The Restatement Second and the Most Significant Relationship
(1) Not surprisingly, the most controversial part of Professor Leflar’s approach is the “better rule” component. It is not 100 percent clear that Professor Leflar advocated a better-rule approach instead of simply stating that courts do in fact tend to choose what they consider to be the better rule. Professor Ehrenzweig, in the article quoted by the Milkovich court, seems to stand somewhere between description and advocacy, since he felt that conflicts rules should reflect what courts actually do in conflicts cases, rather than what scholars urge. In any event, it is clear that several courts have embraced explicit acceptance of the approach.
(2) Consider the posture of a lower court comparing forum law formulated by its state’s supreme court to the law of another state. Presumably, if there is a supreme court decision in the forum holding that local law is “better” for a choice-of-law purposes, then this is binding. How is that any different from a state supreme court decision that the rule is “better” for substantive purposes? Why, in other words, isn’t a substantive precedent also binding on choice-of-law issues—given that a choice-of-law precedent on “betterness” would be?
In Jepson v. General Casualty Co., 513 N.W. 2d 467 (Minn. 1994), the Minnesota Supreme Court held that a recent legislative amendment allowing insurance contracts to prevent stacking was not evidence that Minnesota’s law was “better” in a case involving a contract signed in Minnesota for an out-of-state risk involved in an out-of-state accident. Would a choice-of-law provision in a statute be given effect if it declared that this substantive law was “better” in Leflar’s terms? If so, then why doesn’t the simple adoption of a substantive statute declare, in effect, that this rule is better for choice-of-law purposes? Doesn’t this suggest that the only sort of rule that could be declared “worse” for choice-of-law purposes is one that is not authoritative for substantive purposes? For instance, a forum’s common-law rule that was outdated or eroded by subsequent decisions could be declared “worse” for choice-of-law purposes. But if such a substantive decision is not authoritative, why not simply overrule it directly for domestic purposes as well?
(3) The Milkovich opinion states, at page 233, that “we are concerned that our courts not be called upon to determine issues under rules which, however acceptable they may be in other states, are inconsistent with our own concept of fairness and equity.” Couldn’t that interest be much more rationally served in this case, and with much less disruption to the policy interests of Ontario, by a forum non conveniens dismissal? Wouldn’t such an approach also have the advantage of not burdening the Minnesota courts? In light of the less drastic dismissal alternative, isn’t the use of the quoted rationale to decide the issue an instance of meddling in Ontario interest?
(4) Is the determination of the “better rule” as objective as Professor Leflar tries to make it sound? In the article excerpt quoted before Milkovich, he says at one point that the “better rule” approach “has to do with preferred law, not preferred parties” and is therefore objective and not subjective. But isn’t that just saying that it makes no nonobjective choice between parties, while leaving open the possibility that the choice between two laws is nonobjective?
In fact, if there is an objective way in a given conflicts case for a court to determine what the better rule is, why weren’t the courts or the legislature of the state with the worse rule able to see that fact and change their rule?
(5) Professor Weintraub finds the use of the better-law criterion “commendable” if two limitations are observed: first, he would require that it be used only to resolve a true conflict; second, he would require that the selection of the better law be by objective standards. Such standards include rejecting the law that is an “anachronism” or is “aberrational.” Weintraub, Commentary on the Conflict of Laws 328 (2d ed. 1980). Is that another way of saying that new laws are always better than old laws and that one should discriminate against experimentation among the states?
(6) It is a common observation that the better-rule approach for true conflict cases is little more than Currie’s solution in disguise if the court determines that its own law is the better law. Moreover, as in Milkovich, courts routinely conclude that their own law is the better law. And yet not all courts do. See, e.g., LaBounty v. American Ins. Co., 451 A.2d 161 (N.H. 1982); Bigelow v. Halloran, 313 N.W. 2d 10 (Minn. 1981); compare Jepson v. General Casualty Co. of Wisconsin, 513 N.W.2d 467, 473 (Minn. 1994) (“if it were true [that] forum law would always be the better law … this step in our choice of law analysis would be meaningless”). Moreover, an empirical study of tort conflict cases suggests that the better-law approach does not lead to the application of forum law any more often than the other modern approaches (although the modern approaches as a group lead to the application of forum law more frequently than does the traditional approach). See Borchers, The Choice-of-Law Revolution: An Empirical Study, 49 Wash. & Lee L. Rev. 357 (1992).
(7) The attention that the better-rule factor has diverted from Professor Leflar’s other choice-influencing considerations may be justified. Professor Reppy claims that the factors are really only two, not five. See Reppy, Eclecticism in Choice of Law: Hybrid Method or Mishmash? 34 Mercer L. Rev. 645 (1983). Factor 3, simplification of the judicial task, is most easily satisfied by applying the law of the forum and could never influence the court away from picking what it will usually pick under factor 5, the better law—forum law. No case has ever turned on factor 2, maintenance of interstate and international order, and it is hard to imagine a conflicts case threatening that order. Predictability might sometimes be a concern, but, Reppy says, it will lose, 2 to 1, to the factors that point toward application of forum law: better law and factor 4, advancement of the forum’s governmental interests.
(8) However, some courts enamored with Leflar’s approach have deemphasized the controversial “better law” factor. For example, the better-rule approach was specifically limited to true conflict cases where the other considerations are in “near equipoise” in Fuerste v. Bemis, 156 N.W.2d 831 (Iowa 1968). See also Schumacher v. Schumacher, 676 N.W.2d 685, 691-692 (Minn. Ct. App. 2004) (noting that generally the better-rule factor “is addressed only when the other four factors are not dispositive as to which state’s law should be applied”). Also, several federal courts applying Leflar’s approach have refused to state which state’s law was better. See, e.g., Cowley v. Abbott Laboratories, Inc., 476 F. Supp. 2d 1053, 1059 (W.D. Wis. 2007) (“The Court is not in a position to determine which jurisdiction’s policy better serves justice and the public interest. Such a determination is ‘entrusted to the legislatures of the respective states.’”); Stupak v. Hoffman-La Roche, Inc., 287 F. Supp. 2d 968, 974 (E.D. Wis. 2003) (same, but using better-rule factor to reject use of dépecage: “it does seem clear that the better rule of law is not half of one state’s law and half of the other’s”); Polensky v. Continental Casualty Co., 397 F. Supp. 2d 1164, 1171-1172 (D.N.D. 2005) (“The Court does not find that either rule of law is ‘better’ per se. The Court finds that this factor does not favor the application of either state’s law.”).
(9) In recent years Minnesota apparently has backed away from the “better law” approach. In Nodak Mutual Ins. Co. v. Am. Fam. Mut. Ins. Co., 604 N.W. 2d 91, 96 (Min. 2000), the Minnesota Supreme Court noted that “this court has not placed any emphasis on the [better-law] factor in nearly twenty years,” and described its approach instead as “the significant contacts test.” See also Montpetit v. Allina Health System, Inc., 2000 Minn. App. LEXIS 1051 (Minn. Ct. App. 2000) (better-rule approach “has been abandoned in recent years”). At least four states—Arkansas, New Hampshire, Rhode Island, and Wisconsin—still use some form of the better-law approach for torts. See Symeonides, Choice of Law in the American Courts in 2010: Twenty-Fourth Annual Survey, 59 Am. J. Comp. L. 303 (2011). For a recent intelligent defense of the better-law approach, see Singer, Pay No Attention to That Man Behind the Curtain: The Place of Better Law in a Third Restatement of Conflicts, 75 Ind. L.J. 659 (2000). For a symposium devoted to Leflar’s conflicts theory, see 52 Ark. L. Rev. 1-232 (1999).
E. The Restatement Second and the Most Significant Relationship
The First Restatement was promulgated in 1934. Less than 20 years later the American Law Institute called for a new Restatement because of the perceived inadequacies of the old one. The first tentative draft of the Restatement Second appeared in 1953. The final product was completed and published in 1971.
The choice-of-law process contemplated by the (Second) Restatement generally works as follows. The centerpiece of the Second Restatement is a “most significant relationship” test. So, for example, the general choice-of-law rules for torts and for contracts provide:
§145. The General Principle
(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of that state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in §6.
(2) Contacts to be taken into account in applying the principles of §6 to determine the law applicable to an issue include:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is centered.
These contacts are to be evaluated according to their relative importance with respect to the particular issue.
§188. Law Governing in Absence of Effective Choice by the Parties
(1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in §6.
(2) In the absence of an effective choice of law by the parties (see §187), the contacts to be taken into account in applying the principles of §6 to determine the law applicable to an issue include:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) the domicil, residence, nationality, place of incorporation and place of business of the parties.
These contacts are to be evaluated according to their relative importance with respect to the particular issue.
(3) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in §§189-199 and 203.
The §6 referred to in Sections 145 and 188 provides:
§6. Choice-of-Law Principles
(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law.
(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include:
the needs of the interstate and international systems,
(a) the relevant policies of the forum,
(b) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(c) the protection of justified expectations,
(d) the basic policies underlying the particular field of law,
(e) certainty, predictability and uniformity of result, and
(f) ease in the determination and application of the law to be applied.
There are obvious tensions between sections 145 and 188, on the one hand, and section 6 on the other. Sections 145 and 188 look like a blind, contacts-based jurisdiction-selecting approach (i.e., an approach that picks which state’s law to apply without reference to the content of state laws), while section 6 contemplates policy analysis. In addition, sections 145 and 188 state a rule, even if a highly general one, while section 6 states an approach. See Reese, Choice of Law: Rules or Approach, 57 Cornell L. Rev. 315 (1972). For these reasons, there is a certain amount of schizophrenia built into the Second Restatement. To make matters more complicated, the Second Restatement also contains more specific sections that provide presumptive rules in discrete substantive contexts. For example, section 154’s presumptive choice-of-law rule for interference with marriage relationships provides:
§154. Interference with Marriage Relationship
The local law of the state where the conduct complained of principally occurred determines the liability of one who interferes with a marriage relationship, unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in §6 to the occurrence and the parties, in which event the local law of the other state will be applied.
Because of the Second Restatement’s eclecticism, courts have done many different things under its banner. Sometimes they count contacts; sometimes they apply the law of the place of the injury; sometimes they perform interest analysis; often they mix several different approaches. As a result, the cases that follow cannot be said to be “typical” applications of the Second Restatement. Excellent general discussions of the methodology of the Second Restatement may be found in Reppy, Eclecticism in Choice of Law: Hybrid Method or Mishmash? 34 Mercer L. Rev. 645, 655-666 (1983), and Kay, Theory into Practice: Choice of Law in the Courts, 34 Mercer L. Rev. 521, 552-562 (1983).
Phillips v. General Motors Corp.
995 P.2d 1002 (Mont. 2000)
REGNIER, J.
[Darrell Byrd purchased a 1985 Chevrolet pickup truck in or about February 1995 from Mike’s Wholesale Cars in Newton, North Carolina, and he listed a North Carolina address in the paperwork. The truck was designed, tested, manufactured, and distributed by General Motors and originally sold by GM in North Carolina. The vehicle had fuel tanks mounted outside the frame rail.
