Conflict of Laws Outline

Spring 2008 Bjorklund

CONFLICT OF LAWS OUTLINE

1)Introductiona) Generally

i) Forum usually applies its rules as to how to resolve conflicts.ii) Most of the time, a forum will decide to apply its own law. iii) Domiciliary is more specific term than residence, can only have one domicile-place

intend to be permanent home (subjective view, even if they are not there).iv) Only matters which law we choose if laws are different-otherwise the issue is moot

and forum law would be applicable. v) Conflicts issues are often overlooked and people assume forum law will apply. There

may be a conflicts issue but people assume laws are the same. It is also a complicated topic. If recognize in advance that there will be a conflicts issue, then parties can choose which law will govern when contracting and most courts will honor this.

vi) 3 Pillars of conflicts (1) Preliminary to court proceeding-which court should/can exercise jx. If court is

able, should it do it(2) Choice of law-arises when we have an ongoing court proceeding; issue is which

law should court apply(3) Recognition and enforcement of judgments. What happens to judgment, i.e., res

judicata, collateral estoppel, full faith and credit clause in sister state judgments (does not reach foreign nation judgments)

vii)Conflicts is also called private international law (outside US)(1) Vertical conflicts-federal government vs. state govt-governed by supremacy

clause (only comes into effect if fed govt has authority to legislate in particular area and if it has actually done so and intends to occupy the field). Mostly dealt with in federal jx.

(2) There are conflicts between states(3) Foreign countries vs. states or federal govt. (US law vs. EU or English law or CA

law vs. Hong Kong law). In a case where the state is dealing with a foreign country, the court will treat it the same way as if it was a state vs. state conflict.

(4) Rules change depending on the forum-will have rules re: jx and choice of law. viii) There is some interplay re jx and choice of law

(1) Old view was that only 1 court should be able to exercise jx in any given dispute. (a) i.e., Old rule was that had to go to home of D in order to sue D. Even now this

is always an appropriate forum. Does not necessarily mean that that forum’s law must govern (territorial dispute).

(2) New view is that can sue in other places depending on sufficient presence, etc.(3) Underlying goal is that forum selection should be irrelevant as to choice of law-

not encourage forum shopping.(4) Every forum has ability to choose different conflicts rules and many of them have.

2)Choice of Lawa) The Traditional Approach (The First Restatement)

i) Jurisdiction-Selecting Rules – Torts (Lex Loci Delecti)

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(1) Alabama Great Southern RR v. Carroll: Torts case. Personal injury COA. Alabama court in 1892. Court is affected by traditional conflicts theory (Beale, 1st restatement) (a) Place where right vests/injury occurs and this is the law that governs. The

occurrence of this localizing event creates vested rights defined by the law of that place so that courts everywhere must enforce those rights. (i) In theory this is good b/c it suggests only 1 jx has authority to vest right

and we would not be faced with a CoL. However, in practice this is not easy and might be somewhat arbitrary (especially in US with close borders). Outcome is different, depending on where the accident occurs. Case is between Miss and Alabama law. Alabama is forum in this case.

(ii) Substantive laws:1. Alabama-employer liable (employer liability act). 2. Miss-Employer not liable (fellow servant rule)-old rule

(iii) Conflicts rule-Lex loci delicti is place of injury. Law governing tort is place of injury (Miss). Alabama conflicts rule, but court applies Miss. law.

(iv)Result-court applies Miss law; employer not liable. Why should Alabama entertain this case at all? Full faith and credit requires it. Alabama cannot say it would never apply Miss. Law, but it is also clear that Alabama does not always have to apply Miss. Law; there are a lot of Alabama connections (both D and P live in state); Comity notions – there could be times when it is a better for an Alabaman to bring a suit in Mississippi

(v) Limits of the territoriality theory1. A sovereign should be free to regulate within its own borders, but not

outside its borders2. But if that is true, how can Alabama be made to apply Mississippi

law? Civil claims are regarded as transitory. There is a distinction between territoriality at the level of primary conduct, and at the level of enforcement

(vi)Vested Rights-Courts enforce rights that are created at the place where the event is localized. Those rights are thus governed by the law applicable where the localizing event occurred

(2) Fitts v. 3M: Airline crash case. More connections to Alabama than Florida. (a) Substantive laws

(i) Alabama-generous recovery(ii) Florida-less generous recovery. May have this b/c people travel to Florida

and state may not want to protect non-Floridians who are not familiar with the law.

(b) Conflicts rule-Lex loci delecti-defined as law of the place of crash (Florida)(c) Result: Al court reaffirms lex loci delecti and applies Florida law. This is

unusual b/c there is a tendency for courts to apply its own law. This is to the detriment of Alabama citizens. This shows that we cannot completely dispense with territoriality. Lex loci delicti may be especially fortuitous in airline crashes. Difficulties and arbitrary outcome in territory rules-One of the main benefits to having this approach is that they are supposed to lead to

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predictability and uniformity of application. However, predictability as a goal does not always happen.

ii) Jurisdiction-Selecting Rules -- Contracts & Misc. Areas(1) Milliken v. Pratt-Mass-forum. Issue is what law governs capacity to contract?

Place where making of the K is where it is deemed to be done. Unilateral-commencement of performance acts as acceptance of K, therefore performance given is where K is said to be done. Case demonstrates difficulty in localizing exact place of K.(a) Substantive law

(i) Mass: W cannot enter into K (K invalid)(ii) Maine: W capable of K (K valid)

(b) Conflicts rule: lex loci contractus: defined as law of place of last act necessary to make a binding K

(c) Result: Court assumes a unilateral contract, concluded when the promisees (Millikens) acted upon the promisor’s (Mrs. Pratt’s) promise; K thus concluded in Maine and valid. Mass. had changed law in the interim and under current Mass law k would be valid. If it was bilateral K-then Pratt in Mass could have said I will give you $10 for flour, Milliken in Maine could say ok. Then this would be a valid K made in Maine. However, it could also be made in Mass: Pratt said how much for flour, Milliken says $10 and then Pratt says sold. Then the K would be deemed to be made in Mass and contract would be invalid.

(2) Linn v. Employers Reinsurance-PA is forum. Issue is formal validity (statute of frauds)-bilateral K(a) Substantive law

(i) PA: no writing required (K valid)(ii) NY: writing required (contract valid)

(b) Conflicts Rule: lex loci contractus-defined as law of place from which acceptance was spoken.

(c) Result: TC: K made in NY; k invalid because no writing. Linn #1: Court remands to determine from which state acceptance was spoken. Linn #2: Court upholds k under forum law because Δ unable to prove acceptance spoken from NY. P bears burden of proof of establishing existence of K. Court says there clearly is a k, and D must show it was not in PA and they cannot, so court assumes PA b/c it is the law of the forum. Court says that the theory of telephone conversations it should be where it is heard, not where it is spoken. Reason why court says it is where acceptance is said is b/c it is possible that the phone call could be dropped or the other person may not be heard

(3) 1st Restatement(a) § 332: Questions of contract validity are governed by the law of the place of

contracting.(b) § 358: Questions of contract performance are governed by the law of the place

of performance.

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(c) § 311: “The law of the forum decides as a preliminary question by the law of which state questions arising concerning the formation of a contract are to be determined. . . .”(i) Law of the forum decides if looking at K formation (what it means to have

a K formed) (ii) 311 Comment: “Under its Conflict of Laws rules, in determining the place

of contracting, the forum ascertains the place in which, under the general law of Contracts, the principal event necessary to make a contract occurs.”1. Restaters assumed forum would apply general CL of Ks in

determining where K is formed, but real issue is what it views as the defining act in the making of the K

(4) Depaçage: Where some of the COA can be cut up and different pieces can be governed by different laws. US courts do not like to do it very often.

(5) Place of the making of the K covers capacity, form, accent, etc. Milliken involves capacity and Linn involves form.

(6) If performing K in a state-presumed to need the laws of the state in order to perform, more so than formation. This seems more important

(7) Rome Convention (EEC Convention on Contractual Obligations) Art. 9(a) A k concluded between persons who are in the same country is formally valid

if it satisfies the formal requirements of the law which governs it under this Convention or of the law of the country where it is concluded

(b) A k concluded between persons who are in different countries is formally valid if it satisfies the formal requirements of the law which governs it under this Convention or the law of one of those countries

(8) Rule of validation-when people enter into K they want to have binding K. So try to apply law that will lead to a binding K

(9) Land is special. Territorial limitations are exacerbated when land is involved. Cannot move land into other jx. Territorial considerations attached to land are stronger that to place of tort, place of K, etc. Law of the place where land is usually trumps

b) Escape Devicesi) Characterization

(1) Generally(a) Ways judges have found to escape bad result emanating from strict

application of the territorial rules. Way court manipulates law in order to manipulate outcome.

(b) Jx selection rules are blinds as to outcome in theory. (c) Domicile-every person has at all times has 1 domicile and cannot have more

than 1 at the same time. Once established, a domicile continues until another one is established. In order to acquire a new domicile, a person must establish a dwelling place with intention of making it his home (mental and physical elements must coexist at the same time)(i) Domicile is important here b/c of family law issue and usually this

governs family relationships

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(d) Courts escape localization rules adopted by first restatement. Court may want to escape rules b/c of occasional happenstance nature of the result. (accident takes place on 1 state, not another that is very close and result is different).

(e) Also there is a sense of unfairness. Jx-selecting rules are not supposed to take into account the outcome, but it happens and this leads them to try to get to a different result.

(f) Characterization is not always an escape devise, it is a necessary part of court proceeding. It is when it is used in a manipulative way that it is an escape devise. We are skeptical b/c there are no rules court to apply to see which claim has supremacy. Court does this b/c of assessment of reasonable expectations of the parties.

(g) Characterization Steps (i) 1st step is to characterize issue court is addressing

1. Is it a tort, K, etc?2. What are the connecting factors? 3. Where does COA arise?4. What is applicable law?

(h) Three steps for escape devises: (i) Characterization(ii) Localization(iii) Application

(2) Alabama Great Southern RR v. Carroll: Characterization Q. Issue: Is Δ employer liable for injury caused to P by negligence of P’s fellow servants? (a) Substantive laws:

(i) AL: Employer liable (employer liability act)(ii) Miss: Employer not liable (fellow servant rule)

(b) Conflicts rule-Lex loci delecti is place where injury occurred (MS); lex loci contractus is place where K was made (AL)

(c) Result: Court rejects characterization as a K matter. P was trying to argue he made K in Alabama and was governed by laws of AL. K incorporated laws of AL and therefore, wherever K was applicable contained those laws and protections that came from those laws. Court did not want to consider it a K issue.

(3) Levy v. Daniels’ U-Drive-Court here is opposite of Carroll. K made in CT and K issue. K governed by CT and therefore CT laws apply to the matter. Issue: Is rental car company liable for injury sustained by plaintiff as a result of negligence of drive to whom company rented the car?(a) CT forum. Court deciding under CT whether K or tort. If it is a tort, it

occurred in Mass, and therefore governed by Mass law. It is reasonable to think that rental company would be liable when it is rented in CT. This seems fair from point of view of the D. (i) Goals that state adopted-look to what their aims are. If they are not

furthered by applying the law, then statute points to certain direction. (ii) Legislature not only concerned with protecting safety of its own highways,

but also concerned with its loss allocation-CT residents and CT is concerned with protecting its residents.

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(iii) Depends on the concern of the statute-is it conduct-regulating or loss-allocating?

(b) Substantive law(i) CT: Rental co is liable by special statute(ii) Mass: Rental co. not liable unless it rented a defective vehicle, which is

not the case here(c) Conflicts rule: lex loci delecti points to Mass. Law, but lex loci contractus

points to CT law. (d) Result: Court says it is a K case. CT statute gives injured person a right of

action directly as a consequence of the contract of hiring. Purpose was to protect the safety of traffic upon the highways by providing incentive to rental company to rent to competent persons. Statute makes liability of person renting part of every rental car k in CT; this k made in CT.

(4) Haumschild v. Continental Casualty-Insurance K. Wisconsin is the forum. On holiday in CA. Court faced with Q as to which law applies. Issue: Is H amenable to suit for injury caused to his W?(a) Conflicts rule: lex loci delecti points to CA law but lex domicilli (for family

law matters) points to Wisconsin law(b) Substantive laws

(i) CA: Husband is not amenable to suit (interspousal immunity)(ii) Wisconsin: Husband amenable to suit (no interspousal immunity)

(c) Result: Court separates out tort and looks at issue narrowly. Call it a family law matter and this moves case back to Wisconsin. This is a reasonable outcome b/c it enhances predictability-H expects to be governed by law in which the marital relationship is governed. Court looks at cases as tort matter, then looks at CA law and breadth to send matter to Wisconsin.

(5) Folk v. York-Shipley: DE is forum. Loss of consortium case. Is action for loss of consortium available? P argues localization – If this is a tort action, then it involves an injury to the marital relationship, and that injury occurred in DE where the marital relationship is centered. P also argues Characterization – This is a matter of family law and as such is governed by the law of the family domicile, DE.(a) Substantive law:

(i) DE: Loss of consortium action available. Wife would recover(ii) PA: Loss of consortium action not available. Wife would not recover

(b) Conflicts rule: Lex loci deliciti points to Pennsylvania Law, but if issue is characterized as one pertaining to marriage, then lex domicilii rule points to Delaware law

(c) Result: Court rejects both of P’s arguments and holds that the question is purely one of tort and as such is governed by the lex loci delicti, PA. No loss of consortium action. Tort in PA, if issue is characterized as one pertaining to marriage it would point to DE law.

ii) The Substance/Procedure Distinction(1) Generally

(a) The forum applies its own procedural rules b/c of practicality, convenience and cost Avoidance

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(b) Use of substance/procedure distinction(i) First step in choice-of-law process-Laws to govern procedural matters;

depositions, service of process, etc.(ii) Matter of characterization-Issue “characterized” as one of procedure; e.g.

Grant v. McAuliffe(c) How much of the foreign law applies-Foreign law governs -- e.g. Mass. Law

re: torts in Kilberg – (place where accident happened) but only those parts that are deemed “substantive”

(d) Examples of Rules (Usually) Viewed as Procedural (i) Methods of serving process;(ii) Matters of pleading and the conduct of proceedings in court(iii) Proof in court of a fact alleged as well as presumptions and

inferences to be drawn from evidence (if courts have different rules re: weight of evidence might effect outcome and thus substantive effect)

(iv)Limitations of forum law on extent of recovery(v) Statutes of limitations* (often viewed as substantive -- more on this later)-

controls access to court (procedural). As jx measure (substantive).(vi)Right (substantive) vs. remedy (procedural) distinction

(2) Grant v. McAuliffe-CA (forum) Π’s (injured passengers), Nominal Δ (administrator), Deceased tortfeasor, Tortfeasor’s estate; accident in AZ. Issue: Whether a tort action survives the tortfeasor’s death? (a) Substantive rules:

(i) CA: Action survives tortfeasor’s death(ii) AZ: Action does not survive tortfeasor’s death

(b) Conflicts rule: Lex loci delicti points to AZ law, but if the issue is characterized as procedural, or as one involving the administration of estates then CA law applies as the lex fori or as the law of the state where the estate is located

(c) Result: Court characterizes issues as procedural and applies lex fori; alternatively, ct characterizes issue as one of admin. of estates and applies CA law on that ground.

