cases, the Supreme Court has announced a federal policy favoring enforcement of forum selection clauses absent a strong showing that they should be set aside. The first inquiry is whether the forum selection clause is enforceable. A forum selection clause should be upheld absent a strong showing that it should be set aside (Shute). The court looked at the following factors: whether the clause was obtained by fraud, duress, or other unconscionable means; whether the designated forum would unfairly or ineffectively handle the suit; and whether the designated forum would be so seriously inconvenient such that requiring the plaintiff to bring suit there would be unjust. 5) The opposing party bears the heavy burden of showing that the clause should not be enforced. C. ARBITRATION CLAUSES 1. Arbitrability 1) Scherk v. Alberto-Culver Co. An agreement to arbitrate disputes arising out of international transactions will be respected and enforced by federal courts in accordance with the provisions of the FAA. 2) Rodriguez de Quijas v. Shearson/American Express, Inc. - Held : Claims arising under 1933 Securities Act are arbitrable, overruling and reversing Wilko. Wilko is incorrectly decided and also extends it to Securities industry. Not limited to any particular statute. ARBITRATION IS A MERE FORM OF TRIAL. 2. Policing the clauses 1) Spann v. American Express Travel Related Services Co. - The issuer, a Utah company, unilaterally amended the cardholder agreements to include an arbitration provision with a class arbitration waiver clause of which the cardholders were notified by a 10-page mailer. The cardholders received statements that included charges by affiliates of the issuer for goods and services that were unauthorized. Held: The Agreements expressly provided that challenges to the enforceability of the arbitration provision were claims subject to arbitration at the election of either party. Thus, the plain language of suggested that the cardholders' challenge to the enforceability of the class arbitration waiver clause should be decided by an arbitrator. The trial court properly decided to apply Utah contract law in determining whether the doctrine of unconscionability rendered the clause unenforceable, but erred in concluding that the clause was substantively unconscionable under Utah law. The enforcement of the clause would not result in a situation so oppressive as to "shock the conscience." The clause was not procedurally unconscionable either given that the cardholders received the amendment four years prior to the unauthorized charges. a. Substantive unconscionability- Focuses on the contents of the contract and the relative fairness of the obligations assumed. The question is whether a contract's terms are so one-sided as to oppress or unfairly surprise an innocent party or whether there exists an overall imbalance in the obligations and rights imposed by the bargain according to the mores and business practices of the time and place. b. Procedural unconscionability- focuses on the manner in which the contract or provision at issue was entered into and the relative bargaining power of the contracting parties. The question is whether there was overreaching by a contracting party occupying an unfairly superior bargaining position. c. Arbitrator decides whether d. Whether the contract is void as a simple contract. 2 prong test: substantive and procedural. 2) Coady v. Cross Country Bank - The credit card holders alleged that the bank engaged in illegal debt collection practices, including harassing phone calls that involved abusive, derogatory, or obscene language and threats. The bank moved to compel arbitration pursuant to an arbitration clause in the credit card agreements. The trial court found that the arbitration clause was unconscionable and denied the bank's motion. On appeal, the court affirmed. The court held that Wisconsin law, rather than Delaware law, applied because the Act embodied an important state public policy, as it was plainly designed to protect a weaker party against the unfair exercise of superior bargaining power by another party. Held: the arbitration clause was substantively
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unconscionable because it prevented the credit card holders from obtaining any of the relief they sought for abusive debt collection practices under the Act and because it unfairly prohibited class-wide relief. The clause was procedurally unconscionable because, inter alia, the credit card holders were presented with the clause in the credit card agreement on a take-it-or-leave-it basis and they lacked meaningful alternative means to obtain needed credit.

EXAM TIPS 2 hour, page limit shall be strictly required, answer the questions do not say it may be this or that must be a definite answer. First question 1.5 suggested time 30 minutes, second question page limit 1.5 suggested time 1 hour Know New York and California law. Subject matter of both questions was discussed extensively. The exam will tell you the circuit. Why did you follow decision in the famous case, If you cannot remember the case method in which court is using. Cannot be answered by reference to a particular state. Choice of Law governs the contract OR choice of the forum Commercial dealings or corporate law 2 of the most impt provisions to know: arbitration or court selection, perogation clause/ forum selection clause. WONG case is very important Rohlik 7265154 not after midnight 1st Circuit (Boston) o Maine o Massachusetts o New Hampshire o Puerto Rico o Rhode Island 2nd Circuit (New York) o Connecticut o New York o Vermont 3rd Circuit (Philadelphia) o Delaware o New Jersey o Pennsylvania o U.S. Virgin Islands 4th Circuit (Richmond) o Maryland o North Carolina o South Carolina o Virginia o West Virginia 5th Circuit (New Orleans) o Louisiana o Mississippi o Texas 6th Circuit (Cincinnati) o Kentucky o Michigan o Ohio o Tennessee 7th Circuit (Chicago) o Illinois o Indiana o Wisconsin 8th Circuit (St. Louis) o Arkansas o Iowa o Minnesota o Missouri o Nebraska o North Dakota o South Dakota 9th Circuit (San Francisco) o Alaska o Arizona o California o Guam o Hawaii o Idaho o Montana o Nevada o Northern Mariana Islands o Oregon o Washington 10th Circuit (Denver) o Colorado o Kansas o New Mexico
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o Oklahoma o Utah o Wyoming 11th Circuit (Atlanta) o Alabama o Florida o Georgia

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