On December 22, 1997, Darrell Byrd was driving with his wife and their two sons in the truck from their home near Fortine, Montana, where Darrell Byrd was employed and where Timothy and Samuel Byrd attended school, to North Carolina to visit family. The Byrds were domiciled in Montana before and at the time of the 1997 accident. While driving through Kansas, a semi-tractor trailer collided with the Byrds’ truck, which caught on fire. Darrell, Angela, and Timothy Byrd died. Samuel Byrd, then 11 years old, was hospitalized with injuries.]
Plaintiff Alvin Phillips is the legal guardian of Samuel Byrd and the personal representative of the estates of Angela Byrd, Darrell Byrd, and Timothy Byrd. Alvin Phillips resides in Newton, North Carolina. Samuel Byrd presently resides in North Carolina. Probate proceedings for the Estates of Timothy, Angela, and Darrell Byrd are filed with and pending in the Montana Nineteenth Judicial District Court, Lincoln County, Montana.
In these product liability cases, in which Plaintiffs raise claims of negligence and strict liability, Plaintiffs seek compensatory and punitive damages related to the deaths of Darrell, Angela, and Timothy Byrd and the personal injuries sustained by Samuel Byrd. General Motors denies all liability.
[The case was filed in federal district court in Montana, which certified three questions to the Montana state court.] … The District Court observed that the instant case raised significant policy questions involving Montana’s choice of law rules, that choice of law questions in tort cases are frequent in diversity litigation in federal court, and that it would be helpful in resolving this case and others to have a definitive determination of what the Montana choice of law rule is.
Question One
Whether, in a personal injury/product liability/wrongful death action, where there is a potential conflict of laws, Montana will follow the Restatement (Second) of Conflict of Laws, including the “most significant relationship” test set forth in §§146 and 6, in the determination of which state’s substantive law to apply?
The traditional choice of law rule, known as lex loci delicti commissi (or the law of place where the wrong was committed), provides that the infliction of injury is actionable under the law of the state in which it was received.… The theoretical basis for the traditional rule was the “vested rights” theory propounded by Joseph H. Beale. The theory explained the forum’s use of foreign legal rules in terms of the creation and enforcement of vested rights. According to Professor Beale’s theory, the only law that can operate in a foreign territory is the law of the foreign sovereign. When an event occurred in a foreign territory (an injury caused by a defective product, for example), and under the laws of that territory that event gave rise to a right (damages), a right “vested” under that territory’s law. The role of the forum court was simply to enforce the right which had vested in the foreign territory according to that territory’s law. Crucial to this theory was a determination of where and when a right vested, because the law in place where the right vested would control the existence and content of the right. As evidenced by the decision in Alabama Great S. R.R. Co. v. Carroll, courts have held that for tort claims a right vested where and when an injury occurred.
Traditional practice depends on a few broad, single-contact, jurisdiction-selecting rules. Traditionalist courts find the location of the last event necessary for a right to vest and apply the law of that location. As a result, courts following the traditional approach often choose the law of a state with no interest in the resolution of the dispute, like the choice of Mississippi law in Carroll.
The traditional rule has largely been justified on the basis of the practical advantages that it offers: certainty, predictability, and forum neutrality. However, problems inherent in its application as well as escape devices used to avoid results perceived to be arbitrary or unfair have greatly diminished the advantages the traditional rule supposedly provides. For example, the explicit public policy exception to the lex loci rule allows courts to avoid the law of the place of injury by concluding that it violates the public policy of the forum. Use of the public policy escape device by lex loci courts continues today.
The traditional rule also no longer affords consistency and predictability across jurisdictions. While some jurisdictions still cling to the traditional rule, the vast majority of states have rejected it.… Professor Symeonides observes:
As the century draws to a close, the traditional theory in tort and contract conflicts in the United States finds itself in a very precarious state. This assessment is based not simply on the relatively low number of states that still adhere to that theory, but also on the shallowness of their commitment to it. Although the degree of commitment varies from state to state, it is fair to say that very few of these states are philosophically committed to the traditional theory.… More often, these rules remain in place only because [a] court is able to find a way to evade them by using one of the traditional escapes, such as characterization, substance versus procedure, renvoi, or, more often, the [public policy] exception.
Symeonides, Choice of Law in American Courts in 1998: Twelfth Annual Survey, 47 Am. J. Comp. L. 327, 345 (1999). The Restatement (Second) of Conflict of Laws largely abandoned the traditional rule in favor of an approach which seeks to apply the law of the state with the “most significant relationship to the occurrence and the parties.” Restatement (Second) of Conflict of Laws §145(1) (1971) (hereinafter “Restatement (Second)”). In adopting a policy analysis approach, the drafters noted that “experience has shown that the last event rule does not always work well. Situations arise where the state of the last event (place of injury) bears only a slight relationship to the occurrence and the parties with respect to the particular issue.” Restatement (Second), Introductory Note to Ch. 7, at 412.
In abandoning the lex loci rule in favor of the most significant relationship test, one court observed:
The majority of courts which have considered the question have abandoned the lex loci rule in favor of a more flexible approach which permits analysis of the policies and interests underlying the particular issue before the court. Additionally, the commentators are overwhelmingly opposed to its retention and, although they disagree as to a substitute approach, all advocate a method which allows Courts to focus on the policies underlying the conflicting laws … and the governmental interests which would be advanced by their application.
In re Air Crash Disaster at Boston, Mass. on July 31, 1973 (D. Mass. 1975), 399 F. Supp. 1106, 1110. In determining the choice of law rules for contract disputes, we adopted the approach contained in the Restatement (Second) of Conflict of Laws. We see no reason to have one choice of law approach for contracts and another for torts. For the reasons set forth above, we now hereby adopt the “most significant relationship” approach to determine the applicable substantive law for issues of tort.
Question Two
Given the facts of this case, which state’s law applies to plaintiff’s various tort and damages claims under Montana’s choice of law rules?
The Byrds claim that under the most significant relationship test Montana law applies. General Motors contends that under this same test, the law of Kansas applies. We agree with the Byrds.
At the outset, we note that many appellate courts that have analyzed the most significant relationship test have done so in a fairly conclusory fashion. Although the analysis that follows appears somewhat tedious, our attempt is to comply with the procedures set forth in the Restatement (Second) of Conflict of Laws. We also raise an additional caveat. Any analysis under the Restatement approach is necessarily driven by the unique facts, issues, applicable law, and jurisdictions implicated in a particular case.
A. RELEVANT RESTATEMENT PROVISIONS
Any conflict of law analysis under the Restatement must begin with §6. [The court recites Section 6, reproduced supra pages 237–238. Since we have no statutory directive regarding choice of law, we turn to the specific section that relates to tort and personal injury actions. [The court recites Section 145, reproduced supra pages 236–237.] These contacts are to be evaluated according to their relative importance with respect to the particular issue.
The Restatement also has more specific sections relating to personal injury and wrongful death actions. Sections 146 and 175 provide that the rights and liabilities of the parties are to be determined in accordance with the law of the state where the injury occurred unless, with respect to a particular issue, another state has a more significant relationship. Whether another state has a more significant relationship is determined under §145(2). We further note that issues such as the tortious character of conduct, available defenses, contributory fault, and damages are all to be determined by applying the most significant relationship rule of §145. See, e.g., Restatement (Second) §§156 (“Tortious Character of Conduct”), 157 (“Standard of Care”), 161 (“Defenses”), 164 (“Contributory Fault”), and 171 (“Damages”).
B. MOST SIGNIFICANT RELATIONSHIP ANALYSIS
Under the Restatement (Second) approach, the local law of the place of injury, Kansas, is presumptively applicable in a product liability and wrongful death action unless, with respect to a particular issue, a different state has a more significant relationship. See Restatement (Second) §§146 and 175. In order to determine whether a state other than the place of injury has a more significant relationship, the contacts listed under §145(2) “are to be taken into account in applying the principles of §6.” Restatement (Second) §145(2). Accordingly, we shall address each of the factors enumerated under §6(2), taking into account, when appropriate, the contacts of §145(2).
1. NEEDS OF THE INTERSTATE AND INTERNATIONAL SYSTEM
The first factor we must consider under §6(2) is the needs of the interstate and international system. Restatement (Second) §6(2)(a). The drafters stated,
Choice-of-law rules, among other things, should seek to further harmonious relations between states and to facilitate commercial intercourse between them. In formulating rules of choice of law, a state should have regard for the needs and policies of other states and of the community of states. Rules of choice of law formulated with regard for such needs and policies are likely to commend themselves to other states and to be adopted by these states.
Restatement §6 cmt. d.
On the facts of this case, this factor does not point toward the importance of applying any particular state’s law. Rather, this factor supports the application of the Restatement approach, namely the law of the state with the most significant relationship to an issue. We believe the Restatement approach fosters harmonious relationships between states by respecting the substantive law of other states when those states have a greater interest in the determination of a particular issue litigated in a foreign jurisdiction. The Restatement approach is preferable, in our view, to the traditional lex loci rule which applies the law of the place of the accident which may be fortuitous in tort actions. We further conclude that there is no need to evaluate the contacts listed in §145 to this issue.
2. THE POLICIES OF INTERESTED STATES
The second and third factors we must consider are the relevant policies of the forum state and other interested states. See Restatement (Second) §6(2)(b) and (c). In the case sub judice, these are the most important factors in our analysis. The drafters stated,
Every Rule of Law, whether embodied in a statute or in a common law rule, was designed to achieve one or more purposes. A court should have regard for these purposes in determining whether to apply its own rule or the rule of another state in the decision of a particular issue. If the purposes sought to be achieved by a local statute or common law rule would be furthered by its application to out-of-state facts, this is a weighty reason why such application should be made.
Restatement (Second) §6 cmt. e. This principle requires us to consider whether applying the law of a state with a relevant contact would further the purpose that law was designed to achieve. Upon consideration of this principle, it is clear that Montana has the more significant relationship to the issues raised by this dispute for the reasons set forth below.
a. Place of Injury
As noted above, in product liability and wrongful death actions, the law of the place of injury is presumptively applicable unless another state has a more significant relationship. See Restatement (Second) §§146 and 175. The injury here occurred in Kansas. Kansas law provides for a cause of action against a manufacturer whose product causes harm as a result of its defective design. See Kan. Stat. Ann. §60-3302. The purpose of a state’s product liability statute is to regulate the sale of products in that state and to prevent injuries incurred by that state’s residents due to defective products.… Any conduct the state of Kansas may have been attempting to regulate through §60-3302 could not be implicated by the facts of this case as it involves neither a sale in Kansas nor an injury to a Kansas resident.
Kansas law provides for multiple defenses to a product liability claim. For example, Kansas law bars recovery for injuries occurring after “the time during which the product would be normally likely to perform or be stored in a safe manner.” Kan. Stat. Ann. §60-3303(a)(1). Kansas law also allows a party defending a product liability claim to assert that the injury causing aspect of the product was in compliance with the regulatory standards relating to design or performance at the time of manufacture. See Kan. Stat. Ann. §60-3304(a). Once again, the overriding purpose of Kansas’s product liability laws is to establish the level of safety of products sold either in Kansas or to a Kansas resident. Clearly, these rules regarding defenses were not enacted in order to grant a defense to a manufacturer when a non-Kansas resident is injured by a product not purchased in Kansas.