(3) Kilberg v. Northwest Airlines: NY: Π’s (survivors), Δ airline, Deceased victim, Ticket purchase, Beginning of round trip flight; accident in Mass. Issue: Amount of recoverable compensatory damages.(a) Substantive law

(i) NY: Damages limitations are prohibited(ii) Mass: Damages are limited by statute to a maximum of $15,000

(b) Conflicts rule: Lex loci delicti points to MA law, but if the issue is characterized as procedural (or as substantive but contractual), then NY law applies

(c) Result: Court finds MA limitation to be offensive to NY public policy and thus in applicable and characterizes issue as procedural in order to apply the lex fori. Court went further here b/c decisions grounded on public policy are iffy. Court is trying to change conficts law they are using-trying to shift the thinking.

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(4) Marie v. Garrison-NY (forum) & place of promise. Missouri: Place of

acceptance, Land that is the object of the K, π. Issue: Whether the K made was valid as to form (Statute of Frauds)(a) Statute of frauds:

(i) NY (forum): “Every contract [involving land] shall be void unless the contract . . . be in writing”

(ii) Missouri: “No action shall be brought” on a ck involving land unless k is in writing

(b) Conflicts law: Lex loci contractus points to MO law, but only MO substantive law

(c) Result: Referee holds that MO SoF is inapplicable because it is procedural; NY SoF is inapplicable because it is substantive. Contract is thus valid!

(5) Vest v. St. Alban’s Psychiatric Hospital-hospital malpractice case. Hospital is in

VA; forum is WVA, where P is citizen. Issue: Whether lawsuit should be allowed to proceed in light of a VA statute that requires review by a medical panel before resorting to the courts?(a) Substantive law:

(i) West VA (forum): Lawsuit may proceed – no requirement of review by med. panel

(ii) VA: Lawsuit may not proceed until plaintiff satisfies statutory requirement of review by a medical panel

(b) Rule: If VA statute is substantive, it applies under the lex loci delicti; if statute is procedural, court need not apply it.

(c) Results: Court characterizes VA statute as procedural (controlling access to VA courts) and refuses to apply it. VA appeals court ruled the opposite, but here WVA could still rule the way it wanted to b/c it is considered an advisory opinion b/c the appeals court was split. Purpose of review panel plays a factor in considering this case (if it is procedural or substantive). Acts as procedural hurdle-so maybe it limits claims. Unless this is effective, the substantive goal of protect health care providers seems like it would help VA courts. If WVA had a review panel, the court may have gotten out if it by saying the panel could not rule on a VA medical malpractice issue and that this would be a substantive issue and not procedural in order to get around it.

(d) Dissent says that it is blatant protectionism of WVA resident in conflict with lex delecti rule.

(e) Posner suggests that appropriate Q to ask is what the purpose of the rule is. (i) Is it concerned with accuracy and economy in litigation? – Then it is

procedural(ii) Is it concerned with channeling behavior outside the courtroom? -- Then

it is substantiveiii) Renvoi

(1) Generally (a) Internal” law – excludes a jurisdiction’s conflicts rules(b) “Whole” law – includes a jurisdiction’s conflict-of-laws rules(c) Usual an escape device in CL system(d) Only arises when different states have different conflicts rules

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(e) REMEMBER procedure can’t be renvoied(2) Estate of Wright-Place where renvoi comes up is property law. Property is tied to

territory and it does not move. One of few rules that all jx agree on is that the state where the property sits can dictate anything relating to property (sale, etc.) even if decedent does not want it to be. Maine is forum and place where will is written; land is located in Switzerland. Issue: what will be done with property in Switzerland b/c it has a right to control? Rest of estate will be governed by Maine law. Issue: whether testator’s children are entitled to a forced share “against his will”.(a) Substantive law:

(i) Maine (forum): Testator’s will prevails; children are not entitled to forced share

(ii) Switzerland: Children are entitled to a forced share. Testator’s will is invalid to extent it denies them that share

(b) Conflict law:(i) Maine: (Treaty) Succession to immovables is governed by the law of the

situs; does “law” include choice-of-law rules(ii) Switzerland: Succession is governed by law of domicile (Switzerland).

BUT a foreigner may, through a choice-of-law clause, subject his state to his national law (subject to exceptions; e.g. arts. 17 & 18 of treaty)

(c) Result: Court concludes (1) “law” in the treaty includes conflicts rules; (2) Swiss conflicts rules permit the testator to choose governing law (3) Maine law governs and children get no forced share. Court says treaty applies to the whole law. Court justifies itself by saying that other Swiss decisions are not binding and that the treaty’s purpose is to ensure that Americans living in Switzerland are treated as well as the Swiss. Court said that if treaty was given effect the way children were arguing it would put them at a disadvantage to other foreigners. Swiss citizens are limited-they cannot disinherit their children. If the purpose is to treat US citizens as well as Swiss, this is not necessary. Ct. really compares Americans to other foreigners-but he does not say this is the goal of the treaty. Purpose of concluding treaties is to avoid these kind of Qs b/c court did not really analyze the treaty as it normally would.

(3) American Motorists v. ARTRA-MD forum: Insured factory and contamination.

IL: Insured, Insurer, Insurance K. Issue: Whether the insurance contract obligates the insurer to provide coverage?(a) Substantive Law:

(i) MD: Coverage not provided, because contamination would not be considered “sudden and accidental”

(ii) IL: Coverage provided, because contamination would be considered “sudden and accidental”

(b) Conflicts law:(i) MD: Lex loci contractus rule leads to IL law(ii) IL: Under Restatement (2nd), IL would apply MD law b/c it’s the location

of the insured risk-MD has more significant relationship than IL

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(c) Result: Court adheres to lex loci contractus but adopts a “limited renvoi exception”, which permits it to consider IL conflicts law. Assuming IL law would refer matter back to MD, MD ct applies MD substantive law denying coverage and dismissed. Often courts are outcome-driven. Judges who are trying to move things forward when they do not have full agreement on their court do this too (as in ARTRA case)

(4) Braxton v. Anco Electric -NC-forum, P, P’s employer, Employment

Relationship, D (other employer); VA: accident. Issue: Whether, after having received workers’ comp. through his own employer, P is entitled to a tort action against another employer, D, who, under VA law, would also be considered P’s “statutory employer” and thus would be immune from tort liability(a) Substantive Law:

(i) NC: D is not P’s “statutory” employer. Thus D is not responsible for WC coverage, but is liable in tort. P may recover in tort

(ii) VA: D employer is P’s “statutory employer”. D is responsible for WC coverage, but is immune from tort liability. P may not recover in tort

(b) Conflicts law:(i) NC: Lex loci delicti leads to VA law; but the NC WC statute suggests

application of NC law(ii) VA: Under similar circs., VA did not apply VA law but applied law of the

state of the employment relationship(c) Result: Ct acknowledges lex loci delicti, but focuses on NC WC statute, and

concludes it has to apply the statute. NC law also applicable for public policy reasons. Finally, court employs a “renvoi” rationale: VA would apply NC law; why shouldn’t NC apply its own law? Renvoi as confirmatory rationale here. Basis of decision is that it is a NC court and legislature has directed that workers comp statute applies. Also talks about public policy.

iv) The Public Policy and Penal Law Exceptions (1) Loucks v. Standard Oil (1918)-NY-forum, P’s (survivors), Deceased Victim, D.

Mass: accident. Issue: Whether the Massachusetts wrongful death statute is offensive to NY’s public policy.(a) Substantive Law:

(i) NY: unlimited damages (ii) Mass: Damages limited by statute to a maximum of $10,000 and minimum

of $500. (b) Conflicts law: Lex loci delicti points to MA, but if MA statute is offensive to

NY public policy it doesn’t apply(c) Result: Not repugnant to public policy. Damages limitation plays no role in

this assessment. Until late 19th century there was no wrongful death recovery-statutorily created. D is fighting this case b/c they are doing business in every state and wants Ps to go to state of the accident-limit liability if it is more difficult for Ps to sue. P says NY should not enforce MA wrongful death law b/c this would violate public policy. Court says that the 2 laws are not very different. Court did not want public policy requirement easily met.

(d) Court gives us the standard test for public policy exception:(i) Applicable if the foreign law

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1. “offends our sense of justice or menaces the public welfare”; or2. “Shock[s] our sense of justice”; or3. “Violates some fundamental principle of justice, some prevalent

conception of good morals, some deep rooted tradition of the common weal”

(2) Kilberg v. Northwest Airlines-Issue: Amount of recoverable compensatory damages. We already know they will apply the Mass. law (a) Substantive Law:

(i) NY: Damages limitations are prohibited(ii) Mass: Damages are limited by statute to a maximum of $15,000

(b) Conflicts law: Lex loci delicti points to MA law, but if the issue is characterized as procedural (or as substantive but contractual), then NY law applies

(c) Result: Court finds MA limitation to be offensive to NY public policy and thus in applicable and characterizes issue as procedural in order to apply the lex fori.

(3) Owens v. Owens-SD-forum, P’s domicile, D’s domicile, Car registration; Indiana:

Accident, P and D temporary residence. Issue: Whether P, who was injured in an Indiana accident while riding as a passenger in a car driven by her husband, D, should recover against him (and his insurer) in light of the Indiana guest statute, which would deny recovery(a) Substantive Law:

(i) SD: No guest statute – P recovers(ii) Indiana: Guest Statute – P does not recover

(b) Conflicts law: Lex loci delicti points to Indiana law, but if that law is repugnant to SD public policy it should not be applied.

(c) Result: Court reiterates lex loci rule, but finds Indiana guest statute repugnant to SD public policy and applies SD law. Ct. also bases its decision on SD’s contacts & interests and Indiana’s lack of interests. (Parties have relationships with SD)

(d) Courts often use public policy to avoid harsh results(e) Forum court is not obligated to apply foreign law if it found that law to be

repugnant to local public policy(f) PP exception is to be construed narrowly; only for fundamental justice or

good morals(4) Penal law

(a) courts will not apply another state's penal laws- refers not only to criminal code but to any law designed to punish what is penal is determined by forum state

(b) The courts of no country execute the penal laws of another.” The Antelope (1825)

(c) Criminal law – choice of law is merged with jurisdiction(d) Civil laws with penal component

(i) Is law designed primarily for the vindication of public justice or the vindication of a private right?

v) The Foreign Tax Exception

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(1) Generally(a) traditionally, states will not enforce foreign revenue laws(b) some states now have reciprocity with others(c) Revenue rule – the courts of one sovereign will not enforce the tax judgments

or claims of another sovereign(d) Why not enforce revenue rule?

(i) Sovereignty1. Limit assertion of authority beyond borders2. Eliminate the possibility of insulting a foreign sovereign by refusing to

honor the foreign tax ruling of one state but not the other(ii) Separation of powers

1. Conduct of foreign affairs is reserved to the executive branch (and secondarily the legislative branch)

2. Exec & legislative branches have recently acted by concluding treaty with Canadaa. Treaty defines methods of enforcing foreign tax claimsb. Treaty does not abrogate the foreign revenue rule

c) Proving and Pleading Foreign Law-Judicial Notice and Proof of Foreign Lawi) Generally

(1) Foreign law- we are talking about law of sister state, as well as law of another country. Most states distinguish formally between foreign law and sister-states (which they can apply without difficulty).

(2) In many cases, no Q of foreign law is raised or offeredii) Geller v. McCown-NV case. Old approach to foreign law as species of fact that can

be proved. Issue here is property in Yukon and decedent lived in NV. W suggests she has right of 1/3 share of property in Yukon property under its laws. No one disputes Yukon law could govern, but she did not plead or prove it. Court says cannot apply Yukon law and so as a fall back will apply own (NV) law. (1) Court usually has 2 options-can dismiss whole COA (usually when P needs

foreign law for claim) or can apply its own law. (2) Place of property is under Yukon law and P’s action is dismissed and court

residually applies law of NV.(3) Old way of foreign law being issue if fact means that it would have to be proved

by expert testimony (bring in foreign lawyer to testify as to content of the law). Governed by evidence code.

(4) TC decision usually dispositive b/c it decided issue as matter of fact. So it had to be clearly erroneous in order to reverse

(5) Conflicts rule: Lex rei sitae (place the property is situated) points to Yukon law, but P did not plead or prove it.

(6) Many conflicts issues never get raised-parties are more comfortable applying their own law. Q is really when a court sue sponte raises the issue of foreign law. Often this does not happen and it is usually not a jx matter.

(7) NO JUDICIAL NOTICE OF FORIGN LAW, IT MUST BE PLEAD iii) Walton v. Arabian American Oil Co-NY fed court and accident is in Saudi Arabia,

where D does business. Court applies NY law. Issue is whether the TC abused

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discretion when it refused to take judicial notice of Saudi Arabian law when the P who relied on that law was unwilling to prove its content?(1) Notion of respondeat superior-would employer be responsible for negligent acts

of employer-substantive law(2) Law of Saudi Arabia is not pled or proved and it seems it does not recognize

respondeat superior.(3) Conflicts rule: Lex loci delicti points to Saudi law. P does not try to plead Saudi

law b/c he can’t understand it and also b/c it hurts his case and he would lose. (4) D’s conduct-did not plead foreign law b/c it assumed that forum law was the same

as foreign law b/c no one proved otherwise. D dropped ball by not proving that Saudi law would not recognize respondeat superior.

(5) P argues that Saudi law was uncivilized and court did not buy this b/c it did not want to declare that the whole country’s laws were uncivilized.

(6) TC did not abuse its discretion by failing to take judicial notice of Saudi law. Court rejected P’s plea to apply NY law because of the presumption/fiction that the 2 are identical because (1) it was unrealistic in this case and (2) P did not prove that Saudi Arabia had not law or that it was “uncivilized”.

(7) Result here is different than Geller b/c of a shift in mindset and court there had to come to a decision, whereas here the court does not have to maintain the action. If P bears burden of proof and can’t maintain case-case cannot go forward.

(8) Maxim that court knows the law-has ability to apply the law and this is regime under we currently operate w/r/t foreign law

iv) Proof of foreign law(1) Old Practice: Treated as matter of fact

(a) Argued to the jury(b) Rules of evidence applied(c) Expert testimony usually required(d) Very limited appellate review

(2) Modern Practice: Judges can take judicial notice of foreign law(a) Foreign law treated as law, but must be ascertained by the court with the

assistance of the parties (if neither parties suggest foreign law should apply, usually the court will not make that suggestion)

(b) Judge is decision-maker(c) Plenary appellate review in most states (b/c it is a matter of law)(d) Possibility (in some states) of certification to foreign court

v) California Evidence Code §§ 452 & 453(1) Section 452

(a) Court may take judicial notice of(i) decisional, constitutional, and regulatory law of any state of the US and of

the resolutions and private acts of the Congress and of CA’s legislature(ii) official acts of the legislative, executive, and judicial departments of the

United States and of any state of the United States(iii) The law of an organization of nations and of foreign nations and

public entities in foreign nations(2) Section 453

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(a) Court shall take judicial notice of any matter specified in §452 if a party requests it and

(b) Gives each adverse party sufficient notice AND(c) Furnishes the ct with sufficient information to enable it to take judicial notice(d) Parties have responsibility to put court on notice that it is a foreign issue. (e) CA does not distinguish between foreign states and sister states. Most states

has taking judicial notice of other US state’s law as mandatory but foreign non-US jx as option and this makes a difference in appellate review.

vi) Federal Rule of Civil Procedure 44.1(1) Party intending to raise an issue concerning foreign law shall give notice by

pleadings or other written notice;(2) Court may consider any relevant material or source (including but not limited to

evidence presented by parties)(3) Court’s determination shall be made as a matter of law-court can inform itself

d) Modern Choice-of-Law Approachesi) Introduction-History

(1) Walter Wheeler Cook (1873 – 1943)(a) Deconstructed the traditional theory

(i) First Restatement’s goals of certainty, predictability, and uniformity were illusory b/c of escape devices that courts used

(ii) Actual judicial practice did not reflect law’s directives(iii) Simplistic system could not provide guidance for complex CoL

problems(b) Recommended that an “approach” is better than a fixed system of rules(c) Suggested that judges make a wise choice between conflicting rules

(2) David F. Cavers (1902-1986)(a) Content-blind choice of law precluded the making of intelligent choices(b) Choice of law should be dictated by selecting the law that would produce

justice in the individual case(c) Later he articulated “principles of reference” (retreated from above).

(3) Brainerd Currie (1912-1965) (a) Pioneered governmental “interest analysis”(b) Shorthand version:

(i) Normally a forum will apply its own law(ii) If two sets of laws could possibly apply, the court should inquire into the

policies expressed in those laws(iii) If one state has an interest in the application of its law, and the

other state has none, that state’s law should apply (“false conflict”)(iv)If both states are interested, the court should engage in a “moderate and

restrained interpretation” to try to eliminate the conflict(v) If, upon reconsideration, the court finds that a conflict between the two

legitimate interests of the states is unavoidable, the court should apply the law of the forum. (“true conflict”)

ii) Early approaches, including “Center of Gravity”

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(1) Auten v. Auten-K case. NY court. W is in England (where they lived), H leaves and gets divorce in Mexico and goes to NY. She follows him and gets settlement K for kids. He pays a few times, then quits. She then sues in England to try to get separation and alimony. W claims she sued in order to enforce, rather than repudiate K. She then goes to NY to try to get back payment.(a) Issue is did the initiation of the English action constitute a rescission of the

NY agreement? Issue b/c as part of K she promised she would not sue him.(b) Under lex loci contractus, law of NY should apply to K.

(i) Under NY she breached.(ii) Under English she did not

(c) Court uses center of gravity approach. Finds that, in light of its multiple contacts, England is the “center of gravity” of the dispute and is the state with the “greater concern” in applying its law. English law should govern. Court wants to further theory of this approach to CoL and wants her to win. ( based on whether we are talking about his performance or her performance)

(d) NY is the H’s domicile-we now this b/c court has jx over him. Place where H made payments is NY, court maybe looks at this as not as important as place where W receives payments (England).

(e) Mention of expectations of the parties-both parties assumed that English law would govern the W’s institution of a separation action.

(2) Haag v. Barnes-K case. NY court. Secretary has affair with boss and has child. In return for no paternity suits, he agrees to pay support for child. Liason in NY, she got payments in NY. D is in Il and K is in Il(a) K had choice of law stipulation. Choice of law clause said Il law governed,

but court recognized the superior bargaining of the D. Reason court went through conflicts analysis b/c party autonomy was not as firmly entrenched as it is now. Also, court recognized this as a case in which it could further their goal of changing the law.

(b) Issue is should the IL k be enforced as written, or should NY law apply with possibility of modifying the k and increasing D’s obligations? Is NY public policy re child support satisfied or offended by the enforcement of the IL contract?

(c) Results from application of NY is not necessarily a given and court surmises no increase in payments.

(d) Court here emphasizes payments made in Il. (totally different from Auten)(e) Court finds that the “center of gravity of the dispute was in Illinois and the

agreement should be enforced as written. That being so, the agreement acts as a bar to P’s further claims for support. The court implicitly concludes that this is a “false conflict” when it says that the agreement had more than satisfied the standards of NY law

(f) Problem with this approach is that how do we weigh certain contacts and how do we decide which contacts to weigh?

iii) Policy-Based Analyses(1) Generally

(a) All of the approaches have in common that they give consideration to the policies underlying the laws.

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(b) Courts still treat cross border cases differently from domestic cases. (c) Ask if certain policy should apply to this case and what was the purpose

behind the law in general. In identifying govt interest, you can ascertain whether that law should apply to that case.

(d) Process results in 1 of 3 (or 4) scenarios(i) False conflicts (easy)

1. Also includes cases where laws are identical or results are same but law differs

(ii) Apparent true conflict-if alter interpretation (multistate case) might be able to read out conflict

(iii) True conflict (hard)-both states have an interest-how do we decide which law should apply? Curie said in tie-breaker forum law applies

(iv)Unprovided for case (kind of hard)-neither jx is interested (e) All modern approaches have some sort of interest analysis in them

(2) False Conflicts (Common-Domicile Torts)(a) Babcock v. Jackson-Mix of center of gravity with interest analysis. This is a

tort case with D and P from NY. The traveled into Canada and got into accident. P sued and under Canadian law COA not permitted, but under US it is(i) Court looked at the interests that NY had in allowing people to recover

and Canada’s reasons for excluding and decided Canada was not interested b/c it was concerned with false insurance claims.

(ii) Common domiciliary cases lead to easier outcomes b/c not competing between states to protect its domiciliaries. Cases are harder when there are split domiciliaries.

(iii) NY policy : NY’s failure to enact a guest-statute or limit tort recovery reflects a loss-allocation judgment that victims of traffic accidents should be protected (even if they are guests) by holding drivers accountable for the accidents they cause.

(iv)NY interest : Here both victim and driver are NY domiciliaries. Hence NY interest in applying its loss-allocation rule to protect the passenger at the expense of the driver.

(v) Ontario policy : Protect insurer from collusion between driver and passenger. Trying to protect drivers who were trying to do a good thing by driving people.

(vi)Ontario interest : Insurer here is not an Ontario insurer. Hence, Ontario not interested. Has interest in making sure insurance is affordable for its residents.

(b) Conduct regulation v. Loss allocation(i) Policy behind the rule is important

1. Conduct regulation rules operate territoriallya. We assume NY wants to protect NYers, but this might not always

be accurate. 2. Loss distribution rules might not operate territorially

a. Rules tend to accompany domiciliariesb. Territorial contacts can still be important, but less so

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(c) Rong Yao Zhou v. Jennifer Mall Restaurant-Pure interest analysis case. Introduces concept of dram shop act. Ps-victims and D is restraurant owner. Place of conduct of serving alcohol was in DC. Accident in MD. Issue: is restaurant owner liable for injury caused by his drunk customers??(i) In DC-Yes. Dram Shop Act provides that a tavern-owner who serves

liquor to an apparently intoxicated customer.(ii) In MD-No, the tavern-owner is not civilly liable, although he may be

criminally liable(iii) Loss allocation here, but also conduct regulating b/c tavern owners

must govern practice if they know they are on the hook for paying liability.

(iv)DC policy : To deter tavern owners from serving excess liquor, and/or to compensate the victims of accidents caused by the drunks.

(v) DC interest : DC interested on both grounds. Tavern is in DC and conduct occurred there; victims are DC domiciliaries.

(vi)MD policy : Protect tavern owners from the financial burden of civil liability.

(vii) MD interested : No? MD tavern or owner involved here. Hence MD not interested

iv) The Second Restatement (False Conflicts)(1) 2nd Restatement

(a) Section 6 (i) Section 6(1) A court will follow a state’s statute on choice of law insofar

as it is Constitutional(ii) Very few states have choice-of-law statutes (only Louisiana and Oregon)

1. Means most state legislatures have legislated about choice of law. All judge-made.

(iii) Section 6(2) When there is no such directive, factors relevant to the choice of the applicable rule include:1. The needs of the interstate and international systems2. The relevant policies of the forum3. The relevant policies of other interested states and the relative interests

of those states in the determination of the particular issue4. The protection of justified expectations5. The basic policies underlying the particular field of law6. Certainty, predictability, and uniformity of result7. Ease in the determination and application of the law to be applied

a. The section 6(2) factors are not listed in any hierarchyb. The factors include interest analysis principles as well as other

concernsc. Section 6(2) works in conjunction with subject-specific sections to

identify the state with the “most significant relationship”(b) Biggest problem with 2nd restatement is lack of direction(c) Retains characterization problem-i.e., must figure out if it is a tort or K case.

Also, the place of injury in torts, place of K is starting point, etc.

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(d) 2nd restatement was in response to criticism of 1st restatement. Has a plurality of acceptance by the US-b/c 2nd restatement allows judge to get to whatever result he wants (too cynical?). Does permit judges to engage in ad hoc analysis, but is it worse than any other approach?

(2) Bryant v. Silverman-Court applies 2nd restatement but determines that CO is not interested in outcome, but AZ is. Section 6 factors can either bolster or undermine the presumption. CO place of accident from small plane from AZ. 1 P is from NM, 1 from TX and 1 from AZ. Tickets purchased in CO. What law governs compensatory and punitive damages?(a) Compensatory damages-unlimited in AZ and TX and limited in CO.(b) Punitive-yes in all states, but CO(c) Forum is AZ, presumption that forum law will apply, but can be overcome.

Here, Ps would rather have AZ law than CO.(d) Court concludes that, in light of its contacts and policies, AZ has the most

significant relationship. AZ law applies for both compensatory and punitive damages and with regard to all three plaintiffs.

(e) Court’s analysis-court starts at most specific section(i) Section 178 (Damages for Wrongful Death Cases)

1. Applicable law is that selected by application of Section 175(ii) Section 175 (Wrongful Death)

1. Local law of place of injury determines the rights and liabilities of the parties unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in Section 6

(iii) Section 145(2) (General Tort Choice-of-Law Principles)1. Place of Injury -CO2. Place of conduct causing injury-? Do not know for sure where (CO or

AZ)3. Domicile of plaintiff and defendant-1P, D in AZ, other Ps in NM and

TX4. Place of the relationship between the parties-Court places relationship

in CO, where ticket was purchased. (iv)Relevant policies of the forum

1. CO decided not to make punitive damages available, possibly b/c it is protecting CO defendants from large verdicts.

(v) Ps are not residents of CO-so court said CO is indifferent to their compensation, but CO has strong policy of protecting Ds-court reads in P’s protection, without considering flip sides of this. They assume CO is not interested b/c they look at it from P’s perspective. However, this result might not be something CO likes and its interests not adequately taken into account.

(vi)In torts cases it is not unusual to dismiss with certainty, predictability, or uniformity of result

v) The “Better Law”; Recap on Common-Domicile Cases(1) 3 different modern approaches

(a) Interest analysis (Curie) (b) Interest analysis in 2 nd restatement

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(c) Leflar’s better law (i) All approaches lead to same direction in common domiciliary cases

(2) Milkovich v. Saari-Minnesota case. Guest statute that could shield D from liability. D and P are Ontario residents and Ontario has guest statute. Accident in Minn (no guest statute). Law of domicile would not allow recovery. Issue is D amenable to suit in light of the Ontario guest statute which immunizes her from liability in cases where she is not guilty of gross negligence?(a) P sued under Minn law and court uses better law analysis and concludes Minn

law is better. Uses rationale that it has interest of administering justice-this is a transparent rationale and is not convincing.

(b) Court applies MN law based on (a) the forum’s interest and (b) its “preference for what is regarded as the better rule of law” (which happens to be MN’s law). The forum’s interests are: (i) ensuring payment of local medical bills incurred as a result of the accident and (ii) its interest as a “justice-administering state” in seeing that its standards of justice are followed in resolving disputes with substantial MN connections.

(c) Does court have the autonomy to choose the better law that is not the law of the state? Is this taking a legislative action it is not allowed to have? If court had said that Ontario law should apply, then it would be legislating-so this is a problem. Hard for court to say that even though legislature has spoken, Ontario law is better so it decided to apply it. This is a problem with the better law approach. Better law approach seems to do away with any public policy rationale.

(d) There are more contacts in Ontario, but court argued that medical bills and care were in Minn and court said incentive for Minn to care for victims meant Minn law should apply. Not an insignificant interest, but should it trump all of the other Ontario interests?

(e) Dissent thinks the P forum shopped and does not like the result. If they stayed in Ontario court, he thinks it would have applied Ontario law. But, we would need to know Ontario’s choice of law rules before deciding this.

(3) Leflar’s Choice-Influencing Considerations: (a) Predictability of results(b) Maintenance of interstate and international order(c) Simplification of the judicial task(d) Advancement of the forum’s governmental interests(e) Application of the better rule of law-this is the real focus b/c the other 4

are familiar. Leflar argued this is only applicable to some cases, but courts focus on this always. (i) In nearly every case that applies the better law approach, court has

applied forum law. Another way of giving advantage to forum? (4) Common-Domicile Cases

(a) In nearly every case involving plaintiffs and defendants with a common domicile, the court applied the law of the common domicile.

(b) This was the result regardless of the choice-of-law methodology employed by the court.

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(c) In those cases in which the court did not apply the law of the common domicile, the court usually applied the (1) pro-plaintiff law (2) of the forum

vi) True Conflicts – Interest Analysis (Contracts)(1) Lilienthal v. Kaufman- Involves a spendthrift statute. Where a state appoints a

guardian for someone who keeps getting into debt. Guardian can void Ks that spendthrift enters into, so as not to get spendthrift’s family in financial trouble(a) D is from Oregon, which has spendthrift law. He went to CA, entered into a

loan K and then D defaulted. P is trying to get $ back and D is trying to convince Oregon court that Oregon law should apply.

(b) These cases happen when more than 1 state has interest in having their law apply.

(c) Oregon court does not think that Oregon spendthrift law is a good law, but they are hampered by the previous case-if they let CA P recover they are somehow giving a benefit to the CA P that the Oregon P did not get in prior case. Court comes to rational conclusion that CA law could apply, but they are constrained by Oregon policy, so rule that Oregon law applies

(d) Oregon’s policy is that it protects spendthrift’s family and ultimately state

welfare funds. INTERESTED. Other OR interests are subordinated by the spendthrift rule: enforcing contracts; protecting people from fraud; promoting OR’s reputation as a state that holds parties to their contracts and thus encouraging foreigners to do business with Oregonians

(e) CA policies are that their law protects California creditor and contracts validly made in that state. INTERESTED

(f) Court applies OR law and declares the contract unenforceable. This is a true conflict in which both states are interested. In such a case, the “public policy” of Oregon should prevail, and the law of OR should be applied; thus, we should apply that choice-of-law rule that will advance the policies or interests of Oregon

(g) Courts are instruments of state policy. The Oregon legislature has adopted a policy to avoid possible hardship to an OR spendthrift’s family and to avoid possible expenditure of OR public funds that might occur if the spendthrift is required to pay his obligations. In litigation OR courts are the appropriate instrument to enforce this policy.

(h) This case is an illustration of the constraints of interest analysis when you have a true conflict. Once Court identifies Oregon as interested, they say who are we to second-guess the Oregon legislature-not our job to change the law.

(i) Criticism of interest analysis-there is forum favoritism. vii)True Conflicts/Restrained Interpretation (Apparent Conflicts) (Contracts)

(1) Traynor’s approach (a) Instead of automatically applying law of forum, can you approach matter in

different way-moderate and restrained interpretation. Can you reassess the states’ interests so that 1 state’s interests falls away and then apply law of only interested state.