Under Kansas law, an award of damages for product liability may be diminished in proportion to the amount of negligence attributed to the plaintiff or decedent. General Motors asserts that the issue of comparative negligence turns upon conduct that occurred in Kansas and therefore Kansas law should apply because Kansas has an interest in regulating conduct which occurred within its borders. However, the record before us does not contain the substance of General Motors’ allegations regarding the Byrds’ allegedly negligent conduct. Therefore, there is no evidence that General Motors’ allegations concerning the comparative negligence of the Byrds are limited to conduct occurring solely within Kansas.
Moreover, even if General Motors’ allegations concerned conduct occurring solely in Kansas, the Kansas Supreme Court did not extend Kansas’s comparative negligence statute to product liability causes of action in order to regulate conduct occurring in Kansas. In concluding that the comparative negligence statute applied to product liability actions, the Kansas Supreme Court stated:
Comparative liability provides a system for allocating responsibility for an injury while still serving the social policy of not allowing a manufacturer or seller to escape liability for defective products merely because of slight culpability on the part of the product user in bringing about the injury.
Kennedy v. City of Sawyer, 618 P. 2d 788, 796 (Kan. 1980) (emphasis added). It is clear from the Kennedy decision that the Kansas Supreme Court extended Kansas’s comparative negligence standard to product liability cases in order to “allocate responsibility for an injury” due to a defective product, disallowing defenses such as “assumption of the risk,” “product misuse,” or “unreasonable use” from completely precluding recovery under Kansas product liability law. Kansas has no interest in allocating responsibility for the injuries suffered by Montana residents and caused by a product purchased in North Carolina. Again, the purpose of a state’s product liability laws is to protect and provide compensation to its residents and regulate the sale of products within its borders.
Kansas law limits the total amount recoverable for “noneconomic loss” in a personal injury action to $250,000, and limits “nonpecuniary” damages in wrongful death actions to $100,000. Kan. Stat. Ann. §§60-19a02, 1903. Section 60-1903 was enacted in an effort to alleviate a perceived crisis in the availability and affordability of liability insurance.… The purpose of these limitations would be furthered if any damage award issued would affect the availability or affordability of liability insurance for Kansas residents. The purpose of these limitations would not be furthered by applying them to the instant case because an award of damages against General Motors which exceeded Kansas’s statutory damage limitations would not affect the availability or affordability of liability insurance for Kansas residents.
Lastly, Kansas law allows for punitive damages, but limits them to the lesser of $5 million or the defendant’s highest gross annual income earned during any one of the five years immediately before the act for which such damages are awarded. The purpose of the availability and extent of punitive damage awards is to punish or deter conduct deemed wrongful when the availability of a cause of action and compensatory damages are considered an insufficient punishment or deterrence. Accordingly, the purpose of Kansas’s punitive damage provisions would only be furthered on a particular set of facts if it had an interest in punishing or deterring the conduct at issue. As noted above, the purpose of Kansas’s cause of action for product liability would not be furthered by its application to these facts because the pickup was not sold in Kansas nor were the Byrds Kansas residents. Correspondingly, this case does not involve conduct which Kansas was attempting to punish or deter through its punitive damage provisions.
b. Place of Conduct
The Byrds purchased the vehicle in North Carolina. General Motors has made a general assertion that North Carolina might have an interest in having its law applied, but has not briefed us on which North Carolina laws might be applicable. Accordingly, our discussion will be somewhat general in nature. General Motors has argued that North Carolina has an interest because General Motors initially sold the truck in North Carolina, the Byrds subsequently purchased the truck in North Carolina, and the Byrds may have been North Carolina residents when they made this purchase.
The fact that the Byrds purchased the truck in North Carolina while residing there indicates that one of the purposes of North Carolina product liability law—the regulation of products sold within its borders—might be implicated by the facts of this case. However, we think it significant that a North Carolina court would not apply North Carolina law to these facts, even if the Byrds had remained in North Carolina; North Carolina still adheres to the traditional place of injury rule in tort cases. On the facts of this case, a North Carolina court would apply the law of Kansas because they still adhere to the “vested rights” theory that any right created by an injury is solely a product of the law of the territory in which that injury occurred. Accordingly, the scope of North Carolina product liability law does not include causes of action for products purchased in North Carolina by North Carolina residents which cause injury outside of North Carolina. This belies the significance of North Carolina’s interest in having its law applied. We note, however, that the place of purchase may have had greater significance if North Carolina followed the Restatement’s approach rather than the traditional place of injury rule.
General Motors asserts that Michigan has an interest in regulating conduct occurring in Michigan. We note that evidence of where the pickup truck was designed and manufactured is not in the record nor has General Motors briefed us on the content of the precise laws which it claims might be applicable to these facts. However, we do not believe that the purpose of any potentially applicable Michigan product liability law would be to regulate the design and manufacture of products within its borders. The purpose of product liability law is to regulate in-state sales or sales to residents and to set the level of compensation when residents are injured.
Significantly, Michigan courts have recognized that it would not further the purpose of Michigan product liability law to apply it to a similar set of facts. Michigan courts have not applied Michigan law under similar circumstances because Michigan has little interest in applying its law when its only contact with the dispute is the location of the manufacturer.
Other courts have observed that applying the law of the place of manufacture would be unfair because it would tend to leave victims under compensated as states wishing to attract and hold manufacturing companies would raise the threshold of liability and reduce compensation. We agree that stressing the importance of the place of manufacture for choice of law purposes in a product liability case would be unfair. The conclusion that the place of manufacture is a relatively unimportant factor in a product liability case is obvious when we consider a hypothetical case in which all of the relevant contacts are in the forum state except the location of the manufacturer (most likely the fact pattern for the vast majority of product liability cases). Applying the law of the place of manufacture to that case simply because the product was manufactured out-of-state would allow a state with a high concentration of industry to capture all of the benefits of a high threshold of liability and a low level of compensation. Specifically, the manufacturing state could enjoy the benefits associated with liability laws which favored manufacturers in order to attract and retain manufacturing firms and encourage business within its borders while placing the costs of its legislative decision, in the form of less tort compensation, on the shoulders of nonresidents injured by its manufacturers’ products. This seems inherently unfair.
The Plaintiffs were residents of Montana at the time they were injured. Unlike the laws of the other states with relevant contacts under §145(2), the purposes sought to be achieved by Montana’s product liability laws would be furthered by their application to this set of facts.1 One of the central purposes of Montana’s product liability scheme is to prevent injuries to Montana residents caused by defectively designed products. In contrast to Kansas, Montana has a direct interest in the application of its product liability laws because its residents were injured in this accident. Montana adopted a strict liability standard in order to afford “maximum protection for consumers against dangerous defects in manufactured products with the focus on the condition of the product, and not on the manufacturer’s conduct or knowledge.” See Sternhagen v. Dow Co. (1997), 282 Mont. 168, 176 (emphasis added).
As is clear from Sternhagen, the focus of Montana law is not only on the regulation of products sold in Montana, but also on providing the maximum protection and compensation to Montana residents with the focus on the condition of the product and not on the conduct of the manufacturer. Applying Montana’s provisions guaranteeing strict liability and full compensation to a cause of action involving a Montana domiciliary injured by a defective product would further the purposes of Montana law by insuring that the costs to Montana residents due to injuries from defective products are fully borne by the responsible parties. It will also have the salutary effect of deterring future sales of defective products in Montana and encouraging manufacturers to warn Montana residents about defects in their products as quickly and as thoroughly as possible.
Likewise, the purposes of Montana’s laws regarding the availability and extent of punitive damages in product liability actions would also be furthered by their application to these facts. This is because, as described more fully above, punitive damages serve to punish and deter conduct deemed wrongful—in this case, placing a defective product into the stream of commerce which subsequently injured a Montana resident.
Lastly, we must address whether the purpose underlying Montana’s rules governing product liability would be furthered by their application in this case despite the fact that Samuel Byrd is no longer a Montana domiciliary. We believe that the application of Montana law to an injury received by a Montana domiciliary would further the purpose of that law regardless of the postaccident residency of the plaintiff. As discussed previously, the purpose of Montana product liability law is to regulate product sales in Montana and to compensate injured Montanans. Clearly, that concern arises as soon as a product is either sold in Montana or causes injury to a Montana resident. Consequently, the relevant residence of the plaintiff is the residence at the time of injury.
We note that the only reason Samuel Byrd is currently residing in North Carolina is because his parents died in the accident which forms the basis of the Plaintiffs’ claims. The guarantee of full compensation for Montana residents who suffer injuries due to defective products certainly will not turn on such fortuitous circumstances as a postaccident move caused by the allegedly wrongful conduct of a defendant.
d. The Place Where the Relationship, if Any, Between the Parties Is Centered
It doesn’t appear that there is a place where the relationship, if any, between General Motors and the Byrds is centered. As one court described in similar circumstances:
Products liability arises out of the most casual “relationship” imaginable, the one-time purchase and sale of the product, and the plaintiff, as here, may have had no connection with it. The only “relationship” between the parties here is that of injured victim and alleged tortfeasor. [citation omitted]
In sum, upon an analysis of the principle requiring us to consider the policies of interested states, it appears that Montana, as the domicile of the Byrds, has a significant relationship to the issues raised by this dispute. This is because, in general, the purpose of a state’s product liability law is to regulate purchases made within its borders and to protect and compensate its residents. The policies underlying Montana product liability law would be furthered on these facts because the Byrds were Montana domiciliaries at the time they were injured. The policies underlying Kansas and Michigan law would not be furthered by their application to these facts because the product was not sold in either state, nor were the Plaintiffs domiciled in either state at the time they where injured. The purposes underlying North Carolina product liability law would not be furthered on these facts because, under North Carolina’s vested rights approach to conflict of laws, North Carolina would apply the law of the jurisdiction where the injury occurred, whatever that law may be.
3. JUSTIFIED EXPECTATIONS
Although we are to consider the justified expectations of the parties, tort cases generally do not involve justified expectations. Particularly in the area of negligence, when parties act without giving thought to the legal consequences of their conduct or to the law to be applied, they have no justified expectations. See Restatement (Second) §6 cmt. g.
Automobile manufacturers do presumably give advance thought to the legal consequences of their conduct when designing and manufacturing their products. However, we note that the law of any state could potentially apply in a product liability action involving an automobile. For example, because North Carolina employs the traditional place of injury rule for choice of law purposes, if a North Carolina resident receives an injury from a defective vehicle while driving out-of-state, the law of the place of injury would govern that dispute. Accordingly, any expectation General Motors had that the law of North Carolina would govern a product liability suit involving a pickup truck it sold in North Carolina would not be justified. Furthermore, … automobiles are moveable and frequently resold and the maintenance of a product liability action does not require privity. For example, the pickup could have been subsequently resold by the initial purchaser in a state which does not adhere to the traditional lex loci rule. Therefore, any expectation General Motors had that a dispute concerning this pickup truck would be governed by North Carolina’s place of injury rule would not be justified.