(2) People v. One 1953 Ford Victoria-D purchased car in TX and had chattel mortgage. He went across state lines into CA, where car was used for illegal

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purposes. Issue is what is going to happen to the interest in the car? Car is partially owned by a bank, and they want their part of the car. (a) CA’s law says a car used to transport narcotics shall be forfeited to the state.

The forfeiture includes the interests of third parties, such as mortgagees, unless they show that they conducted a reasonable investigation of the mortgagor’s character. No such showing here; hence, mortgagee’s interest is subject to forfeiture. TXhas no such statute and thus mortgagee’s interest is not subject to forfeiture.

(b) Ct uses interest analysis, but with “enlightened interpretation” of forum law(c) CA’s policies: To deter the use of cars for the transportation of narcotics –

INTERESTED. TX’s policies: To protect the Texas mortgagee and mortgages validly established in that state -- INTERESTED

(d) Currie would say apply forum law-CA, but Traynor did not do this. Re-interpretation: In the absence of contrary language, it would be unreasonable and unfair (contrary to the policy of protecting justified expectations) to interpret the CA statute as being applicable to out-of-state transactions. In fact, the statute’s language, especially its 1955 amendments, suggest that the statute was not intended to apply to non-CA transactions.

(e) Court says CA statute inapplicable and thus TX law governs. Mortgagee’s interest is expected from forfeiture.

(3) Bernkrant v. Fowler-P bought apartment and owed $ to person who bought it. Then P wanted $ sooner and had them takeout a different loan and promised to put in his will that he would forgive whatever amount of the loan remained at time of his death. (Consideration for the change). No Q that this was done. NV Ps; decedent died in CA.(a) CA statute of frauds renders unenforceable an oral promise to make a will.

NV statute of frauds [arguably] inapplicable to this case. Oral promise enforceable. Loan secured by interest in property. Issue is the oral promise to make a will enforceable?

(b) Court uses interest analysis, but with “enlightened interpretation” of forum law

(c) CA’s policies: to protect the estates of CA decedents from potentially fraudulent claims – INTERESTED. NV’s policies: to protect plaintiffs and contracts validly made in NV -- INTERESTED

(d) Re-interpretation- In the absence of contrary language, it would be unreasonable and unfair to interpret the CA statute as being applicable to non-CA transactions. The policy of protecting justified expectations, which is a common policy of both states, militates strongly against applying the CA statute to this NV promise. Ps could not have anticipated the application of CA law because, even if at the time of the promise the promisor was domiciled in CA (which is doubtful), there was no assurance that he would retain his CA domicile until death. He could have moved to any other state. Ps could not comply with the laws of all 49 states

(e) Result is that CA statute held inapplicable. NV law applies. Promise is enforceable.

viii) True Conflicts (Split Domicile Intrastate Torts)

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(1) Foster v. Leggett-Kentucky (forum) is location of P. D is employed there and also has residence there. D’s domicile is in Ohio, accident occurs there and car is registered there. Intrastate b/c tort occurs entirely in 1 state, but parties are from different states. Issue: is D amenable to suit in light of the Ohio guest statute that immunizes host-drivers from liability? (a) Kentucky has no guest statute. P is not denied recovery merely because of her

status as a gratuitous guest. Ohio has a guest statute. Host driver is immune from liability vis-à-vis his gratuitous guests

(b) Kentucky’s approach is lex fori- (forum favoritism approach)-law of forum applies unless there is a good reason why it should not apply. Aligned with interest analysis, but different in its absolute clarity.

(c) Court applies KY law. Reasons given: “the court’s primary responsibility is to follow its own substantive law. The basic law is the law of the forum, which should not be displaced without valid reasons. In the case at bar, contacts with KY were numerous and significant. If there are significant contacts -- not necessarily the most significant contacts -with KY, the KY law should be applied.

(d) Forum favoritism is appealing to some judges-it is easier.(a) Court could have determined that this was not really a true conflict with

Ohio’s interest in protecting him limited b/c he spent most time in Kentucky and thus a false conflict.

(e) Only split domicile tort case that applied law of P, when D’s domicile and accident occurred in other state. Any other court would have applied Ohio law

(2) Cipolla v. Shaposka-D and P were classmates and D gave P a ride. There was a car accident in Delaware. Car was owned by P’s father and he was DE resident; passenger was PA resident. DE guest statute, which would bar recovery, whereas PA does not have a guest statute. Issue is which state’s law governs D’s immunity to suit?(a) Court’s approach is mixed. Interest analysis coupled with reliance on Cavers’

principles(b) PA’s policies- Protect victims of a traffic accident even if they are gratuitous

guests – INTERESTED. DE’s policies- Protect host-drivers and their insurers -- INTERESTED

(c) Court says “The fact that the accident occurred in DE is not a relevant contact because the Delaware statute does not set out a rule of the road.” Nevertheless, “DE’s contacts are qualitatively greater than PA’s and [DE] has the greater interest in having its law applied.” Citing Cavers, “By entering [DE], the [P] has exposed himself to the risk of the territory and should not subject persons living there to a financial hazard that their law had not created.” “Inhabitants of a state should not be put in jeopardy of liability exceeding that created by their state’s law just because a visitor from a state offering higher protection decides to visit there.” DE law applies and D immune from suit.

(d) Court says this is a loss allocating rule, not a regulating rule. Idea here is if you are a D and your conduct and injury occur within single state, you can expect your conduct to be governed by the law of that state and P, who

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chooses to go into that state, is voluntarily subjecting herself to that state. (Enhances predictability).

(e) Court did not address possible purpose of guest statute as designed to prevent fraud against insurance companies. (Interesting fact). If this is the purpose, then maybe guest statute is not altogether outdated.

(f) Dissent says that should have used a better law analysis-guest statute is the inferior law. He looks at which law is regressing across the country and he thinks guest statutes are on the decline.

(3) Eger v. Du Pont-P employee in NJ, NJ employer and NJ subcontractor. Employer sent to SC. Du Pont in SC. Exposure in SC (injury). Different workers comp laws. NJ-DuPont only secondarily liable for WC and not immune from a tort suit, SC-Du Pont directly liable for WC and immune from tort suit. Issue is which state’s law determines whether DuPont is amenable to a tort suit?(a) NJ courts approach is interest analysis (including weighing of interests)(b) NJ wants to protect workers by allowing recovery of additional damages

beyond WC; protect the subcontractor by allowing reimbursement for WC benefits paid to worker – INTERESTED

(c) SC wants to protect the welfare of persons working within borders; affix responsibility for that protection; regulate the safety of the workplace; allocate financial costs resulting from employment accidents. Attain these goals by requiring that a general contractor assume burden of furnishing WC for employees of subcontractors because GC is usually more financially responsible – INTERESTED

(d) Weighing of NJ interests: “NJ’s interest in seeing that its injured residents receive compensation has not been neglected; it has been addressed through the WC system. [A]n injured resident who is covered by WC is guaranteed payment of medical expenses and disability benefits for work-related accidents . . . Therefore, WC, which was intended to prevent injured workers from becoming public charges by shifting to industry the expense of compensating work-related injuries, reasonably satisfies the state’s interest in providing a source of compensation for injured workers.”

(e) Weighing of SC interests: SC “has a great interest in having other states recognize the tort immunity conferred on general contractors, since this immunity is part of the quid pro quo that is fundamental to SC’s WC system.” “[S]ubjecting a SC general contractor to tort liability in addition to the expense of providing WC coverage . . .would frustrate that state’s interest in regulating the manner in which victims of industrial accidents are compensated” and “would undermine the foundation of SC’s WC statute” by upsetting “the fundamental equation” of linking the obligation to provide WC coverage and immunity from tort liability

(f) Result-“NJ’s interest is not strong enough to outweigh SC’s interest in immunizing general contractors.” SC law applies; DuPont is immune from tort suit

(4) Bottom line for split-domicile intrastate torts

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(a) When conduct and injury occur in the tortfeasor’s home state and that state’s law favors the tortfeasor, that law governs (even if the law of the victim’s home state favors the victim). Foster is the only exception.

(b) When the conduct and injury occur in the victim’s home state and that state’s law favors the victim, that law applies (even if the law of the tortfeasor’s home state favors the tortfeasor).

ix) True Conflicts (Split Domicile Cross-Border Torts)(1) Bernhard v. Harrah’s Club: Club is in NV and they sell alcohol, but also

advertise in CA. A couple from CA are injured in car accident in CA and sued club in CA ct, claiming club was negligent in selling alcohol. Issue is which law determines whether the D is liable for the injury caused by his intoxicated patron?(a) CA at this time would hold tavern owners liable for injuries resulting from the

negligent serving of alcohol. CA’s interests: Protect victims of traffic accidents caused by drunk drivers by deterring tavern-owners from continuing to serve apparently intoxicated patrons – INTERESTED. Conduct regulating and loss allocation as well.

(b) NV’s interest-Protect tavern-owners from ruinous civil liability “every time they pour a drink” -- INTERESTED

(c) Approach-Interest Analysis + Comparative Impairment. We have a true conflict here.

(d) CA impairments: “CA cannot reasonable effectuate its policy if it does not extend its regulation to include out-of-state tavern keepers such as D who regularly and purposefully sell intoxicating beverages to CA residents in places and under conditions in which it is reasonably certain these residents will return to CA and act therein while still in an intoxicated state. CA’s interests would be significantly impaired if its policy were not applied to D.”

(e) NV impairments: Since the act of selling alcoholic beverages to obviously intoxicated persons is already proscribed in NV [not true], the application of CA’s civil liability rule would not impose an entirely new duty requiring the ability to distinguish between CA residents and other patrons. Result is only an increased economic exposure, which for businesses that actively solicit extensive CA patronage, is a foreseeable (and insurable) business expense. Moreover, NV’s interest is not significantly impaired because liability is only imposed on those who actively solicit CA business.

(f) Result-CA law applies and D is liable. (2) Baxter’s Hypothetical

(a) State X is forum and where driving and accident occurs. State Y has D and P. State X’s law says that speeding is negligence per se and state Y says no per se rule and negligence must be proved. Issue is which law?

(b) Baxter says that X’s goal is road safety for people from X. Y says interest is to control loss-distribution rights and duties between X and Y.

(c) Impairment analysis: X’s regulatory interest stands alone in opposition to Y’s loss distribution interest . . .[T]he X regulatory interest will not be impaired significantly if it is subordinated in the comparatively rare instances involving two nonresidents who are residents of a state or states that reject the per se subrule. Conduct on X highways will not be affected by knowledge of Y

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residents that the X per se rule will not be applied to them if the person they injure happens to be a co-citizen.”

(d) Resolution: “X’s per se rule ought not to be applied, because X’s regulatory interest stands alone in opposition to Y’s loss distribution interest.”

(3) Comparative impairment generally (a) Victim-protecting resolution so long as it is foreseeable that V would be

injured by particular conduct. (b) Baxter thought the proper way to resolve this was to imagine the two states’

legislatures could sit down and work out a solution—who would be willing to give up what?

(c) Comparative impairment is not supposed to consider which law is better or worse

(d) Still CA’s approach to CoL in torts. Interest analysis with intermediate of restrained interpretation and ending with comparative impairment analysis.

(e) Internal objective – the goal underlying each state’s resolution of conflict private interests when all of the parties are within the state

(f) External objective – furthering as far as possible the goal set forth in the internal objective in all situations involving those for whom the state has the responsibility “for legal ordering”

(g) When external objectives collide, you have a true conflict(h) Imagine that the two state legislatures were to sit down to come to some form

of agreement – what would they decide to do?(i) Which state’s internal objective (interest) would be LEAST impaired if it

were subordinated to the other state’s internal objective (interest)(j) Bottom line for split-domicile cross-border torts-When conduct originating in

one state injures in another state a person domiciled in the latter state, the law of the latter state applies if it is more favorable to the injured person and IF the occurrence of the injury in that state was objectively foreseeable.

(k) Issue is often when is it foreseeable to the D that conduct in state X will be judged in any way by state Y. It may be foreseeable according to state Y after the fact, but not before.

x) The Unprovided-For Case(1) if neither state is interested in regulating particular conduct or providing defense

for conduct (2) Erwin v. Thomas: D was driving in Wash. and got into accident that injured P’s

H and she sues in OR court. D lives in Or, P lives in Wash. This court found that OR law should apply. In OR, action for loss of consortium is available, it is not in Wash. Issue is which state’s law determines availability of action for loss of consortium? Approach is interest analysis(a) OR’s policies: Protect wives by declaring their losses to be real and

compensable – NOT INTERESTED since no Oregon wife is involved.(b) Wash’s interests: Protect Ds by shielding them from this additional liability

(perhaps furthering policy/judgment that wife’s losses are not considered real or compensable) – NOT INTERESTED since no Washington D is involved.

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(c) Resolution-“[N]either state has a vital interest in the outcome of this litigation and there can be no conceivable material conflict of policies or interests if an Oregon court does what comes naturally and applies Oregon law.” Result is forum law governs and P can recover

(3) Casey v. Manson Construction Co: Issue is loss of consortium. D and accident

occurred in Wash and P is in OR (which allows loss of consortium). Issue- Which state’s law determines availability of action for loss of consortium?(a) Used 2nd restatement approach. (b) Resolution-“WA defendants should not be required to accommodate

themselves to the law of the state of residence of any traveler whom they might injure in WA; WA’s interest in the matter, which was protective of WA defendants, was paramount to OR’s interest in having its resident recover for her loss; WA’s relationship was the more significant one and WA law applied.

(4) Neumier rules(a) If you have common domicile false conflicts, then go with law of domicile for

loss allocation rules (Babcock). (b) If you have split domicile true conflicts, then if go into D’s jx, if there is a

pro-D law that should apply. If accident in pro-P jx and foreseeability is here, then apply law of pro-P. Lex loci delicti acts as tie breaker

(c) All other cases (difficult)-apply lex loci delecti b/c that comports w/ expectations.

(5) Neumeier v. Kuehner: Accident in Ontario and P from there. D is from NY. NY doesn’t have a guest statute. P is not denied recovery merely because of her status

as a gratuitous guest. Ontario has a guest statute. Host driver is immune from liability vis-à-vis his gratuitous guests except in cases of gross negligence (a) False conflict here, but approach is “Neumeier” Rules(b) Resolution: Court enunciates the Neumeier Rules. This calls for application

of Rule 3 – application of the lex loci delicti – unless it is shown that not applying that law “will advance the relevant substantive law purposes without impairing the smooth working of the multistate system or producing great uncertainty for litigants.” Escape is inapplicable here.

xi) Dépeçage & Conduct-Regulation Conflicts(1) Introduction

(a) Depecage is available in US Ct to apply to all kinds of conflicts of law approach. One area is substance vs. procedure; another area is cases of mixed K and tort case. In K case, one law may govern the performance of K and another law governs K formation.

(2) Ardoyno v. Kyzar: LA is the forum, performance of the K and where the atty/client relationship is. MS is where slanderer is, where D is. Issue is which law governs (a) availability of action for interference with contract and (b) availability of punitive damages for slander? Combined modern approach: interest analysis, Restatement 2d, comparative impairment analysis. (a) Interference with K-In LA, action for interference with contracts not

available -- protects MS D. In MS, action for interference with contract is available -- protects LA P. LA policies: To ensure “mobility of labor force” by enhancing the chances of employees to receive better employment offers from

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competing (“interfering”) employers. By not allowing an employer to sue the “interfering” employer, LA law preserves and enhances opportunities for all employees. This policy is relevant in all LA contracts (even if the individual

beneficiary of this rule is a non-Louisianan)- INTERESTED because the contract was to be performed in LA. MS policies: Protect stability of employment contracts by penalizing competing employers who interfere with such contracts. This policy is confined to MS contracts (regardless of who is

the individual who benefits from the rule)- NOT INTERESTED because the

contract was not made, nor was it to be performed, in MS> Result- False conflict. LA law applies. No action for interference with k.

(b) Punitive damages for slander-LA- Not available at the time of the statements (although made available by subsequent statute). MS-available. LA

policies- “Protect integrity of judicial system by avoiding speculative

damages” -- INTERESTED since case is before a LA court. MS policies- Deter slanderous conduct within its borders. -- INTERESTED since conduct

occurred in MS by a MS D. Result- Court resorts to Restatement Second and comparative impairment and concludes that MS has the more significant relationship and that MS interests would be more impaired if its law were not applied. MS law applies and damages are available.

(3) Hypotheticals on depecage(a) Issues-Which law governs: (a) D’s negligence; and (b) the beneficiaries of the

wrongful death action?(b) Resolution Issue (a): State A law applies. State A has legitimate reasons to

insist on adherence to its snow-tire rule and on defining the consequences of noncompliance. State B’s no-snow-tire rule is simply irrelevant with regard to driving outside its borders.

(c) Propriety of dépeçage: Dépeçage is not inappropriate here because the snow-tire rule of State A is not closely related, and perhaps not related at all, to the wrongful death rule of the same state. The application of the former rule and the non-application of the latter rule does not distort or defeat the policies of state A, nor does it disturb whatever equilibrium these two rules might establish between deterrence and compensation

(4) Padula v. Lilarn (a) NY is the forum and where Ps and D are; MA is the site of the building and

construction and where work took place. Even though this is a common domicile case, Neumerier rule doesn’t apply b/c it is a loss allocation rule rather than conduct regulation rule. This distinction could be difficult to apply. It might not easy to find out the purpose of law in a particular jx.

(b) Concurring opinion: statutory interpretation problem. The bottom line is as the comment suggests, there is dispute on feasibility to distinguish conduct regulating and loss allocating rules. Conduct regulating rule, if the conduct and injury occurred in the same state, apply the law of that state.

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(c) If conduct occurred in State A, the injury occurred in state B. State B may have interest in applying its law to protect the citizen in the state. The Ct almost always applies the law of state B.

(5) Conduct regulating rules(a) Deciding if it is loss allocating or activity-deterring is difficult. 1 of the

striking things about conduct regulation is that they are territorially dominated.

(b) If conduct-regulating rule and if conduct and injury occur in same state, then apply law of that state.

(c) If injury and conduct occur in 2 different states, this is more difficult. If standards are the same (same provisions), then does not matter-choice of law analysis will be cursory-law of place of conduct will probably apply.

(d) If conduct state has higher level duty of care on the D then place of injury state-conduct state applies b/c has bigger interest. Other state is not interested b/c conduct is in other state and not as concerned with protecting Ps. So false conflict and concerns about predictability are satisfied b/c if D is engaging in conduct in conduct state he is availing himself of its law.

(e) When state of injury has higher injury imposed on D then state of conduct-this is a true conflict. State of injury wants to protect Ps and give them greater recovery and conduct state wants to protect Ds. Conduct state will probably apply.

(f) If it is foreseeable that D engages in conduct and injury is in other state, then D is subject to higher standards of injury state

xii)Complex Litigation(1) In re Air Crash Disaster at Sioux City, IA

(a) Court dismisses IA as applicable law. Crash in IA b/c of crash landing, but fortuitous. It is lex loci delecti.

(b) Multidistrict litigation-procedural device in fed courts that consolidate cases that have common claims. Here cases were filed all over the country and fed courts consolidate them b/c they were really the same trial.

(c) Raises issues b/c fed courts sitting in diversity apply state substantive rules in which they sit, includes choice of law rules. In cases of transfer, fed court applies choice of law rules from which case came. This is to prevent forum-shopping by means of transfer and not to penalize Ps. Desirable to change forum even though P got jx over D and we do not want to hurt P. Means D cannot forum shop, but does not prevent P from forum shopping to begin with.

(d) IL is the transfer forum and interested state. United’s principal place of business, destination of flight. Plane was in CA and maintenance was there and manufactured there. OH is where engines are from. CO-crew training. NY-GE’s place of business and Missouri-McDonnell’s place of business.

(e) Wrongful death, personal injury claims vary by state here. Court minimizes difficulties in the case but assuming that when talking about punitive damages, they are conduct-regulating and therefore have to do with D, therefore nothing to do with compensation to P. This is why P’s domicile does not matter AT ALL-no interest.

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(f) Not feasible to expect United to be subject to laws of all the states and might think that laws of IL and CA are sufficient to protect those elsewhere.

(g) Court then has places of business of D and must apply choice of law rules of various states. It lumps cases together in different approaches. (i) Cases from GA, CO, IA, NY, IL-2nd restatement, (ii) CA-interest analysis and comparative impairment and (iii) PA and DC-interest analysis and restatement second.

(h) We end up only applying IL to United, CA to MD and OH law to GE. (i) Problems with this-

(i) NY has own special rules-does not really follow 2nd restatement. GA-applies old lex loci delecti rule. Court should have said that other courts decide that this is not feasible in aircraft cases and can predict GA would abandon this. District Ct could have certified to state supreme court of GA the issue and then applied it after hearing from GA SC. GA could have tried to use escape devices to avoid applying IA law-characterize issue as breach of K between GA P and United. Could also have applied renvoi and look at IA law and then shift it back to GA or IL. Might use last act rule to say injury to GA P occurred in P b/c that is where wrongful death hurt loved ones.

xiii) Party Autonomy(1) Generally

(a) This is a cornerstone of the law of contracts. Ability to choose law that governs their Ks.

(b) Under 1st restatement, this choice sometimes not followed. The issue is really to what extent can parties contract to direct a court or judge can do. Parties have a lot of freedom that governs K, as long as it is a reasonable choice. There are some limitations on party autonomy.

(2) Restatement 2nd §187(a) 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.

(b) The law of the state chosen by the parties to govern their contractual rights and duties will be applied even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either(i) 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

(ii) 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 (law that would be applicable absent a choice of law provision), would be the state of the applicable law in the absence of an effective choice of law by the parties

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(c) In the absence of a contrary indication of intention, the reference is to the local law of the state of the chosen law

(d) Almost all courts follow this, even if they do not follow the restatement in other areas. Pro-party autonomy.

(3) Nedlloyd Lines B.V. v. Superior Court(a) Dispute over whether CA or Hong Kong would apply. Choice of law clause-

“This agreement shall be governed by and construed in accordance with Hong Kong law and each party hereby irrevocably submits to the non-exclusive jurisdiction and service of process of the Hong Kong courts.” This means that Hong Kong law governs regardless of forum. Parties did not choose exclusive forum (this is why it is in CA).

(b) In CA b/c Ps want CA law b/c it will help them and Hong Kong law doesn’t. (No fiduciary duty claim under Hong Kong law).

(c) Issue: is the Choice-of-Law clause enforceable, and does it encompass all causes of action?

(d) Court uses Restatement (Second) section 187 test: (i) Is this issue within the parties’ contractual power? NO.(ii) Does HK have a “substantial relationship”? YES (P’s & another party’s

incorporation). Even if not substantial, it would be a “reasonable basis” for choosing HK law.

(iii) Does CA have a “more significant relationship” than HK? Ct. assumes YES

(iv)Does CA have a “Materially greater interest” than HK? Not addressed (v) Is the application of the chosen law (HK) “contrary to a fundamental

policy” of CA? NO(vi)Does the choice-of-law clause encompass the not purely contractual issues

such as breach of fiduciary duty? YES(e) Result is that the chosen law applies to all COAs. But, parties cannot contract

too broadly if another state would be very interested.

3)Constitutional Limitations on Choice of Lawa) Due Process and Full Faith & Credit

i) The US Constitution leaves states largely free to determine choice of law approaches within a broad constitutional perimeter

ii) Two Sources of US Constitutional Limits on Choice of Law(1) The Due Process Clause Fourteenth Amendment, Section 1 Due Process Clause

(a) “[N]or shall any State deprive any person of life, liberty, or property, without due process of law....”

(2) The Full Faith and Credit Clause Article IV, Section 1 of Full Faith and Credit(a) “Full Faith and Credit shall be given in each State to the Public Acts, Records,

and judicial Proceedings of every other state. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.

(b) 28 U.S.C. § 1738(i) “Such Acts, records and judicial proceedings or copies thereof, so

authenticated, shall have the same full faith and credit in every court

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within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory, or Possession from which they are taken.”

iii) Home Insurance Co. v. Dick(1) TX originally the forum here-now in US SC. Dick was a citizen of TX, but lived

in MX and bought insurance there. K applied when boat was in MX and there was a choice of law provision that claims had to be brought within 1 yr (MX law

governs) and TX SoL said 2 years and precludes parties from agreeing to limitations periods of less than 2 years

(2) Full faith and credit does not come into play here b/c they did not raise the issue and also b/c MX is not a state and FFCC only applies to fellow states. Also, choice of law clause to some degrees tips the scales of recognizing the choice of law made by the parties. This choice is very reasonable and the best law.

(3) Initial K was between Dick and MX insurance co; reinsurers are in NY and do business in TX. Dick moves back to TX after these events. TX’s claim to protect Dick is weak.

(4) Issue: can TX law apply to the contract even though it was neither made in TX, nor to be performed in TX?

(5) Court finds that TX law was unconstitutional in this case-TX was overreaching in applying its law to this case. Only reason TX laws or TX courts are involved is that Dick was able to sue there (n.b. he could not maintain this suit today) TX’s attempt to impose a greater obligation than that agreed upon and to seize property in payment of the imposed obligation violates the guaranty against deprivation of property without due process of law.” TX statute acts to extend the rights and obligations of the parties, rather than merely affecting a remedy attached to a right. Public policy interests cannot here overcome the due process concerns. This is not a FF&C case; it is a due process case

vii) Alaska Packers’ v. Industrial Accident Comm’n of California(1) Workers comp and choice of law provision. Employee hired in CA and PPB of

Corp is CA (employee is Mexican). Alaska is place of choice of law provision. We are not concerned with the difference between the CA and Alaska law.

(2) Issues: Does the application of CA Workers’ Compensation Law violate (a) the due process clause or (b) the full faith & credit clause of the Constitution?

(3) Resolution: No violation of due process. Contract was entered into within CA; employee was to be paid in CA; CA has interest in regulating the employer-employee relationship; difficult for employee to get back to Alaska to make claim

(4) No violation of FF&C. Inevitable that there should be conflict, but prima facie a state can apply its own law in its own courts; CA need not always give way to AK interests; AK interest is not greater in this case.(this suggests some kind of balancing is going on-court appears to have backed off this after this case). (a) There must be limit to FFCC otherwise all states would have to displace their

own laws in order to apply other state’s law. Can only apply in limited instances.

Focus Objective

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DueProcess

Contacts (is it fair to apply particular state’s law to this case?) Goal is fairness and concerned with unfair surprise

Protection for Individuals

Full Faith and Credit

Interests (are the competing states’ interested in having their laws applied?) Concerned with state interest and goal is reducing interstate friction

Respect for State Sovereignty

b) Convergence (of Due Process and Full Faith & Credit)i) Allstate v. Hague

(1) Stacking issue-widow receives 15K if Wis. Law applies, 45K if Minn law applies. Case filed in Minn. (forum). Minn SC applied Minn law. Minn has a few contacts: decedent’s place of employment, Allstate does business there and widow moves there after decedent’s death.

(2) Wis contacts: K of insurance entered into, descendent lived, accident, Allstate does business there and policy was delivered there.

(3) Court is deciding the Constitutional Q of whether Minn could apply its law given (4) Reasoning: “[F]or a State’s substantive law to be selected in a constitutionally

permissible manner, that State must have a significant contact or a significant aggregation of contacts, creating state interests, such that choice of law is neither arbitrary nor fundamentally unfair.”

(5) Minnesota’s three contacts, that, in the aggregate, according to the Plurality, permit application of Minnesota law to be constitutional:(a) Decedent was a member of the Minnesota workforce.(b) Defendant Allstate does business in Minnesota.(c) P Widow moved to Minn following the accident and prior to commencing suit

(6) How justices evaluated this case: (a) Brennan and 4 justices: contacts and interests, not arbitrary or fundamentally

unfair test. Contacts sufficient application (b) Stevens and 1 justice: Sovereignty threatened? Application arbitrary or

fundamentally unfair? Tests (2). Sovereignty & fundamental fairness not impaired application.

(c) Powell and 3 justices: Contacts & interests, not fundamentally unfair. State must have policy interest test. Contacts give rise to no legitimate interests application.

(7) Due process concern-Nationwide policy, so Ps were not limited in driving, so Allstate had some idea that other state law might apply to it. However, ordinarily place of K would govern, so Allstate might have expected Wis law. Not surprising that Minn law might apply.

(8) FFCC concern-Fact that Minn has an interest means it does not matter if Wis. has any interest or not. Court says that FFCC concerns do not matter b/c due process concerns were satisfied.

c) Conflicts Between Federal Law and Foreign Lawi) Presumption Against Extraterritoriality

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(1) Congress is presumed to legislate with an intent that laws be enforced only within territorial boundaries of the US absent a clear indication otherwise (assumption since 1930s)

ii) Charming Betsy-Courts will attempt to interpret U.S. laws to be consistent with international law, absent clear direction from Congress.(1) If Congress says it is regulating extraterritorially, court does not say Congress

can’t do this, it can -Congress not limited by international law. iii) Now we are dealing with Constitutional limits on federal govt when it attempts to

regulate extraterritorially. (1) Congress is subject to Constitution and due process clause. Due process clause

limits fed. Govt in attempt to regulate internationally, but we usually do not see courts assessing these cases re: Constitutional regulations (probably b/c of effects doctrine –suggests US interest in cases)

iv) Lauritzen v. Larsen(1) Place of K is in NY (forum), but everything else is in Denmark. (Law of K, place

of P and D, where ship is registered). Accident happened in Cuba on ship. P has tort action under US law, not under Denmark law.

(2) US Jones act: “Any seaman who shall suffer personal injury in the course of his employment may maintain an action for damages at law, and in such action all statutes of the US modifying or extending CLlaw right or remedy in cases of personal injury to railway employees shall apply.”

(3) Issue: Does the Jones Act apply to a foreign seaman injured aboard a foreign vessel while in foreign waters?

(4) Construction of the Jones Act --“The Unilateral Approach”(a) Absurdity of literal reading . If read literally, the JA would confer a US right

of action which requires nothing more than that P be seaman who suffers personal injury during the course of his employment, even in the absence of any connection with the US. It would extend US law to all alien seamen injured anywhere in the world in the service of watercraft of every nation.

(b) Judicial power to delineate reach of JA . When it wrote these all-comprehending words, Congress was relying on the experience of US courts in reconciling US and foreign interests and accommodating the reach of US laws to those of other maritime nations. Congress must have expected that in the absence of more definite directions, the JA would be applied by US courts to foreign events, foreign ships, and foreign seamen only in accordance with the usual doctrine and practices of maritime law.