4. BASIC POLICIES UNDERLYING PARTICULAR FIELD OF LAW
We must also consider the relevant contacts in regard to the basic policies underlying the particular field of law. See Restatement (Second) §6(2)(e). The drafters state that:
This factor is of particular importance in situations where the policies of the interested states are largely the same but there are nevertheless minor differences between their relevant local law rules. In such instances, there is good reason for the court to apply the local law of the state which will best achieve the basic policy, or policies, underlying the particular field of law involved.
Restatement (Second) §6(2) cmt. h. This is not a case in which the policies of interested states are basically the same except for minor differences in their local rules. For example, although under Kansas and Montana law, manufacturers of defective products are strictly liable for injuries, North Carolina law does not permit strict liability in tort in product liability actions. Instead, it appears that the various interested states have reached different conclusions concerning the right level of compensation and deterrence for injuries caused by defective products. Therefore, we need go no further in addressing this contact.
5. CERTAINTY, PREDICTABILITY, UNIFORMITY, EASE
We are also instructed to give consideration to the certainty, predictability and uniformity of result as well as the ease in the determination and application of the law to be applied. See Restatement (Second) §6(2)(f) and (g). The comments state:
Predictability and uniformity of result are of particular importance in areas where parties are likely to give advance thought to the legal consequences of their transactions. It is partly on account of these factors that the parties are permitted within broad limits to choose the law that will determine the validity and effect of their contract.…
Restatement (Second) §6(2) cmt. i. A consideration of this principle does not indicate that any one state has a more significant relationship than any other. Applying the law of the place of injury would not increase certainty or predictability any more than applying the law of the plaintiff’s residence at the time of accident.
Under the most significant relationship approach of the Restatement (Second), the local law of the place of injury, Kansas, governs the rights and liabilities of the parties to a product liability and wrongful death action unless, with respect to a particular issue, a different state has a more significant relationship. See Restatement (Second) §§146 and 175. In order to determine whether a state other than the place of injury has a more significant relationship, the contacts listed under §145(2) must be analyzed in relation to the principles enumerated under §6(2). However, the principles of §6(2) need not be given equal consideration in each case. Varying weight must be given to a particular factor, or group of factors, in different areas of choice of law. See Restatement (Second) §6 cmt. c. On the facts before us, we give most weight to the principles requiring us to consider the relevant policies of interested states. Restatement (Second) §6(2)(b) and (c). The other principles do not indicate the significance of any one contact.
Upon an analysis of the policies of interested states, it appears that the purposes of both Montana and North Carolina product liability law would presumably be furthered by their application to these facts. The place of purchase has an interest in regulating the safety of products sold within its borders; the place of the plaintiff’s residence has an interest in deterring injuries to its residents and setting the level of compensation. Significantly, however, North Carolina law would not apply its own law to these facts, even if the Byrds had been North Carolina residents at the time of injury.
The purpose behind Montana product liability laws is clearly implicated by these facts. The following factors all point toward applying Montana law: The Byrds resided in Montana at the time of the accident; General Motors does business in Montana; Montana has a direct interest in preventing defective products from causing injuries to Montana residents as well as punishing and deterring manufacturers whose products injure Montana residents; and, finally, Montana is interested in fully compensating Montana residents. All of these factors would be furthered by applying Montana product liability, defenses, damages, and wrongful death statutes to the facts of this case.
Question Three
Does Montana recognize a “public policy” exception that would require application of Montana law even where Montana’s choice-of-law rules dictate application of the laws of another state, and would such an exception apply in this case?
For choice of law purposes, the public policy of a state is simply the rules, as expressed in its legislative enactments and judicial decisions, that it uses to decide controversies. The purpose of a choice of law rule is to resolve conflicts between competing policies. Considerations of public policy are expressly subsumed within the most significant relationship approach. See Restatement (Second) §6(2)(b) and (c) (mandating consideration of the relevant policies of the forum state and other interested states). In order to determine which state has the more significant relationship, the public policies of all interested states must be considered. A “public policy” exception to the most significant relationship test would be redundant.
Accordingly, in answer to the questions certified, we adopt the Restatement (Second) of Conflict of Laws for tort actions. Under the analysis contained in the Restatement (Second), we conclude that given the facts as presented in the District Court’s Order, the laws of Montana apply. Lastly, considerations of public policy are accounted for under the analysis contained in the Restatement (Second) of Conflict of Laws.
Questions and Comments
(1) The history of the drafting of the Second Restatement helps to explain its complex methodology. The project began in 1953 as a response to the harsh criticisms of the First Restatement. The first tentative draft retained the First Restatement’s jurisdiction-selecting approach but used the more flexible jurisdiction-selecting criteria of the “most significant relationship” test. Early drafts of the Second Restatement were heavily criticized by Currie and Ehrenzweig (among others) on the grounds that its rules focused too much on territorialism and ignored interest analysis. See Currie, The Disinterested Third State, 28 Law & Contemp. Probs. 754, 755 (1963); Ehrenzweig, The “Most Significant Relationship” in the Conflicts Law of Torts: Law and Reason Versus the Restatement Second, 28 Law & Contemp. Probs. 700, 700 (1963). Section 6 was a response to these criticisms. In the words of one writer, it was “a sop tossed … to members of the American Law Institute who were unhappy with a purely territorial methodology.” Reppy, Eclecticism in Choice of Law: Hybrid Method or Mishmash? 34 Mercer L. Rev. 645, 662 (1983).
(2) How would you characterize the Second Restatement as applied in Phillips? Was it a contacts-counting, center-of-gravity case? Or was it more akin to interest analysis? Does the Second Restatement allow a court to do either, or both?
(3) How far does the Second Restatement actually depart from the first? Professor Gary J. Simson appears to believe that the difference is not substantial, arguing that the “presumptive rules adopted [by the Second Restatement] frequently bear a striking and rather frightful resemblance to the territorial rules that the Second Restatement purported to lay to rest. Indeed, it is positively stunning to see the much criticized place-of-wrong rule whose illogic spurred the first overt judicial breaks with the traditional rules rise from the ashes to take on the status of a presumptive rule in section after section of the chapter on torts.” Simson, Leave Bad Enough Alone, 75 Ind. L.J. 649, 651 (2000).
Is Professor Simson correct? More to the point, is it really a cause for concern that the presumptive—and hence displaceable—rules adopted by the Second Restatement have some similar features as the bright-line rules of the First Restatement, which are much harder to take exception to? One needs to look no further than Phillips to see that courts can remain faithful to the Second Restatement while taking exception to the presumptive rules that it provides. For more on the advantages of the multi-factor approach compared to the First Restatement’s single-factor approach, see Brilmayer & Anglin, Choice of Law Theory and the Metaphysics of the Stand-Alone Trigger, 95 Iowa L. Rev. 1125 (2010).
(4) What do you think of the Phillips court’s interest analysis? What states have an interest in the welfare of a corporation? Its state of incorporation? Headquarters? Principal place of business? Place of manufacture? Wherever it operates its business? The court says that Michigan would not have an interest in regulating the design and manufacture of products within its borders. Why not? The court’s interest analysis here is faithful to Currie’s proposal, but doesn’t it seem at least possible that states wish to encourage safe manufacturing within their borders? The court also says that it would be unfair to apply the law of the place of manufacture because then a state could attract the manufacturing industry with lax laws “on the shoulders of nonresidents injured by the manufacturers’ products.” It seems reasonable that a place-of-manufacture rule could lead to a race to the bottom for product liability laws. But applying the law of the plaintiff’s residence for nationally marketed products could conversely cause states to race to provide their residents with too much injury compensation, assuming that the costs of the extra liability get spread across all of the company’s consumers. See McConnell, A Choice-of-Law Approach to Product Liability Reform, in New Directions in Liability Law 90 (Walter Olson ed., 1988).
(5) The Second Restatement is by far the most popular choice-of-law methodology in the United States. Approximately 24 states have formally embraced its approach to torts, and 23 have embraced its approach to contracts. See Symeonides, Choice of Law in the American Courts in 2010: Twenty-Fourth Annual Survey, 59 Am. J. Comp. L. 303 (2011). These numbers are misleading, however. As Professor Symeonides has noted, Second Restatement courts evince wildly varying “gradations of commitment to the Second Restatement,” and perform many different choice-of-law analyses in its name. See Symeonides, The Judicial Acceptance of the Second Conflicts Restatement, A Mixed Blessing, 56 Md. L. Rev. 1248, 1261-1263 (1997). Some courts use the Second Restatement’s specific presumptive rules to break a true conflict, see, e.g., Reichhold Chemicals, Inc. v. Hartford Accident and Indemnity Co., 703 A. 2d 1132 (Ct. 1997) (applying §193 to break true conflict between New York and Washington law). Other courts ignore the Second Restatement’s specific presumptive rules even when they are on point, see, e.g., Allstate Insurance Co. v. Stolarz, 613 N.E.2d 936 (N.Y. 1993) (applying Second Restatement but ignoring §193 in case involving insurance stacking). Some courts use the Second Restatement to perform a “groupings-of-contacts” analysis, see, e.g., Palmer v. ARCO Chem. Co., 904 P. 2d 1221 (Alaska 1995), others use it to curtail but not avoid interest analysis, see, e.g., Nelson v. Hix, 522 N.E. 2d 1214 (Ill. 1988), and yet others use it in a manner akin to the First Restatement, see, e.g., Hataway v. McKinley, 830 S.W. 2d 53, 58 (Tenn. 1992). There are many other possibilities. Is the discretion that the Second Restatement obviously gives judges the key to its widespread acceptance?
(6) One author’s survey of Second Restatement cases led to the following conclusions:
Some state courts routinely list [the Restatement’s] relevant sections in their opinions and try to follow them; this task is easiest when the case is controlled by one of the Restatement Second’s specific narrow rules. Other state courts have not been consistent in their terminology about what approach they are following, and others have retained primary emphasis on the place of the wrong in tort cases, even while abandoning the lex loci delicti for the Restatement Second.… This review of the cases suggests that, if the original Restatement was unsuccessful because of its dogmatic rigidity and its insistence on the uncritical application of a few specific rules, the Restatement Second may fail to provide enough guidance to the courts to produce even a semblance of uniformity among the states following its method. In the drafters’ attempt to mollify their critics, they have created an umbrella for traditionalist and modern theorist alike: a fragile shelter that may prove itself unable to survive any but the most gentle of showers.
Kay, Theory into Practice: Choice of Law in the Courts, 34 Mercer L. Rev. 521, 561-562 (1983). An Oregon court was less gentle, comparing the Second Restatement to “skeet shooting with a bow and arrow: a direct hit is likely to be a rarity, if not pure luck.” Fisher v. Huck, 624 P. 2d 177, 178 (Or. 1981).
(7) Do the Second Restatement’s specific “presumptive” rules (like §§146 and 175 at issue in Phillips) have any bite? Doesn’t a court applying the Second Restatement with rigor always have to ensure that there is not a state with a “more significant relationship”? And doesn’t this, in turn, push courts back into the conundrum of sorting out the relationship between sections 6 and 145? Isn’t this what happened in Phillips? Why, then, have the specific provisions?