(c) International Comity . By usage as old as the nation, statutes have been construed to apply only in accordance with prevalent doctrines of international law. This accords with long-heeded admonition that an Act of Congress ought never to be construed to violate the law of nations if any other possible construction remains.

(d) Court says the JONES ACT SHOULD NOT REACH THAT FAR (5) Choice of law approach -- “The Bilateral Approach”

(a) Avoid or resolve conflicts between competing laws by ascertaining and valuing points of contact between the transaction and the states or governments whose competing laws are involved. The criteria are derived

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from weighing the significance of one or more connecting factors between the shipping transaction regulated and the national interest served. . . While being mindful of the necessity for mutual forbearance to avoid retaliation.

(6) 7 factors the court uses to id the appropriate law that should apply:(a) Cuba-place of wrongful act. Court dismissed this b/c on vessel, place of

wrongful act is fortuitous and trumped by law of the flag. (b) Denmark-Law of the Flag(c) Denmark-Allegiance or domicile of injured party(d) Denmark-Allegiance of defendant shipowner(e) NY/US-Place of k (fortuitous)(f) NY/US-The law of the forum -- NY, but insufficient contacts, + choice of law

clause(g) P argues inaccessibiltiy of foreign forum –courts says this is relevant only in

forum non conviens, courts says it will apply Danish law to case, so this issue is n/a

(h) Application: Review of factors shows overwhelming preponderance in favor of Danish law. D was served process in NY and contract was signed there, but there was Danish choice of law clause, which offsets those factors. No justification for interpreting the Jones Act to intervene between foreigners and their own law because of acts on a foreign ship in foreign waters.

(7) Result-Jones Act does not apply -- Danish law applies on remandv) Restatement (Third) of the Foreign Relations Law of the United States

(1) Section 402(a) Subject to section 403, a state has jurisdiction to prescribe law with respect to:

(i) Conduct that wholly, or in substantial part, takes place within its territory (territory)

(ii) The status of persons, or interests in things, present within its territory (territory)

(iii) Conduct outside its territory that has or is intended to have substantial effect within its territory (effects doctrine /territory)1. Invoked in antitrust context. (Why SC says Hartford Fire is subject to

US laws.)2. EU opposed this for yrs.

(iv)Activities, interests, status, or relations of its nationals outside as well as within its territory (nationality/passive personality)1. I.e., France has laws that protect French citizens anywhere in the

world. Could sue in local French jx even if Frenchman was hurt in CA.(v) Certain conduct outside its territory by persons not its nationals that is

directed against the security of the state or against a limited class of other state interests (protective)

(2) Section 403(a) Even when one of the bases for jurisdiction under section 402 is present, a

state may not exercise jx to prescribe law w/r/t a person or activity having connections with another state when the exercise of such jx is unreasonable

(b) How do you tell if it is unreasonable?

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(i) Section 403(2): Whether the exercise of jurisdiction is unreasonable is determined by evaluating all relevant factors, including1. Link of the activity to the territory of the regulating state2. Connections between regulating state and person responsible for

activity being regulated3. Character of activity to be regulated; importance to regulating state4. Justified expectations5. Importance of regulation to the international political, legal, or

economic system6. Extent to which the regulation is consistent with the traditions of the

international system7. Extent to which another state may have an interest in regulating the

activity8. Likelihood of conflict with regulation by another state

(3) 403(3)-When not unreasonable for two or more states to regulate activity, but there is a conflict, each state should evaluate its own and the other state’s interest, and defer if other state’s interest is clearly greater

vi) Hartford Fire(1) CA/US is the forum, where the injury is and Ps. UK is where conduct occurs and

where Ds are. Sherman Act-makes every contract, combination, or conspiracy in unreasonable restraint of interstate or foreign commerce illegal.”(a) Construed as reaching extraterritorial behavior since the 1930s

(2) Issue: Does the Sherman Act apply to conduct in the UK which was intended to and did produce substantial effects in the US?

(3) Answer- It is well established that the Sherman Act applies to foreign conduct that was meant to produce and did in fact produce some substantial effect in the US. Here the London re-insurers engaged in unlawful conspiracies to affect the market for insurance in the US and their activities did in fact have substantial effect

(4) Does int’l comity prevent application of the Sherman Act?(a) No. Even assuming that in a proper case a court may decline to exercise its

jurisdiction on grounds of comity, this case does not present appropriate circumstances. Moreover, we address this AFTER determining whether or not the court has jx; comity does not affect the courts jurisdictional analysis.

(5) Is this a true conflict?(a) No. Fact that Britain has established a comprehensive regulatory regime to

govern the British re-insurance industry does not mean there is a true conflict. The fact that such conduct is lawful in the jurisdiction in which it takes place does not, in and of itself, bar application of US antitrust laws, even if the foreign state has a strong interest in regulating such conduct. No conflict exists, for these purposes, where a person subject to regulation can comply with the laws of both jurisdictions. Since the London re-insurers are not barred by British law from acting in compliance with US law, there is not conflict.

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(b) Souter says that reinsures could abide by both England and US law. So, no conflict, they can raise conduct to meet most stringent requirements. Result-Sherman act applies.

(6) Scalia’s Dissent(a) Congress has legislative jurisdiction to regulate foreign conduct, and has in

fact exercised it in Sherman Act cases, thus negating the first “canon of statutory construction” – i.e., the presumption against extraterritoriality.

(b) Second canon – an act of Congress ought never to be construed to violate the law of nations if any other possible construction remains” – Statutes should not be interpreted to regulate foreign persons or conduct if that regulation would conflict with principles of international law or with the limitations customarily observed by nations upon the exercise of their powers.

(c) A nation having some basis for prescriptive jurisdiction – for enacting laws that extend to certain conduct, should nonetheless refrain from exercising that jurisdiction when its exercise would be unreasonable. Here, it is unimaginable that an assertion of legislation jurisdiction by the US would be considered reasonable under international law. Scalia does not even get to weighing the US jx against English jx.

4)Choice of Law in the International Arena: European Cross-Border Regulation of Trustsa) The Hague Convention on Trusts

5)Personal (Adjudicatory) Jurisdictiona) Fundamentals of Personal Jurisdiction

i) “Adjudicatory” Jurisdiction(1) Introduction

(a) More limits assigned to personal jx than choice of law b/c forum applies its laws oftentimes.

(b) Person jx objections are waivable- if you could contest jx, and you don’t you are deemed to have waive the right. If you are a D and you appear in court, you waive right to contest personal jx unless you make a special appearance.

(c) Moved from territorial based analysis to a min. contacts analysis historically. (2) Does the court have authority to hear this dispute as against this particular

defendant?(a) In state court

(i) Breadth of state statutory grant of jx given by legislature to courts. (ii) Does state grant fall within Constitutional limits. Most say courts have jx

to extent permitted by Constitution. (often extended to limits of due process) (due process provisions of the 14th amendment)

(b) In federal court (i) Ability to exercise jx but court also have provided D notice that jx is being

asserted against them. (ii) Breadth of federal grants of jurisdiction

1. Laws provide for nationwide service of process in certain cases (antitrust-Fed court can serve process on anyone anywhere in US)

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2. Otherwise dictated by Federal Rules of Civil Procedure, which provide, inter alia, that if a D is subject to state court jurisdiction, she is also subject to the jurisdiction of a federal court in that state

(iii) Does the federal grant fall within Constitutional limits (due process provisions of the 5th amendment)

ii) Pennoyer v. Neff (1) Still good law; not the only way to exercise jx, but is one way to.(2) Classic territorial limit on exercise of jurisdiction

(a) D had to be present in the territory of the forum (presence could exist by proxy if D owned property) AND

(b) Defendant had to be served process in the territory of the forumiii) World-Wide Volkswagen

(1) Ds had to be served actual notice of suit-this is not contested here (a) (Pennoyer’s territorial limits on service relaxed – service must be reasonably

calculated to give actual notice) (2) Minimum contacts must satisfy three components (Pennoyer’s notion of actual

presence also no longer required):(a) State interests (FF&C). There is some limit of FF&C on exercise of personal

jx. Can conflict with another state’s attempt to exercise personal jx-has to do with interests of the state (is is interested in exercising jx). (i) OK had interests-hospital in OK, accident in OK, etc.

(b) Convenience requirement – reasonableness; must not offend notions of fair play and substantial justice) (due process)(i) Majority focuses of D; Dissent focuses on P and D(ii) Many times there is more than 1 forum that is convenient or available. P

can choose forum, but choice limited to where D has presence. Here D won out-there is no one place convenient for both P and D

(c) Unfair Surprise (due process)(i) Effects alone insufficient (enough for choice of law, but not for personal

jx); foreseeability insufficient; some purposeful contacts with the forum required such that D can reasonably anticipate being haled into court

b) Adjudicatory Authority in International Casesi) Asahi Metal Industry Co. v. Superior Ct. of CA

(1) Zurcher was riding his motorcycle on California highway and due to a sudden flat tire, he got into an accident which rendered him seriously injured and his wife who was the passenger was killed. Zurcher brought suit against Chen Shin Rubber Co., a Taiwanese manufacturer of the tire tube. Chen Shin in turn filed cross complaint seeking indemnification from its codefendants and Asahi Metal Industry Co. which supplied tube’s valve to Chen Shin.

(2) Asahi argued that CA could not exercise jx over it since it lacked sufficient contacts with the state. Asahi (D) did not do business in CA, nor did it import any products into CA. Instead, it sold its valve assemblies to Cheng Shin and the valve assemblies were shipped to Taiwan. Asahi (D) claimed that it had never contemplated that it might be subject to suit in CA b/c of sales to Cheng Shin in Taiwan but Cheng Shin claimed that Asahi (D) definitely knew that its products were being sold in CA. Ashai is a Japan based company. Chen Shin was one of

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Ashai’s customers and the sale of valves took place in Taiwan. Chen Shin claims that Ashai knew that by placing its products in the stream of commerce, some of these products will end up in CA.

(3) Part II.A (Plurality)(a) Purposeful Availment

(i) Predictability-permit Ds to shape their conduct. But there is also a relatively loose requirement and not a strict test. Concerned with limiting knowledge.

(ii) Reasonableness (quid pro quo)(b) Minimum contacts must be based on the deliberate acts of the D – “an action

of the defendant purposefully directed toward the forum state”(c) Stream of commerce (foreseeability) insufficient; knowledge is insufficient;

intent is required(4) Part II.B (Majority)

(a) Traditional notions of fair play and substantial justice(i) Burden on the defendant (dragged halfway round the world)(ii) Interests of the forum state (minimal; this is merely an indemnity action,

nothing to do with giving redress to P)(iii) Plaintiff’s interest in obtaining relief (Cheng Shin may want relief,

but does it need to get it in California? – remedy available in Japan or Taiwan)

(iv)Interstate judicial system’s interest in obtaining the most efficient resolution of controversies (litigation between foreign corporations better pursued in their home court(s)

ii) Post Asahi Test for jx(1) Need

(a) A State interest(b) That litigating in the forum is not unduly inconvenient or unreasonable and(c) Purposeful availment(?)

iii) Due Process(1) Specific Jurisdiction – Permissible if nonresident corporate defendant has “certain

minimum contacts with forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Controversy “arises out of” or is “related to” the defendant’s contacts with the forum

(2) General Jurisdiction – Continuous and systematic general business contacts(a) Analogy to personal domicile or residence(b) Justification?

(i) Assumption of fairness to defendant?(ii) State’s regulatory ability?(iii) Need to have at least one forum?

iv) Helicopteros Nacionales de Colombia, S.A. v. Hall(1) Joint venture doing business in Peru, but based in TX, signs K with Columbian

company. Columbian company has limited contacts with TX (purchase of helicopters, related training trips, payments from TX banks).

(2) Close to getting general jx, but majority dismisses specific jx. Majority says P did not plead specific jx and that is why it is not in front of them.

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(3) One of COA is negligence on part of pilot, and pilot is trained in TX-so it would seem that TX is interested.

(4) Specific Jx(a) No. Parties stipulate insufficiency of contacts

(5) General Jx – Continuous and systematic general business contacts(a) Helicol CEO trip to Houston(b) Checks drawn on Texas bank(c) Purchase of Bell Helicopters and related training trips

(i) More important for specific jurisdiction?(6) Dissent says it could have been specific jx b/c of negligence claim. (7) jx of necessity-P ought to have some forum. So a US court, even if it does not

have personal jx might exercise jx if there is no other court that P can get relief. Most courts are reluctant to embrace this notion.

v) Due Process(1) Concerns:

(a) Fairness to defendant(i) Predictability(ii) Risk assessment(iii) Quid pro quo (is business receiving benefits from state?)(iv)Large quantum of unrelated contacts or fewer strongly related contacts

(b) Interest of state (i) Regulatory function (Specific Jx)

1. Territorial2. Effects-based

(ii) Exercise of authority over members of political community (General Jx)(2) Lower courts like Brennan dissent from Helicopteros and are inclined to exercise

jxc) Adjudicatory Authority in Other Countries-Comparative Adjudicatory Jx

i) In US -- Due Process is core issue(1) Concerns:

(a) Fairness to defendant(i) Predictability(ii) Risk assessment(iii) Quid pro quo (is business receiving benefits from state?)(iv)Large quantum of unrelated contacts or fewer strongly related contacts

(b) Interest of state (i) Regulatory function (Specific Jx)

1. Territorial2. Effects-based

(ii) Exercise of authority over members of political community (General Jx)(2) Comparative Jurisdiction

(a) General Jurisdiction – courts have power to adjudicate virtually any kind of dispute(i) Direct

1. physical presence2. doing business

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3. Incorporation4. habitual residence5. Domicile

(ii) Indirect 1. Ownership of local property

(b) Specific Jurisdiction – courts have power only over controversies deriving from, or closely related to, the circumstances relied on to establish jurisdiction in the forum

(c) Category-specific jurisdiction – general in the sense that claims to be litigated need not be linked, as under specific jurisdiction, but specific in that the jurisdiction extends only to certain subjects(i) E.g. German Code of Civil Procedure Rule 29, which says that a court in

the place of performance has jurisdiction over all matters relating to the contract (including contract formation)

(d) Universal Jurisdiction – inherent duty to exercise jurisdiction in certain matters – e.g. torture, genocide

ii) Examples of Jurisdictional Bases(1) Nationality of the plaintiff – art. 14 of the French Civil Code:

(a) “An alien, even one not residing in France, may be summoned before the French courts for the fulfillment of obligations contracted by him in France with a French person; he may be brought before the French courts for obligations contracted by him in a foreign country toward French people.”

(b) N.b. French law also provides that any French national can be sued in France, regardless of where the obligation arose and regardless of where the French national lives. In theory, but subject to exceptions, French law also says this jurisdiction is exclusive.

(2) Unlimited jurisdiction on the local presence of property – German Code of Civil Procedure Section 23 (also Japan, Austria & Belgium)(a) Applies to tangible or intangible property; applies to movables and

immovables. No limitation in value of judgment to be given(3) Service of Process confers jurisdiction

(a) for Ds within England, jx is perfected by service of process within territory (tag jx)

(b) For Ds outside England, service may be performed out of the jx with the permission of the court (under Rule 6.20) if:(i) A claim is made against a person domiciled in the jurisdiction (ii) A claim is made for an injunction ordering the defendant to do or refrain

from doing an act within the jurisdiction(iii) A claim is made against someone on whom the claim form has

been or will be served and1. There is between the claimant and that person a real issue which it is

reasonable for the court to try and2. The claimant wishes to serve the claim form on another person who is

a necessary or proper party to that claim(c) A claim is made in respect of a contract where the contract:

(i) Was made within the jurisdiction

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(ii) Was made by or through an agent trading or residing within the jx(iii) Is governed by English law (or)(iv)Contains a forum-selection clause(v) A claim is made in respect of a breach of contract committed within the

jurisdictioniii) Brussels Regulation (formerly Brussels Convention)

(1) Double” Convention(a) Addresses Jurisdiction & Recognition and Enforcement of Judgments

(2) Jurisdiction(a) General Bases

(i) Domicile(b) Specific Bases, e.g.,

(i) Contract – place of performance(ii) Tort – place of injury

(3) NOT “Exorbitant” Bases(a) French Civil Code art. 14, English “tag” jurisdiction, Quasi-in-rem

jurisdictiond) Jurisdiction based on Property-quasi in-rem jx

i) Definitions (1) In personam-jx over person based on personal contacts/relationship with forum(2) In rem – jurisdiction over property within the forum to adjudicate rights related to

the property(3) Quasi-in-rem – jurisdiction over property as a ruse to permit the exercise of

jurisdiction over the personii) Quasi-in-rem Jurisdiction in the United States

(1) Property within the forum is sufficient to establish jurisdiction if the property is attached at the commencement of the proceeding

(2) Jurisdiction is limited – the court can only give a judgment up to the value of the property

iii) Old Rule: Harris v. Balk (1905)(1) Harris owes Balk money (property is Harris’s debt to Balk)(2) Balk owes Epstein money(3) Epstein serves Harris in Maryland, thereby attaching Balk’s property; Balk is

subject to the jurisdiction of the Maryland court because Balk’s property had been attached (does not want Harris himself, he wants Balk’s property)

(4) Property within forums is enough to establish jx if property is attached at start of proceeding. Limited to the value of the property attached.

iv) Shaffer v. Heitner(1) Heitner sues in Delaware: Greyhound Corp., Greyhound Lines, 28 present or

former officers of one or both corporations (2) Heitner files motion to sequester property of non-residents amounting to 82,000

shares of Greyhound common stock and some stock options. 19 Defendants owned stock. 2 Defendants owned options

(3) According to DE law, DE is the situs of all stock in a DE corporation. Q is whether Heitner can use ownership of DE stock as excuse to haul Ds in court to DE? Can only get 21 of Ds on basis b/c 7 of Ds don’t own any stock.

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(4) Court says International Shoe standard of “fair play and substantial justice” governs proceedings in rem as well as proceedings in personam(a) Jx over a thing is the same as saying jx over the interests of persons in a thing(b) Jurisdiction over property in the forum when the property itself is the source

of the litigation will (nearly) always satisfy those standards(c) When the only role of the property is to provide the basis for bringing the

defendant into court, the standards might not be satisfied.“We therefore conclude that all assertions of state-court jx must be evaluated according to the standards set forth in International Shoe and its progeny.”

(5) Concurrences of Powell and Stevens suggest that history/tradition goes some way towards answering the fair play inquiry(a) DE has not by statute said that directors/officers are subject to DE jx. Could

DE pass statute that says this? Yes, they did pass this statute 2 wks later. Choice of law analysis differs from exercise of personal jx. DE law can apply to internal affairs doctrine. But, does this mean you are subject to suit in DE for any matter relating to corp.? Not enough for DE legislature to pass law that says they have jx over officers, they still must satisfy International Shoe standards. Q is if min. contacts are enough-this is a separate Q.

(6) Brennan’s concurrence/dissent(a) Minimum contacts analysis should apply, and should suffice here because:

(i) DE has a substantial interest in providing redress for victims of corporate misconduct

(ii) Jx should be read expansively if state has a manifest regulatory interest(iii) Dx has an interest in overseeing the affairs of a Delaware

corporation(iv)DE law should apply; reasonable to have it applied by a Delaware court(v) The fact that the shareholders have taken on responsibilities governed by

Delaware law goes some way towards informing them that they are likely subject to the jurisdiction of Delaware courts

e) Transient Jurisdictioni) Burnham v. Superior Court

(1) Burnham is served with process in SF when visiting his children. CA court exercises jurisdiction over him based on this service of process (“tag” jx)

(2) Issue: Does the assertion of jx by means of service of process over a person physically present in the forum violate “traditional notions of fair play and substantial justice”?

(3) Scalia Plurality: Was “tag” jurisdiction recognized in 1868, when the 14th Amendment was adopted? Yes. Has it been recognized/applied since then? Yes. It must be consistent with due process (even if one looks to “contemporary standards” as espoused by Justice Brennan). Moreover, its traditional nature gives rise to the expectation of Ds that they can be served if within the state; thus, it comports with any fairness concerns. Addition of International Shoe inquiry broadens the ways in which jurisdiction can be asserted from the limited territorial ground of Pennoyer, but it does not limit Pennoyer. Shaffer v. Heitner dealt with absent defendants; thus, applying fair play and substantial justice notions to see whether they could be brought within the forum was warranted

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(4) Brennan concurrence: Tradition is not the only factor court should consider in considering whether the assertion of jx is consistent with due process. Tradition is important in that it gives Ds notice that voluntary presence in the forum will make him subject to suit there. Transient D avail themselves of benefits of the forum state by visiting: health and safety benefits guaranteed by police, fire, and emergency medical services, travel on state’s roads and waterways, fruits of the state’s economy, and has the right to file a suit in the state; thus should be obliged to defend. Burdens on Ds are slight given modern transport and communications

ii) Consent as a basis for Jurisdiction(1) A defendant can waive an objection to personal jurisdiction(2) A defendant can choose a forum (effectively consenting to the forum’s

jurisdiction) in a choice-of-forum clause (a) A choice-of-forum clause can also oust a court of jurisdiction by providing for

only one forum to hear the case

PERSONAL JURISDICTION CHOICE OF LAW

Concerned with Defendant’s Contacts Concerned with all Contacts

Concerned with state’s reason for asserting power

Concerned with State Sovereignty & interstate relations

Post-Occurrence Events Fully Relevant Post-Occurrence Events may be Relevant

f) Service of Process & Forum Selection Clauses in Transnational Controversiesi) Why serve process?

(1) Effectuates formal assertion of the authority of the court(2) Serves notice to the defendant that her rights are the issue of a court proceeding

(a) Separate from assertion of authority in the court. In civil law countries, this distinction is more complicated (civil law countries do not allow informal, service of process by mail, etc.)

ii) Letters Rogatory(1) Plaintiff requests court in State A to prepare an initiating document(2) Document is sent to federal state department in State A(3) Document is transmitted to state department in State B(4) State B state department transmits document justice department(5) Justice department transmits document to the court in the area where defendant is

believed to be(6) Court serves process in accordance with law of state B(7) Above happens in reverse(8) May still have to do this with countries that did not join the Hague Convention.

iii) Hague Convention on Service of Process-limited to civil and commercial matters(1) Necessary b/c process without it was not good. Before, service of process abroad

meant that they had to use letters rogatory. (2) Streamlines and simplifies process

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(3) Each State party designates a Central Authority, which serves process in accordance with the law of that State(a) Court in State A transmits documents to the Central Authority in State B(b) Central Authority serves process in accordance with the law of State B(c) Central Authority transmits certificate of service to court in State A

(4) Volkswagenwerk AG v. Schlunk(a) P first files a wrongful death action against VWoA. They then refile and re-

serve VWoA on behalf of VWAG. Schlunk serves Volkswagen AG through its wholly-owned subsidiary, Volkswagen of America

(b) Lower court finds that VWoA is agent of VWAG. Thus, service is proper. But, VWAG invokes the Hague Convention – if is applies, it is the exclusive means for serving process. P did not serve under convention and so if it applies, the service is not proper and D should win.

(c) Hague Convention language: The Convention shall apply in all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extra-judicial document for service abroad.

(d) Was there occasion to transmit a judicial document abroad?(i) Convention does not answer this Q, so court say must look to forum law. (ii) Whose law governs this question?

1. US SC says forum law-Illinois long arm statute said substituted service is ok, therefore, no occasion to transmit service abroad and therefore service was ok.

(iii) convention wanted to outlaw notification au parquet, with is very similar to this, which seems to say that this outcome is not what was desired by convention

(iv)SC says that internal law was not talked about, so it is allowed. Appears unlikely that drafters of convention meant the internal law of the forum could dictate when service abroad is required

(v) Hague convention cannot be used as tag jx, it’s only about notice; service under convention does not establish jx- you need separate jx basis.

(e) Hague convention preempts state law when it applies. If you let state law say when it applies, then you undercut effectiveness of the convention.

(f) Service of process by mail under convention(i) States that object to service by mail cannot be served this way and satisfy

terms of convention, but this does not stop you from doing this. If company does not object and there is a default judgment against them, then this judgment would not be enforceable in that country. US would enforce this judgment.

(5) Forum selection agreements(a) In international cases, forum selection clauses are ok and are exclusive. W/r/t/

domestic forum selection agreements, there is more reluctance to assume they are exclusive, but this is waning.

(b) Concern is if parties are negotiating on equal footing. If parties did not have equal footing and clause seems unreasonable, court can police and strike down the forum Ks.

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6)Recognition & Enforcement of Judgmentsa) Res Judicata & Basic Principles

i) Res Judicata (Claim Preclusion)(1) Identity of both parties (or privity)(2) Identity of cause of action(3) Can include claims not actually brought but which could have been brought

(compulsory joinder)ii) Collateral Estoppel (Issue Preclusion)

(1) Identity of party against whom prior judgment is sought to be sued must be the same in both proceedings

(2) Issue must have been:(a) Litigated by the parties(b) Determined by the tribunal(c) Essential to judgment of the tribunal

iii) “Full Faith and Credit shall be given in each State to the Public Acts, Records, and judicial Proceedings of every other state. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.” United States Constitution, Article IV, Section 1

iv) “Such Acts, records and judicial proceedings or copies thereof, so authenticated, shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory, or Possession from which they are taken.” 28 U.S.C. § 1738(1) Have FFCC for efficiency and finality. Some concerns that there are problems

with justice-if first court got it wrong then justice is hurt in favor of finality, but Constitution says FFCC is right.

(2) USC 1738 goes farther than Constitution b/c Constitution does not say anything about state court judgments and federal courts. USC says state judgments will be given effect by federal courts.

(3) Congress has not said if state courts must give FFCC to federal courts, but it assumed.

v) Enforcement of judgment(1) If losing party does not have assets in F1 then P must go to F2, and must convert

F1 judgment to F2 judgment b/c F2 is limited. FFCC helps b/c F1 judgment is taken to F2 and it is reduced to an F2 judgment. Uniform foreign judgment recognition act allows P to get F2 judgment and get $.

vi) Fauntleroy v. Lum(1) In Miss. dealing in futures was illegal at this time. Contracting parties made future

contract and it was unenforceable in Miss and knew it was illegal. They made it subject to arbitration as well.

(2) Missouri court upheld arbitrator award and turned it into judgment. So they had judgment for P from Missouri court. D tried to argue that Miss. law should govern. Missouri court got it wrong and should not have upheld arbitrator award. Ps then take award to Miss and Miss. SC will not order enforcement of Missouri court order for Ps.

(3) US SC reversed the Mississippi SC and held that the Mississippi SC was required to give full faith and credit to the Missouri judgment.

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(4) . This is iron law of FFCCvii) Yarborough v. Yarborough

(1) Child support K. 2 courts (GA and SC) marital domicile is GA and father in GA. Child in SC after divorce and GA court entered non-modifiable support order of $1750. SC ordered additional $50 a month in child support. F1 judgment said 1750 is entire judgment and SC orders 2nd judgment.

(2) US SC must resolve as to whether SC court can ignore GA order. SC said they could not ignore judgment. Fact that there was a final decree meant GA order was non-modifiable and had to be given effect. One state’s judgment can preclude another state from ordering support for a child domiciled there

(3) If you are going to try to challenge final order of a court, must do it directly, cannot do it by means of collateral attack as between states.

(4) “[F]or a State’s substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or a significant aggregation of contacts, creating state interests, such that choice of law is neither arbitrary nor fundamentally unfair.” Allstate v. Hague

viii) Congressional action to determine FFCC in special circumstances(1) 1980-1738A: F2 must give effect to child custody agreement of F1. This interacts

with state laws. (2) 1994-1738B Child support: state must give FFCC to child support decree in a

state that has adopted the uniform family act which says there shall only be one jx that controls child’s support order. Also, all child support decrees are modifiable now.

(3) 1996-1738C Same Sex marriage (DOMA)-says that no state is required to give effect to any proceeding of any other state respecting a relationship between persons of the same sex. (a) Permissive language. Purports to amend FFCC. This is unnecessary b/c it is

not a court judgment, so FFCC does not apply in the same way. Marriages have always been treated as choice of law issue. States do not have to give effect to other state’s marriages, but generally states have recognized marriages from other states.

b) Full Faith and Credit Foreclosure of Jurisdictional Issues (Preclusion)i) Durfee v. Duke-

(1) F-1: Nebraska SC held b/c the change in the course of the river was the result of avulsion, the boundary remained the same and the land was in Nebraska.

(2) F-2: Fed. Ct of Appeals, on appeal from an action brought in Fed. DC in Missouri, held that FFCC did not preclude Missouri Ct from examining whether the Nebraska decision was invalid because of lack of subject matter jx.

ii) Treinies v. Sunshine Mining Co.(1) F-1: Washington Probate Court-Pelkes is the Owner(2) F-2: Idaho SC-Wash judgment is invalid for lack of jx, Mason is the owner(3) F-3: Idaho Federal Court Interpleader-Mason is the owner because F-3 is required

to give Full Faith and Credit to the Judgment of F-2(4) Restatement (2nd) of Judgments §15: Inconsistent Judgments. When in 2 actions

inconsistent final judgments are rendered, it is the later, not the earlier, judgment that is accorded conclusive effect in a third action under the rules of res judicata.

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Issue FullyLitigated

Appeared but Did Not Litigate the Issue

Did Not Appear

PersonalJurisdiction

If bound in F-1, bound in F-2. Usually bound.Baldwin

Appearance in F-1 usually a waiver. If bound in F-1, bound in F-2.

Cannot be bound in F-1 because of due process. Not bound in F-2.