(8) One of the problems with the First Restatement that the Restatement Second retains (apparently deliberately) is characterization. Characterization is one difficulty that other modern approaches seem to have dispensed with effectively. Although section 6 sets out the general principles for all issues—substantive and procedural, tort and contract, and the like—the remainder of the Second Restatement attempts to provide more specific principles to deal with these separate categories. Resolution of the question of whether products liability or insurance indemnification (to name just two examples) should be analyzed according to sections 146 or 188 can determine the outcome of the choice-of-law process.
(9) For further analysis of the Phillips court’s public policy analysis, see infra page 279. For further analysis of its use of renvoi, see infra pages 262–268.
America Online, Inc. v. National Health Care Discount, Inc.
121 F. Supp. 2d 1255 (D. Iowa 2000)
ZOSS, Magistrate Judge.
[Plaintiff America Online, Inc. (“AOL”), a Delaware corporation, with its principal place of business in Virginia, is an Internet access provider that allows its subscribers to transmit electronic mail (“e-mail”) to and from other AOL subscribers and across the Internet. Defendant National Health Care Discount, Inc. (“NHCD”), an Iowa corporation with its administrative offices in Sioux City, Iowa, and sales offices in Atlanta, Kansas City, Phoenix, Dallas, and Denver, is in the business of selling discount optical and dental service plans. Using contract e-mailers from all over the country (including, primarily, the services of Forrest Dayton of Marietta, Georgia), NHCD solicited business through large-volume, “unsolicited bulk e-mail” (“UBE”), sometimes known as “spam.” Millions of these messages went to AOL users, at great expense to AOL. When AOL failed to persuade NHCD to stop sending such messages to its subscribers, it sued the company for common law conversion, trespass, and unjust enrichment, as well as violation of various state and federal statutes.]
A federal court exercising supplemental jurisdiction over state law claims in a federal question lawsuit must follow the choice-of-law rules of the forum state. Accordingly, the court looks to Iowa’s choice-of-law rules to determine which state’s law applies.
As both AOL and NHCD agree, Iowa follows the “most significant relationship” test expressed in section 145, Restatement (Second) Conflict of Laws (“Restatement”). The agreement ends there, however, as the parties differ on how the Restatement factors apply in the circumstances of this case.
[The court recites sections 145 and 6 of the Second Restatement, reproduced at pages 236–238 supra.]
The parties only address the section 145 factors in their arguments concerning which state law applies here. As NHCD points out in its brief, none of those factors [place of injury, conduct, center of relationship, and domicile, residence, place of incorporation and of business of parties] points conclusively to Virginia—nor, however, do those factors point clearly to Iowa or to any other state. The section 145 factors provide little in the way of resolving the choice-of-law issue. The court therefore turns to the principles set forth in section 6.
The principles in section 6(2) “underlie all rules of choice of law and are used in evaluating the significance of a relationship, with respect to the particular issue, to the potentially interested states, the occurrence and the parties.” Restatement §145, comment (b). Subsections 6(2)(d), (e) and (f) are less important in the field of torts than they are in other areas such as contracts, property, wills and trusts. Id. “Because of the relative insignificance of the above-mentioned factors in the tort area of choice of law, the remaining factors listed in §6 assume greater importance …,” particularly the relevant policies of “the state with the dominant interest in the determination of the particular issue.” Id. The court finds the factors in subsections (2)(b) and (c) to be controlling; i.e., the relevant policies and interests of Iowa and Virginia.
As noted previously, NHCD is an Iowa corporation, doing business in Iowa. “[A] state has an obvious interest in regulating the conduct of persons within its territory.… ” Restatement §6, comment d. Iowa’s interest in regulating the actions of corporations doing business in Iowa is embodied in the Iowa Business Corporation Act, Iowa Code chapter 490. A corporation has no rights, including the right to do business, other than the rights conferred by the state’s lawmaking power, and the state retains the right to amend the conditions under which corporations may do or continue to do business, and enforce those conditions by revoking a corporation’s privileges for noncompliance. The state, therefore, has a vested interest in determining the rights and liabilities of domestic corporations as to actions arising within the state.
Here, however, the only actions by NHCD that appear to have arisen within Iowa are incorporation of the entity, maintenance of an office, and issuance of checks to pay the contract e-mailers. One could add to this list the receipt of NHCD’s UBE by Iowa residents. Otherwise, all the actions giving rise to this lawsuit appear to have occurred elsewhere, in a number of states. AOL is incorporated in Delaware, and likely has members who received NHCD’s UBE in all fifty states. Dayton’s actions originated in Georgia. The record indicates NHCD contracted with other e-mailers from, inter alia, New York, California, Ohio, Florida, Missouri, Michigan, Tennessee, Kansas, Ohio and Maryland. NHCD’s vice president Hermann Wilms, who, among other things, was responsible for contracting with Dayton, operated out of Overland Park, Kansas.
In addition to “regulating the conduct of persons within its territory,” a state also has “an obvious interest … in providing redress for injuries that occurred there.” Restatement §6, comment e. In the instant case, because there is no clearly demonstrable place where the alleged conduct occurred, “the place where the injury occurred is a contact that, as to most issues, plays an important role in the selection of the state of the applicable law.” Id.
The only locale in which AOL’s alleged injury is clearly demonstrable is Virginia. This is the site of AOL’s hardware that it alleges was overburdened by NHCD’s UBE. It also is the place where AOL allegedly sustained economic loss. Although no state has a clear relationship to the events giving rise to this action, Virginia’s relationship appears to be the most significant. Accordingly, the court finds Virginia law shall control the non-statutory claims raised in this lawsuit.
Questions and Comments
(1) The Internet presents two general choice-of-law problems. The first is the problem of complexity. This is the problem of how to choose a single governing law for Internet activity that has multi-jurisdictional contacts. The second problem concerns situs. This is the problem of how to choose a governing law when the locus of relevant activity cannot easily be pinpointed in geographical space. Both problems raise similar concerns. The choice of any dispositive geographical contact or any particular law in these cases will often seem arbitrary because several jurisdictions have a legitimate claim to apply their law. Whatever law is chosen, seemingly genuine regulatory interests of the nations whose laws are not applied may be impaired.
Consider this hypothetical:
Whose substantive legal rules apply to a defamatory message that is written by someone in Mexico, read by someone in Israel, by means of an Internet server located in the United States, injuring the reputation of a Norwegian?
Perritt, Jurisdiction in Cyberspace, 41 Villanova L. Rev. 1, 3 (1996). And this one:
Which of the many plausibly applicable bodies of copyright law do we consult to determine whether a hyperlink on a World Wide Web page located on a server in France and constructed by a Filipino citizen, which points to a server in Brazil that contains materials protected by German and French (but not Brazilian) copyright law, which is downloaded to a server in the United States and reposted to a Usenet newsgroup, constitutes a remediable infringement of copyright?
Post & Johnson, “Chaos Prevailing on Every Continent”: Towards a New Theory of Decentralized Decision-Making in Complex Systems, 73 Chi.-Kent. L. Rev. 1055, 1056 (1998).
These are genuine problems, but are they new to the Internet? Haven’t we seen identical problems throughout this casebook? Indeed, aren’t the problems of complexity and situs the problems in the conflict of laws? Are the Internet problems presented here more complex than the same issues in “real space”? Are they any more complex than similar issues presented by real-space events such as airplane crashes, mass torts, or multinational commercial transactions? Are they any more complex than a simple products liability suit arising from a two-car accident among residents of the same state? Compare Rutherford v. Goodyear Tire and Rubber Co., 943 F. Supp. 789, 790-791 (W.D. Ky. 1996), aff’d, 142 F. 3d 436 (6th Cir. 1998) (two-car accident between residents of same state implicates the laws of the place of the accident, the states where the car and tire manufacturers are headquartered, the states where the car and tires were manufactured, and the state where the car was purchased). Is the real challenge of the Internet perhaps not the presence of new conflicts problems, but rather the dramatic increase in the number and percentage of intractable conflicts problems?
(2) The parties and events in National Health Care Discount (including the millions of UBE messages that formed the basis for the complaint) implicated contacts in every state in the union. But is every geographical contact equally significant? Why did the Court discount the state of the defendant’s incorporation, the states where the UBE’s were received, and the states where the contract e-mailers were located? Why didn’t it discuss the states where the routers and servers through which the UBE’s traveled were located?
(3) Which conflicts of law methodology is best suited to Internet transactions? Consider:
[C]yberspace transactions [need not] be resolved on the basis of geographical choice-of-law criteria that are sometimes difficult to apply to cyberspace, such as where events occur or where people are located at the time of the transaction. [These] are not the only choice-of-law criteria, and certainly not the best in contexts where the geographical locus of events is so unclear. Domicile (and its cognates, such as citizenship, principal place of business, habitual residence, and so on) are also valid choice-of-law criteria that have particular relevance to problems, like those in cyberspace, that involve the regulation of intangibles or of multinational transactions. [Moreover,] all choice-of-law problems [need not] be resolved by multilateral choice-of-law methodologies. A multilateral methodology asks which of several possible laws governs a transaction, and selects one of these laws on the basis of specified criteria. Multilateral methods accentuate the situs and complexity problems. But the regulatory issues that are most relevant to the cyberspace governance debate almost always involve unilateral choice-of-law methods that alleviate these problems. A unilateral method considers only whether the dispute at issue has close enough connections to the forum to justify the application of local law. If so, local law applies; if not, the case is dismissed and the potential applicability of foreign law is not considered. Unilateral choice-of-law methods make the complexity and situs problems less significant. They do not require a determination of which of a number of possible laws apply. Nor do they require a court to identify where certain events occurred. What matters is simply whether the activity has local effects that are significant enough to implicate local law.
Goldsmith, Against Cyberanarchy, 65 U. Chi. L. Rev. 1199, 1236-1237 (1998). Is this convincing? Did National Health Care Discount have any problem applying a multilateral choice-of-law method that selected a place of injury? Would interest analysis, which in many guises is a unilateral choice-of-law method, have provided a more satisfactory resolution?
(4) Because Internet communications usually cross many physical borders and thus give rise to difficult conflict-of-law problems, several commentators have suggested that Internet transactions be governed not by the law of any particular territorial government, but rather by a private law chosen by Internet users that will be uniform across particular Internet communities. Some of these commentators view the Internet as a separate “place” whose self-governance territorial governments should defer to:
Many of the jurisdictional and substantive quandaries raised by border-crossing electronic communications could be resolved by one simple principle: conceiving of Cyberspace as a distinct “place” for purposes of legal analysis by recognizing a legally significant border between Cyberspace and the “real world.” Using this new approach, we would no longer ask the unanswerable question “where” in the geographical world a Net-based transaction occurred. Instead, the more salient questions become: What rules are best suited to the often unique characteristics of this new place and the expectations of those who are engaged in various activities there? What mechanisms exist or need to be developed to determine the content of those rules and the mechanisms by which they can be enforced? Answers to these questions will permit the development of rules better suited to the new phenomena in question, more likely to be made by those who understand and participate in those phenomena, and more likely to be enforced by means that the new global communications media make available and effective.…
If the sysops and users who collectively inhabit and control a particular area of the Net want to establish special rules to govern conduct there, and if that rule set does not fundamentally impinge upon the vital interests of others who never visit this new space, then the law of sovereigns in the physical world should defer to this new form of self-government.