Subject MatterJurisdiction

If bound in F-1, bound in F-2. Usually bound. Durfee

If bound in F-1, bound in F-2. Usually bound. Underwriters, Chicot

If bound in F-1, bound in F-2. Depends on Circumstances

iii) Section 1738 requires that judgments in F-1 be given the same effect in F-2 as they have in F-1. Is there an exception to that command if:(1) F-1 misinterprets the law of F-2 (Fauntleroy)? [No](2) The F-1 decision is made at a time at which the significant future interests of F-2

are unknown (Yarborough)? [No, but legislative override](3) The F-1 decision is rendered without personal jurisdiction? [Yes, but not if

waived or fully and fairly litigated](4) The F-1 decision is rendered without subject matter jurisdiction (Durfee)? [Yes,

but not if fully and fairly litigated (and probably not if waived/ignored)](5) The F-1 judgment failed to give full faith and credit to a previous judgment

(Treinies)? [No-no exception]c) Federal/State Recognition of Judgments

i) Generally (1) FF&C of the Constitution and 28 USC § 1738 apply to recognition of STATE

court judgments (does not say anything about federal courts giving effect to other federal courts or state courts giving effect to federal courts)

(2) What about recognition of FEDERAL court judgments?(a) Federal Court judgments are also entitled to preclusive effect(b) Article III & Supremacy Clause

(i) Erie v. Tompkins-established that there is no federal CL of procedure in diversity cases. Designed to prevent forum shopping. Federal court sitting in diversity should be virtually the same as state court in same jx. Same substantive law applies-state in which is sits is the law that applies. Fed. Rules of Civ Pro. govern procedure. Problem is that is not always easy to tell what is substantive and what is procedure.

ii) Semtek v. Lockheed(1) Court grapples with issue preclusion b/c it is not really dealt with in federal rules-

must ask if state laws fill in gap when the federal CL does not answer the Q. (2) Fed. court sitting in diversity here. Issue is what law determines the preclusive

effect of a CA federal DC judgment in a later Maryland state court proceeding?(3) Court says: Federal CL governs the claim preclusion effect of a dismissal by a

federal court sitting in diversity. Federal CL incorporates by reference the law of the state in which the federal court is sitting; CA’s claim preclusion rules apply

(4) Problem with the case is discussion of 41(b) is not persuasive. Scalia does not want 41(b) to be claim preclusion rule. Fact that a claim is dismissed on merits

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might or might not mean it should have preclusive effect. Interpretation of 41(b) goes against usual interpretation.

(5) Also, fact that a MD court is going to treat a federal decision differently than it would have treated a state decision b/c of the way SoL have been treated is a problem. SoL determinations are exception to FFCC. SoL are procedural and not substantive and justified by idea that SoL prevents remedy. But does not eliminate underlying right. (a) So if CA has 2 yr. SoL, MD can say has 3 yr SoL and can give remedy

regardless of what CA court would do. (6) Better result:

(a) MD court would give the fed. court the same treatment it would have accorded a judgment by a state court in jx in which the fed. court was sitting.

(b) Maryland’s statute of limitations would thus be applicable(i) Reflection of the treatment of SoL as procedural under choice of law rules

and thus governed by the law of the forumiii) Marrese v. American Acad. Orthopaedic Surgeons

(1) Federal court is trying to decide what preclusive effect to give to state court’s judgment and what rules govern the preclusive effect. State court dismisses case for failure to state a claim on which relief can be granted

(2) P re-files in federal court a claim based on the Sherman Act, which could not have been filed in state court (fed courts have exclusive jx over Sherman)

(3) What rules govern the preclusive effect of the state court’s judgment? How broadly does the state court’s judgment reach? Re-filed claim could not have been filed in state court.

(4) S. Court says federal court should use state preclusion rules. Yet no Illinois court will ever rule whether a federal antitrust action should be barred by a prior state court proceeding. IL does have state antitrust law and Ds argue they could have brought state antitrust COA in state ct.

(5) Fed. DC (on remand) goes with Restatement rule, which says state proceedings do not bar subsequent lawsuits within the exclusive jx of the fed. courts

7)Recognition of Foreign Country Judgmentsa) Comity & Codification

i) Generally (1) No FFCC here-does not apply to International judgments and §1738 does not

apply and Congress has never adopted a law that dictates recognition and enforcements of international courts.

(2) We use CL and a web of statutes (Uniform Enforcement of Foreign $ Judgment Acts, etc.) States adopted the uniform act, but not uniformly.

(3) Res judicata (what preclusive effect does judgment of foreign nation have?) (4) Collateral estoppel (Issue preclusion-if foreign court decided some issue, need a

US court give effect to that determination?)(5) Formality preceding enforcement (exequatur)

ii) Rationale for Enforcement of Foreign Judgments(1) Desirability of end to litigation(2) Creation of vested rights

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(3) Obligations that merit support(4) Comity-trying to give effect of interests of individual and obligation imposed by

foreign court, etc. iii) Rationale Against Enforcement of Foreign Judgments

(1) General distrust of other courts (especially if winning party is local to F1, and the losing party is local to F2)

(2) Public policy concerns(3) Reciprocity

i) Hilton v. Guyot(1) NY citizens doing business in France. Sued it France. Appears and loses-owe

French man $. P comes to NY and tries to get $. (2) SC takes a middle ground-recognition and enforcement should not be automatic,

but should be available. (3) Recognition & Enforcement should be granted if:

(a) Full & fair trial abroad(b) Court of competent jurisdiction(c) Trial conducted in accordance with regular proceedings(d) Notice of lawsuit given to defendant(e) System of jurisprudence likely to secure fair result(f) No prejudice in the court(g) No prejudice in system of laws(h) No fraud in procuring the judgment(i) No other special reason militates against enforcement(j) F1 court would recognize F2 court’s judgment (Reciprocity)-most states have

done away with this. Hiltons ended up winning here b/c of the reciprocity Q.ii) Uniform Foreign Money-Judgments Recognition Act

(1) Applies in 31 states (but sometimes ratifications departed significantly from the text of the uniform act)(a) Final judgments(b) Money judgments only (no injunctions) (c) Enforceable as if a judgment of a sister state(d) Unless an exception applies

(2) 4(a) mandatory non-recognition): A foreign judgment is not conclusive if:(a) The judgment was rendered under a system which does not provide impartial

tribunals or procedures compatible with the requirements of due process of law

(b) The foreign court did not have personal jurisdiction over the defendant(c) The foreign court did not have jurisdiction over the subject matter

(3) 4(b) (discretionary non-recognition)-A foreign judgment need not be recognized if:(a) Defendant in the proceedings did not receive notice of the proceedings in

sufficient time to enable him to defend(b) The judgment was obtained by fraud(c) The cause of action is repugnant to the public policy of F2(d) The judgment conflicts with another final and conclusive judgment

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(e) The proceeding in the foreign court was contrary to agreement of the parties to resolve the dispute elsewhere

(f) In a “tag” jurisdiction case, the foreign court was a seriously inconvenient forum for trial of the action (UFMJRA was written before Burnham)

(4) Personal jurisdiction – judgment shall not be refused enforcement if the D:(a) Was served personally in the foreign state(b) Voluntarily appeared, other than to protect property seized or to object to

jurisdiction(c) Had previously agreed to submit to the jurisdiction of the foreign court(d) Was domiciled in the foreign state(e) Had a business office in the foreign state and the proceedings arose out of that

business(f) Operated a motor vehicle or airplane in the state and the claim arose out of

such operation(g) was subject to the personal jurisdiction of the court on other grounds

recognized by the enforcing statei) ALI Judgments Project

(1) If judgment debtor challenges the jurisdiction of the rendering court:(a) Findings of fact pertinent to the jurisdiction of the rendering court are

conclusive in the proceeding in the United States (like sister state judgments)(b) Legal determinations are conclusive in the proceedings in US as to the jx of

the rendering court under the law of that state(c) But the judgment debtor may show that recognition or enforcement is

unacceptable because jx was unacceptable under other standards (e.g. U.S. Constitutional standards).

b) Other Countries’ approaches to recognition & the Question of Jurisdictioni) Brussels Regulation (formerly Brussels & Lugano Conventions)

(1) Double Convention(a) Jurisdiction(b) Judgments

(2) For domiciliaries of States Parties to the Convention, jx can be exercised only on limited grounds, excluding “exorbitant” bases of jx (have more protection)

(3) For non-domiciliaries, jurisdiction can be exercised pursuant to a State’s regular criteria, including “exorbitant” bases (a) i.e. tag jx in UK, jx under French civil code re: injury to French national and

quasi in rem jx in Germany over possessions as proxy for you(4) All judgments of States Parties are enforceable in every other State Party

regardless of the jurisdictional basis employed(a) If I go to UK and served with process, suffer judgment there, judgment is

enforceable in any place party to convention. ii) Hilton v. Guyot

(1) Hilton and Libbey argued that they were compelled to appear before the French court to defend their property. Jx over them thus was not proper & ensuring judgment should not be recognized

(2) U.S. S. Ct. – Defendants had a storehouse and an agent in Paris, and were accustomed to purchase large quantities of goods there

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(a) They were thus subject to the jurisdiction of the French courtsiii) Nippon Emo-Trans Co., Ltd. v. Emo-Trans, Inc.

(1) EDNY (diversity) – governed by NY law, including NY conflicts principles. NET filed an action in Japan. Japanese court found it had jurisdiction over ETI, conducted a trial, and awarded damages against ETI. ETI participated in the trial

(2) NET came to NY to enforce the judgment. ETI challenged the Japanese court’s decision on the ground that it lacked jurisdiction. ETI voluntarily appeared in Tokyo by litigating the case and thus waived opportunity to object. Question of voluntariness is judged by F2 (NY) standards

(3) Under those standards appearance was voluntary(a) (EDNY doesn’t really like this outcome, but thinks it is dictated by the text of

the statute)(4) However, even if one were to revisit the Tokyo court’s assertion of jx, ETI would

lose b/c assertion of jx was ok, albeit not on the grounds asserted by Tokyo court(a) D’s duty to remit payments to NET is an obligation to be performed in Japan(b) Presence of ETI’s affiliate in Japan, which assisted in defending the lawsuit

(5) Despite general approval of preclusive effect afforded to foreign judgments, it is okay to revisit that court’s determination that it had jurisdiction

(6) Exercise of jurisdiction measured against NY standards(a) NY Long-arm statute(b) US Constitution (due process)

(7) ETI “did business” in Japan sufficient to support jurisdiction measured against both criteria. EDNY thus upheld exercise of jurisdiction by the Tokyo court

iv) How do we judge foreign court’s jx?(1) In foreign jx matters, usually the court applies its own standards (i.e. this case

applies NY law) (2) In sister state judgments, courts answer Q under standards of rendering state.

c) Procedural Fairness i) Hilton v. Guyot

(1) D argued that court’s judgment was not entitled to recognition b/c it violated due process (not subject to x-exam and docs submitted as evidence would not be allowed in US)

(2) Court did not compare French and US procedures. They said mere fact there were differences was not enough to impeach the judgment. Courts in US reviewing judgments from foreign states are not meant to be like appeals court (they don’t have all info/record to review in total).

(3) D argued that decisions by French court were based on false statements. If it is a fraud allegation that could have been raised in foreign court, then make argument before foreign court, otherwise you lose this argument. Only way fraud could be grounds for second guessing judgment is if you did not and could not have known about fraud.

(4) Full & fair trial abroad(5) Trial conducted in accordance with regular proceedings(6) Notice of lawsuit given to defendant(7) System of jurisprudence likely to secure fair result

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(8) No prejudice in the court, No prejudice in system of laws, No fraud in procuring the judgment, No other special reason militates against enforcement

ii) Cooley v. Weinberger(1) Issue-can wife who killed her husband get Social Security benefits?

(a) Yes, if killing was not a “felonious and intentional homicide”(b) No, if killing was a felonious and intentional homicide

(2) Cooley killed her H in Iran, where she was convicted of having committed “willful homicide”. Court finds that D’s arguments do not show that Iran’s system is totally inadequate, nor does she show that she herself did not get a fare trial there.

(3) Cooley’s arguments: Conviction obtained by methods that did not comport with due process and were so shocking in nature that they should not be recognized by the courts of the United States. She was:(a) Not allowed to consult with her attorney(b) Not advised of her rights (no “Miranda”)(c) Denied the right to post bail(d) Never indicted(e) Not given the right to cross-examine witnesses(f) Not proven guilty “beyond a reasonable doubt”(g) She also submitted evidence that she was not treated well.

iii) Bank Melli Iran v. Pahlavi (1) California Code §§ 1713-1713.8-Recognition and enforcement prohibited when

rendered by a court in violation of due process(2) Banks attempt to enforce civil (default) judgments worth $32,000,000.(3) Pahlavi’s Defense: Iranian judgments given in a manner that did not accord with

basics of due process(a) Specifics of Process Accorded:

(i) Service by publication in Iran(ii) Default judgments rendered on promissory notes(iii) Not much evidence to show there was anything wrong with these

proceedings as such (no allegation that she lacked actual notice, for example)

(4) Did Pahlavi show that she did not/could not get due process in Iran?(a) Pahlavi’s evidence:

(i) Consular information sheets re anti-American sentiment and problems for dual nationals

(ii) Iran is state sponsor of terrorism(b) Court ruled in her favor and did not recognize judgment. Court’s evidence

(i) Trials rarely held in public and are highly politicized(ii) Judges are not independent(iii) US claimants have little expectation of justice(iv)Atty are discouraged from representing politically charged D

(5) Judicial estoppel argument: Pahlavi argued forum non conveniens in another unrelated case on the grounds that Iran was the appropriate forum. Here she argues that Iran is completely unsuitable forum

d) Substantive Defenses & the Hague Choice of Courts Convention

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i) Bachchan v. India Abroad Pubs Inc.(1) Indian national institutes proceedings against a New York publisher seeking

recognition of an English judgment rendered against the publisher for having published an article defaming Bachchan

(2) Plaintiff in UK & NY – Bachchan (defamed Indian national). Defendant in UK & NY – Indian Abroad Inc (U.S.) – NY news operator & publisher

(3) India Abroad (NY): D’s New York newspaper. India Abroad (UK): D’s English subsidiary. India Abroad (London): London newspaper published by IAUK. Dagens Nyjeter (Sweden): newspaper that initially published story defamatory to plaintiff (settled case & apologized)

(4) Was the “COA on which judgment was based” contrary to public policy of NY?(a) D argued that it was imposed without the safeguards for freedom of speech

and the press required by the 1st Amendment to the US Constitution and the NY Constitution

(b) P argued (1) Causes of action in libel are cognizable by the law of NY and thus not contrary to public policy and (2) even if court is looking to the judgment, rather than to the cause of action, NY should recognize the judgment given the common antecedents of the law of Great Britain & NY

(5) English libel law: Any published statement that adversely affects a person’s reputation is prima facie defamatory. P’s burden is to establish that :(a) The words complained-of refer to them(b) They were published by the D; and(c) They bear a defamatory meaning(d) There is no distinction between private persons and public figures. None are

required to prove falsity of the libel or liable. None have to prove the media D intentionally or negligently disregarded proper journalistic standards

(6) US libel law: Public figures have to surmount a much higher barrier to recover damages from a media D. Even private figures (likely the case here) bear the burden of showing (a) Falsity, as well as (b) Fault.(c) Placing burden of proof on media Ds is unconstitutional because fear of

liability may deter such speech. NY’s standard for liability in actions brought by private persons against the press in a matter of public concern must establish, by a preponderance of the evidence, that the publisher acted in a grossly irresponsible manner

(7) Enforcing a judgment from abroad would have a chilling effect on media Ds in violation of the US Constitution. P was not required to show that the media D was at fault, thereby failing to meet US Constitutional standards and NY standards

ii) Hague Choice of Courts Convention(1) Remnant of the aspired-to Convention on the Recognition & Enforcement of

Judgments(2) Limited to

(a) business-to-business (b) transnational contracts (c) that include a forum-selection clause

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(3) Court chosen by the parties in an exclusive choice-of-court agreement has jurisdiction

(4) Other courts must decline to hear the case(5) A judgment derived from the court with exclusive jurisdiction must be recognized

and enforced in the courts of other contracting States(6) These obligations are subject to familiar exceptions, such as public policy; also

excludes punitive or exemplary damages judgments

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Conflict of Laws Outline

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Transcript of Conflict of Laws Outline