Johnson & Post, Law and Borders—The Rise of Law in Cyberspace, 48 Stan. L. Rev. 1367, 1378-1379, 1393 (1996).
Is the Internet best thought of as a separate place? Are Internet activities self-contained? Consider this response:
Cyberspace participants are no more self-contained than telephone users, members of the Catholic Church, corporations, and other private groups with activities that transcend jurisdictional borders. They are real people in real space transacting in a fashion that produces real-world effects on cyberspace participants and nonparticipants alike. Cyberspace users solicit and deliver kiddie porn, launder money, sexually harass, defraud, and so on. It is these and many other real-space costs—costs that cyberspace communities cannot effectively internalize—that national regulatory regimes worry about and aim to regulate.
Goldsmith, supra, at 1242.
(5) For a 25-year retrospective symposium on the Second Restatement, see The Silver Anniversary of the Second Conflicts Restatement, 56 Md. L. Rev. 1193-1410 (1997). For a recent symposium on the possibility of a Third Restatement of Conflicts, with much critical analysis of the Second Restatement, see Preparing for the Next Century—a New Restatement of Conflicts? 75 Indiana L.J. 399-686 (2000).
F. Wrinkles in the Theory
While modern choice-of-law theories are different from one another in many respects, they also have important similarities. The common attributes are the goal of implementing state substantive policies and the dislike of rigid rules of the First Restatement variety. Because of their substantial similarities, there are some problems that modern theories share. We have already examined some of the recent theoretical criticisms leveled against governmental interest analysis. The problems arising in the cases below are shared by modern theories generally; indeed, they are not very different from some of the issues raised by the First Restatement.
1. Domicile
The modern theories’ assumption that state policies are often triggered by domicile makes domicile a key concept to the choice-of-law process. All of the problems that we saw in Chapter 2, pages 48–63, therefore also arise in the modern theories; indeed, they arise more frequently because domicile is important to a larger percentage of cases. In addition, there are problems about how to attribute a “domicile” to corporations, because, as suggested earlier, it is not clear which states have interests in protecting a corporation. The modern treatment of this issue is somewhat unsettled. See generally Note, Interest Analysis Applied to Corporations: The Unprincipled Use of a Choice of Law Method, 98 Yale L.J. 597 (1989).
One of the problems that plagues modern choice-of-law theories is that of after-acquired domicile, an issue briefly addressed in Phillips, supra page 238.
Reich v. Purcell
67 Cal. 2d 551, 442 P.2d 727, 63 Cal. Rptr. 31 (1967)
TRAYNOR, C.J.
This wrongful death action arose out of a head-on collision of two automobiles in Missouri. One of the automobiles was owned and operated by defendant Joseph Purcell, a resident and domiciliary of California who was on his way to a vacation in Illinois. The other automobile was owned and operated by Mrs. Reich, the wife of plaintiff Lee Reich. The Reichs then resided in Ohio and Mrs. Reich and the Reich’s two children, Jay and Jeffry, were on their way to California, where the Reichs were contemplating settling. Mrs. Reich and Jay were killed in the collision, and Jeffry was injured.
Plaintiffs, Lee Reich and Jeffry Reich, are the heirs of Mrs. Reich and Lee Reich is the heir of Jay Reich. Plaintiffs moved to California and became permanent residents here after the accident. The estates of Mrs. Reich and Jay Reich are being administered in Ohio.
The parties stipulated that judgment be entered in specified amounts for the wrongful death of Jay, for the personal injuries suffered by Jeffry, and for the damages to Mrs. Reich’s automobile. For the death of Mrs. Reich they stipulated that judgment be entered for $55,000 or $25,000 depending on the court’s ruling on the applicability of the Missouri limitation of damages to a maximum of $25,000. Neither Ohio nor California limit recovery in wrongful death actions. The trial court held that the Missouri limitation applied because the accident occurred there and entered judgment accordingly. Plaintiffs appealed.…
As the forum we must consider all of the foreign and domestic elements and interests involved in this case to determine the rule applicable. Three states are involved. Ohio is where the plaintiffs and their decedents resided before the accident and where the decedents’ estates are being administered. Missouri is the place of the wrong. California is the place where defendant resides and is the forum. Although plaintiffs now reside in California, their residence and domicile at the time of the accident are the relevant residence and domicile. At the time of the accident the plans to change the family domicile were not definite and fixed, and if the choice of law were made to turn on events happening after the accident, forum shopping would be encouraged. Accordingly, plaintiffs’ present domicile in California does not give this state any interest in applying its law, and since California has no limitation on damages, it also has no interest in applying its law on behalf of defendant. As a forum that is therefore disinterested in the only issue in dispute, we must decide whether to adopt the Ohio or the Missouri rule as the rule of decision for this case.
[The court concluded that Missouri, as the situs of the accident, had no interest in imposing limitations on a wrongful death recovery, while Ohio had an interest, presumably as former domiciliary state, in affording a full recovery. It therefore applied Ohio law.]
Questions and Comments
(1) Isn’t the court guilty of a rather bald non-sequitur in saying, “[F]orum shopping would be encouraged. Accordingly, plaintiffs’ domicile in California does not give this state any interest in applying its law … ”? Forum-shopping may be evil, and it may be something to be balanced against California’s desire to see a full and fair recovery for its domiciliaries (especially when injured by another domiciliary), but can it accurately be said to prevent the existence of that interest in the first place?
(2) Does the mere possibility of forum-shopping justify the court’s result? Aren’t courts equipped to discover (within the bounds of acceptable uncertainty) states of mind in other courts? If forum-shopping is the only concern, shouldn’t the plaintiffs have been allowed to show that they would have moved to California even if they had not contemplated litigation?
(3) Even if plaintiffs moved to California precisely to take advantage of its law, does California therefore have any less of an interest in their well-being? Compare Shapiro v. Thomson, 394 U.S. 618 (1969), in which the Supreme Court refused to allow New York to impose a one-year residency requirement for welfare benefits as a response (in part) to fears that New York’s generosity would draw prospective welfare recipients. If forum-shopping is the only worry, and if (as suggested in note (2)), we can rely on the judicial process to weed out those who move to California solely to invoke its law while suing, can we be satisfied with giving higher judgments to those who seek out California for its sunny beaches or its lifestyle than for its law?
Might there be reasons not mentioned by the court for rejecting after-acquired domicile as providing a state with “interests”? For an argument that the real explanation for this attitude toward after-acquired domicile must be found outside the premises of modern policy analysis, see Brilmayer, Rights, Fairness, and Choice of Law, 99 Yale L.J. 1277, 1286-1287 (1989).
(4) Is the situation any different if it is the defendant who has acquired a new domicile? Is it any different if either party acquires a new domicile with law less favorable than that of the previous domicile? In Miller v. Miller, 22 N.Y.2d 12 (1968), a New York resident was killed in a car accident in Maine. Maine limited recoveries for wrongful death; New York had a policy enshrined in its constitution against wrongful death limitations. The defendant, brother of the decedent, moved to New York a few months before suit was brought. (There was no evidence of collusion.) The case was complicated by the fact that Maine repealed its limitation after the accident. The Court of Appeals said,
Having found no considerations present here arising out of fairness to the nominal or real party defendant, we turn next to the question of whether the application of New York law here will unduly interfere with a legitimate interest of a sister State in regulating the rights of its citizens, at least with regard to conduct within its borders. Here again we perceive no reason to deny application of our own law. To the extent that the Maine limitation evinced a desire to protect its residents in wrongful death actions, that purpose cannot be defeated here since no judgment in this action will be entered against a Maine resident. Maine would have no concern with the nature of the recovery awarded against defendants who are no longer residents of that State and who are, therefore, no longer proper objects of its legislative concern. It is true that, at the time of the accident, the defendants were residents of Maine but they would have no vested right to the application of the law of their former residence unless it could be demonstrated that they had governed their conduct in reliance upon it—a reliance which is neither present nor claimed in the case at bar. Any claim that Maine has a paternalistic interest in protecting its residents against liability for acts committed while they were in Maine, should they move to another jurisdiction, is highly speculative and ignores the fact that for the very same acts committed today Maine would now impose the same liability as New York.
There may be times where policy considerations such as a desire to prevent forum shopping would require us to ignore changes in domicile after the accident (Gore v. Northeast Airlines; Reich v. Purcell). In the instant case, however, the change in domicile has nothing whatever to do with a desire to achieve a more favorable legal climate, and we see no reason to ignore the facts as they are presented at the time of the litigation. The two considerations urged in the dissenting opinion—the likelihood of discouraging wrongdoers from settling in this State lest they be held to respond for their wrongdoing and the possibility that wrongdoers will settle here in a collusive attempt to fix broader liability upon the insurer—contradict each other, are speculative and are insufficient to move us to disregard the change in domicile.
In Gore v. Northeast Airlines, 373 F.2d 717 (2d Cir. 1967), a federal court applying New York conflicts law held that a widow who moved away from New York could still invoke New York’s refusal to allow limitations on wrongful death recoveries, even though the state of her new domicile was less solicitous of her welfare. Does this mean a heads-I-win-tails-you-lose approach favoring forum law?
(5) In Clay v. Sun Insurance Office, Ltd., 377 U.S. 179 (1964), reproduced infra page 308, the Supreme Court upheld the constitutionality (though of course did not pass on the wisdom) of application of a Florida statute providing for a minimum period during which suit could be brought on an insurance contract, despite a clause in the insurance contract providing for a shorter period. The contract had been purchased and paid for in Illinois by plaintiff, who was then a resident of Illinois. He later moved to Florida where the loss occurred, and sued after the contractual period had expired but before the Florida statutory period had expired.
Professor Currie said of Clay:
It is vitally important that the Florida court answer one specific question: Assuming that the policy expressed in the statute is one designed “to preserve a fair opportunity for people who have bought and paid for insurance to go to court and collect it,” is the evil which that policy is designed to alleviate so acute, and is the policy so exigent, that Florida believes it necessary to apply the statute from its effective date onward for the protection of the total population of Florida, including residents who had previously entered into domestic contracts containing such “suit clauses”? In other words, is the statute construed as having retroactive effect? If the answer is no, the Court’s problem is solved. If Florida has no policy of protection for residents who entered into such contracts before they were protected by the statute, it has no policy that can rationally be applied to upset vested rights under contracts made under circumstances such that Florida then had no interest in them. If the answer is yes, the Court must determine a different question—probably an easier one, since it is an ordinary question of constitutional law rather than mixed with conflict-of-laws theory. Is such retroactive legislation a reasonable exercise of the lawmaking power under the Due Process and Contracts clauses?
Currie, The Verdict of the Quiescent Years, in Selected Essays on the Conflict of Laws 584, 625-626 (1963). Currie later modified this position by noting an important difference between retroactive legislation and situations like Clay: A state may forgo making legislation retroactive, even though it could do so, because the evils of prior law will diminish and disappear with time—eventually, for example, all current Florida insurance contracts will have been entered or renewed after the date of the Florida statute in question. On the other hand, insured parties may continue to travel ad infinitum from Illinois to Florida. The continuing nature of the latter problem might justify application of the state’s new law even when the same had not been made retroactive in domestic cases. Currie, Conflict, Crisis and Confusion in New York, in Selected Essays on the Conflict of Laws 690, 739 (1963). For criticism of Currie’s revised position, see Hancock, The Effect in Choice of Law Cases of the Acquisition of a New Domicile After the Commission of a Tort or Making of a Contract, 2 Hast. Intl. & Comp. L. Rev. 215, 220-223 (1979).
The Supreme Court again allowed a postaccident change of domicile to the forum to result in the application of forum law in Allstate Insurance Co. v. Hague, page 311 infra.
(6) The drafters of the Restatement Second were equally perplexed by the after-acquired domicile problem. The Introductory Note to Chapter 7 (Wrongs) says:
Mention should here be made of a problem which runs through the entire area of choice of law. This problem is whether a change in a party’s relationship to a state following the occurrence should ever affect choice of the applicable law. For example, let us suppose that at the time of an automobile accident in state X the plaintiff is domiciled in state Y and the defendant is domiciled in state Z, but that the plaintiff acquires a domicil in Z before bringing suit. Should this shift of the plaintiff’s domicil from Y to Z have any impact on choice of the law governing any of the issues that might arise between the plaintiff and the defendant by reason of the accident? Presumably this change of domicil should have no effect upon the law governing most of the issues involving the accident. But is this necessarily true of all issues? The problem is not dealt with in the Restatement of this Subject because existing authority is too sparse to warrant doing so.
(7) Sometimes the change in domicile occurs after some of the events leading up to the litigation but before others. In Lange v. Penn Mutual Life Insurance Co., 843 F.2d 1175 (9th Cir. 1988), a court, applying the Restatement Second, was faced with a suit to recover a life insurance policy. Plaintiff had purchased the policy while a resident of Arizona, and this was where her husband died. She then moved to Iowa and was living there at the point that her insurance claim was denied. She was still in Iowa when her complaint was filed, but moved back to Arizona before the trial began.
(8) One of the chief problems of the First Restatement was that it singled out some unique territorial connecting factor, despite the fact that the litigation involved events in a number of different states in addition. Even if one agreed that what mattered was the location of events, therefore, the choice of a single territorial event was arbitrary.
Do the modern theories have exactly the same problem with domiciliary connecting factors? First, some individuals and corporate entities have multiple connections (residence, domicile, place of incorporation, principal place of business, etc.). Second, these factors change over time. While the nemesis of the First Restatement was the case where events were widely scattered, the nemesis of the new learning is the case with widely scattered personal or corporate affiliations.
Should modern theories, just by fiat, choose a particular point in time at which to measure domicile? When should that be—the time when the cause of action “accrued” (i.e., the time when the rights “vested”)? Recall the problems with “vesting” discussed in Chapter 2, especially those in determining where or when the rights “accrued” for purpose of applying the forum’s borrowing statute.
(9) Plaintiff is in the process of moving from State A to State B. On the way, she becomes involved in an auto accident. Which state has an “interest” in her? Doesn’t her domicile at the time of the accident depend on where the accident occurred?
2. Renvoi
Pfau v. Trent Aluminum Co.
55 N.J. 511, 263 A.2d 129 (1970)
PROCTOR, J.
This appeal presents a conflict of laws problem regarding a host’s liability to his guest for negligence arising out of an automobile accident.…
… Plaintiff, Steven Pfau, a domiciliary of Connecticut, was a student at Parsons College in Iowa, and the defendant, Bruce Trent, a domiciliary of New Jersey, was a student at the same college. The boys met for the first time at Parsons.
Following the Easter vacation in 1966, the defendant, Bruce Trent, drove the automobile involved in the accident back to Iowa for his use at college. The automobile was registered in New Jersey in the name of the Trent Aluminum Company, a New Jersey corporation owned by Bruce’s father. Bruce was using the car with the owner-corporation’s consent. The vehicle was insured in New Jersey by a New Jersey carrier.
About a month after Bruce’s return to college and several days before the accident, he agreed to drive the plaintiff to Columbia, Missouri, for a weekend visit. They never reached their destination. Shortly after leaving Parsons on April 22, 1966, and while still in Iowa, Bruce failed to negotiate a curve and the car he was operating collided with an oncoming vehicle driven by Joseph Davis. Mr. Davis and his wife and child, who were Iowa domiciliaries, were injured in the accident. Their claims have now been settled by defendants’ insurance carrier. The sole question presented by this appeal is whether the Iowa guest statute [which provides that a host-driver is not liable to his passenger-guest for ordinary negligence] is applicable to this action.
[The court, following Babcock v. Jackson, discussed at pages 178–179 supra, inspected the purposes behind the Iowa guest statute and determined that none of them was applicable to the facts of the case. The court then discussed the interests of Connecticut, the plaintiff’s domicile, and New Jersey, the forum and defendant’s domicile.]
In this case, however, we are faced with a more complex situation since plaintiff is a domiciliary of Connecticut. Thus, we must consider the law of both New Jersey and Connecticut. Connecticut long ago repealed its guest statute and now permits guest-passengers to recover from their host-drivers for ordinary negligence. There is no doubt that if this plaintiff-guest had been injured in a Connecticut accident by a Connecticut host-driver, there would be no bar to recover for ordinary negligence if suit were brought in that state.
Turning to New Jersey’s law, we are led to Cohen v. Kaminetsky, where we held that the strong policy of this state is to allow a guest-passenger to be compensated by his host-driver in cases of ordinary negligence. Thus, the substantive laws of Connecticut and New Jersey are in accord.…
It would appear that Connecticut’s substantive law allowing a guest to recover for his host’s ordinary negligence would give it a significant interest in having that law applied to this case. Defendants argue, however, that if we apply Connecticut’s substantive law, we should apply its choice-of-law rule as well. In other words, they contend Connecticut’s interest in its domiciliaries is identified not only by its substantive law, but by its choice-of-law rule. Connecticut adheres to lex loci delicti and accordingly to its decisions would most likely apply the substantive law of Iowa in this case. Defendants contend that plaintiff should not be allowed to recover when he could not do so in either Iowa where the accident occurred or in Connecticut where he is domiciled. We cannot agree for two reasons. First, it is not definite that plaintiff would be unable to recover in either of those states.4 More importantly, however, we see no reason for applying Connecticut’s choice-of-law rule. To do so would frustrate the very goals of governmental-interest analysis. Connecticut’s choice-of-law rule does not identify that state’s interest in the matter. Lex loci delicti was born in an effort to achieve simplicity and uniformity, and does not relate to a state’s interest in having its law applied to given issues in a tort case. It is significant that in Reich v. Purcell [page 257 supra], the California Supreme Court applied the substantive law of Ohio to the Missouri accident. The court did not apply Ohio’s choice-of-law rule which was lex loci delicti, and would have called for application of the Missouri limitation on damages. Professor Kay in her comment on Reich v. Purcell was in agreement with the above authorities that only the foreign substantive law should be applied, and she agreed with the court in Reich that Ohio’s choice-of-law rule should be ignored. Kay, “Comment on Reich v. Purcell,” 15 UCLA L. Rev., supra at 589 n.31. We conclude that since Iowa has no interest in this litigation, and since the substantive laws of Connecticut and New Jersey are the same, this case presents a false conflict and the Connecticut plaintiff should have the right to maintain an action for ordinary negligence in our courts. In this situation principles of comity, and perhaps the equal protection and privileges and immunities clauses of the Constitution, dictate that we should afford the Connecticut plaintiff the same protection a New Jersey plaintiff would be given.
For the reasons expressed the order of the Appellate Division is reversed and the order of the trial court striking the separate defense of the Iowa guest statute is restated.
Questions and Comments
(1) Professor Currie would probably have approved the result in Pfau, since he thought that interest analysis virtually did away with the problem of renvoi:
And, though I make this suggestion with some trepidation, it seems clear that the problem of renvoi would have no place at all [under interest analysis]. Foreign law would be applied only when the court has determined that that foreign state has a legitimate interest in the application of its law and policy to the case at bar and that the forum has none. Hence, there can be no question of applying anything other than the internal law of the foreign state. The closest approximation to the renvoi problem that will be encountered under the suggested method is the case in which neither state has an interest in the application of its law and policy; in that event, the forum would apply its own law simply on the ground that that is the more convenient disposition. Is it possible that this is, in fact, all that is involved in the typical renvoi situation?
Currie, Selected Essays on the Conflict of Laws 184-185 (1963) (footnotes omitted).
(2) Professor von Mehren has elaborated significantly on the idea only suggested by Currie—that a look at the conflicts rules of the other jurisdictions will shed significant light on the interests of that jurisdiction and thus be a considerable aid in applying interest analysis. That will be true, however, only when the other jurisdiction has itself adopted interest analysis, Professor von Mehren warns, since a territorial approach in the other jurisdiction is one that cannot be read as stating the other jurisdiction’s interest or lack of interest in a problem. Von Mehren, The Renvoi and Its Relation to Various Approaches to the Choice-of-Law Problem, in XXth Century Comparative and Conflicts Law 380, 393-394 (1961). Recall that the court in Phillips v. General Motors, page 238 supra, disagreed with von Mehren because it referred to the lex loci attitude of North Carolina as evidence of that state’s lack of interest in applying its law to an accident in Kansas. In recent years many other courts using a modern choice-of-law methodology have employed this renvoi technique to measure the foreign state’s interest. See, e.g., Miller v. White, 702 A.2d 392 (Vt. 1997); Sutherland v. Kennington Truck Service Ltd., 562 N.W.2d 466 (Mich. 1997); Braxton v. Anco Electric, Inc., 409 S.E.2d 914 (N.C. 1991). Egnal, The “Essential” Role of Modern Renvoi in the Governmental Interest Analysis Approach to Choice of Law, 54 Temple L.Q. 237 (1981).
(3) Why should it be assumed that the other state’s choice-of-law decisions would matter more if they conformed to tenets of governmental interest analysis? Isn’t adoption of the First (or Second) Restatement a policy decision in its own right? Can’t adherence to territorial rules be taken as a commitment to the goals of predictability, territorial sovereignty, and the like? Or perhaps a state adhering to an old-fashioned approach simply believes that its substantive policies are best advanced when the substantive rule is applied on a territorial basis. Why should the forum insist on remaking the policy choices of the other state? See generally Brilmayer, Conflict of Laws: Foundations and Future Directions 94-98 (1991).
(4) What should the forum do if it determines that another potentially interested state would not apply its own law because it uses the better-law approach? If it uses the most-significant-relationship approach? If it had a statutory provision declaring its law inapplicable? Professor Larry Kramer would consult the other state’s choice-of-law rules whenever the rule defines the substantive scope of its law. Return of the Renvoi, 66 N.Y.U. L. Rev. 979, 1012 (1991).
Richards v. United States
369 U.S. 1 (1962)
[The action arose from an airplane crash in Missouri. The airplane had been en route from Tulsa, Oklahoma, to New York City. Plaintiffs were representatives of dead passengers. The government was named as a defendant on the theory that the Federal Aviation Agency had been negligent in failing to enforce relevant statutes and regulations concerning the practices of American Airlines in the Tulsa overhaul depot. The parties were generally agreed that the alleged negligence had occurred in Oklahoma and that the harmful effects had occurred in Missouri. Under the Federal Torts Claims Act, upon which the government’s liability was premised, governmental liability would arise “under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.” 28 U.S.C. 1346. Three interpretations of this section were presented to the court and supported by lower court decisions: (1) That the whole law of the place of the negligence ought to control. (2) That the internal law of the place of negligence ought to control. (3) That the internal law of the place of injury ought to control. The Court rejected the last of these on the grounds that it was inconsistent with the language of the statute. It then noted that no choice could be made between the first two options solely on the basis of statutory language and that an analysis of the purpose of the act was necessary to resolve the dispute.]
We believe it fundamental that a section of a statute should not be read in isolation from the context of the whole Act, and that in fulfilling our responsibility in interpreting legislation, “we must not be guided by a single sentence or member of a sentence, but [should] look to the provisions of the whole law, and to its object and policy.” We should not assume that Congress intended to set the courts completely adrift from state law with regard to questions for which it has not provided a specific and definite answer in an act such as the one before us which, as we have indicated, is so intimately related to state law. Thus, we conclude that a reading of the statute as a whole, with due regard to its purpose, requires application of the whole law of the State where the act or omission occurred.
We are led to our conclusion by other persuasive factors notwithstanding the fact that the very conflict among the lower federal courts that we must here resolve illustrates the also reasonable alternative view expressed by the petitioners. First, our interpretation enables the federal courts to treat the United States as a “private individual under like circumstances,” and thus is consistent with the Act considered as a whole. The general conflict-of-laws rule, followed by a vast majority of the States, is to apply the law of the place of injury to the substantive rights of the parties. Therefore, where the forum State is the same as the one in which the act or omission occurred, our interpretation will enable the federal courts to treat the United States as an individual would be treated under like circumstances. Moreover, this interpretation of the Act provides a degree of flexibility to the law to be applied in federal courts that would not be possible under the view advanced either by the petitioners or by American. Recently there has been a tendency on the part of some States to depart from the general conflicts rule in order to take into account the interests of the State having significant contact with the parties to the litigation. We can see no compelling reason to saddle the Act with an interpretation that would prevent the federal courts from implementing this policy in choice-of-law rules where the State in which the negligence occurred has adopted it. Should the States continue this rejection of the older rule in those situations where its application might appear inappropriate or inequitable, the flexibility inherent in our interpretation will also be more in step with that judicial approach, as well as with the character of the legislation and with the purpose of the Act considered as a whole.
In the absence of persuasive evidence to the contrary, we do not believe that Congress intended to adopt the inflexible rule urged upon us by the petitioners. Despite the power of Congress to enact for litigation of this type a federal conflict-of-laws rule independent of the States’ development of such rules, we should not, particularly in the type of interstitial legislation involved here, assume that it has done so. Nor are we persuaded to require such an independent federal rule by the petitioners’ argument that there are other instances, specifically set forth in the Act, where the liability of the United States is not coextensive with that of a private person under state law. It seems sufficient to note that Congress has been specific in those instances where it intended the federal courts to depart completely from state law and, also, that this list of exceptions contains no direct or indirect modification of the principles controlling application of choice-of-law rules. Certainly there is nothing in the legislative history that even remotely supports the argument that Congress did not intend state conflict rules to apply to multistate tort actions brought against the Government.…
Our view of a State’s power to adopt an appropriate conflict-of-laws doctrine in a situation touching more than one place has been indicated by our discussion in Part III of this opinion. Where more than one State has sufficiently substantial contact with the activity in question, the forum State, by analysis of the interests possessed by the States involved, could constitutionally apply to the decision of the case the law of one or another state having such an interest in the multistate activity. Thus, an Oklahoma state court would be free to apply either its own law, the law of the place where the negligence occurred, or the law of Missouri, the law of the place where the injury occurred, to an action brought in its courts and involving this factual situation. Both the Federal District Court sitting in Oklahoma, and the Court of Appeals for the Tenth Circuit, have interpreted the pertinent Oklahoma decisions, which we have held are controlling, to declare that an action for wrongful death is based on the statute of the place where the injury occurred that caused the death. Therefore, Missouri’s statute controls the case at bar. It is conceded that each petitioner has received $15,000, the maximum amount recoverable under the Missouri Act, and the petitioners thus have received full compensation for their claims. Accordingly, the courts below were correct in holding that, in accordance with Oklahoma law, petitioners had failed to state claims upon which relief could be granted.
Questions and Comments
(1) Is it fair to say that Richards uses a kind of interest analysis since it concentrates on the policies of the Federal Tort Claims Act? If so, is the Court’s decision to look to the whole law of the state where the negligence occurred inconsistent with Currie’s conclusion that when foreign law was to be applied, it could only be internal law?
(2) Note that there are several differences between Richards and the typical renvoi case. First, there appears to be no substantive law of the deciding jurisdiction (the United States) on the tort liability issue. Thus, there must be reference to law other than the forum’s, and if the conflicts rules would refer to the law of another jurisdiction, that cannot be taken as a sign of indifference justifying use of the forum’s law. Also, unlike the common renvoi case (to the extent that there is such a thing), the usual options are references to the internal law of the other jurisdiction or reference back to the forum. In the Tort Claims Act case, the reference, if any, will always be to the law of a third jurisdiction.
(3) How did Congress come to choose the conflicts rule in the Federal Tort Claims Act? Professor Leflar offers this explanation and commentary:
Judge Goodrich learned that the draftsmen of the Act (not of course the members of Congress who enacted it) apparently thought that the quoted provision was in accord with settled conflicts law [citing Goodrich, Yielding Place to New: Rest Versus Motion in the Conflict of Laws, 50 Colum. L. Rev. 881, 894-895 (1950).] Even if the Act had been based on a correct understanding of the 1948 conflicts law, it would have produced a hard and fast rule contrary to the torts-conflicts law of most American states twenty-nine years later. Despite this fact, it is unlikely that Congress will correct the discrepancy between the Act and current state law. In Richards v. United States, the United States Supreme Court managed to salvage the conflicts rule of the Act by reading a kind of renvoi technique into the section so that it in effect reads “in accordance with the conflict of laws law of the place where the act or omission occurred.” This interpretation makes the conflicts rule as up-to-date as that of the designated “place” at the time of the “act or omission” and would have been a desirable, though unlikely, interpretation if the section had been drafted more knowingly to prescribe the law of the place of harmful impact. As interpreted, the statute becomes almost a model for federal enactments that should leave room for future growth and improvement in locally governing law. By their innocent error, the Tort Claims Act draftsmen created an opportunity for better law than they knew.
Leflar, Choice-of-Law Statutes, 44 Tenn. L. Rev. 951, 958 (1977).
(4) If the Act requires that the United States be treated as a private party would be, then in cases where the United States is a party, which states have an “interest” in applying their protective laws on its behalf? The United States Court of Appeals for the Seventh Circuit considered this question:
The plaintiff argues that since she is a nonresident of Maryland and Bethesda Naval Hospital is a federal institution rather than a private or Maryland state hospital, Maryland has no interest in enforcing its damages cap. The fact that the plaintiff is not a Maryland resident does not bear on the issue because the damages cap is for the protection of defendants rather than plaintiffs. And the fact that the defendant is a federal institution is inadmissible because the federal government has consented to have tort liability imposed on it only “to the same extent as a private individual under like circumstances.” 28 U.S.C. §2674. This requires us to treat Bethesda Naval Hospital like any nonfederal hospital in Maryland.
Carter v. United States, 333 F.3d 791, 795 (7th Cir. 2003) (citations omitted).
3. Substance and Procedure
The substance-procedure dichotomy recognized even in territorialist thinking retains importance under interest analysis and related approaches. Assume that in a given case the forum has no interest but that another jurisdiction does. That situation calls for application of the other jurisdiction’s substantive law. But on “truly” procedural questions, the forum does have an interest by virtue of the fact that its courts must involve themselves in the handling of the case. The forum state has an interest in having parties comply with rules regarding the size and color of paper on submitted briefs, for example. Similarly, the forum has an interest in requiring the parties to adhere to the forum’s rules for the filing of pleadings, deadlines for filing notices of appeal, and the like. These “conflicts” between the procedures of one state and another are more often false conflicts because the fact that the litigation is in State A rather than State B removes any procedural interest that State B may have from the issue. Since such procedures as have been discussed also fail to affect the substantive outcome of the case if the parties comply with them (compliance being possible and imposing a minimum burden), the conflict is truly false. Thus the traditional rule that the procedural law of the forum should apply seems quite consistent with interest analysis and its cousins.
The trouble, as usual, arises in determining what is procedural and what is substantive. Fortunately, the analysis above provides the answer to that question for the most part. Rules having to do with how the forum’s courts handle cases, as opposed to how such cases come out, are procedural. Rules attempting to affect the parties’ liabilities or their behavior are substantive. (This is a version of the test proposed by Justice Harlan in Hanna v. Plumer, 380 U.S. 460 (1965).) Thus, a rule of evidence requiring relevance is undoubtedly procedural since it is designed to save the time of the forum court, while a rule of privilege is substantive and more appropriately governed by the law of any of the states concerned with the reason for the privilege in the case at hand.
Occasionally, however, a procedural interest of the forum will conflict with a substantive interest of the only state interested in the substance of the case. In a variation on Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949), imagine a cause of action arising under the laws of State A but tried for some reason in State B. Imagine further that the cause of action is viewed with suspicion in State A and that a statute of State A requires the plaintiff to pay in to the clerk of the court a sum of money to be used to pay costs if the defendants prevail. The purpose of the requirement is to discourage plaintiffs with frivolous cases from bringing such suits in the hopes of getting at least minor settlements from defendants, which are viewed as particularly vulnerable to unjustified suits of the type in question. Assume further that State B has no general mechanism whereby money can be paid in to the clerk of the court for later purposes. A court of State B would be unlikely to allow its clerk to accept such money without bonding for the clerk, for which no statute of State B provides.
Here is a true conflict between the laws of the two states, even though State B’s objection to the bond is clearly procedural and State A’s requirement for it is clearly substantive in the sense of trying to shape people’s behavior. There seems little doubt that the conflict will be resolved as Currie suggested—by applying the law of the forum.
Such cases are relatively easy to decide—cases in which the proposed procedure puts an extra burden on the forum. Much more difficult are cases in which a rule of the other state—the only one with a substantive interest in the outcome of the case—has clearly substantive effect even though its motivation seems to be more toward the procedural. Take, for example, the oft-seen justification for guest statutes—preventing fraud against insurance companies. If that is the true motivation for a given guest statute, and the state with the guest statute would otherwise impose tort liability on the driver for the usual motives, what should the forum confident of its ability to discover fraud do? Theoretically the forum could hold the trial and allow liability because the case would be a false conflict case—the antifraud interest of the other state would have been served (albeit by means different from those used by that state) and the underlying purpose of its substantive rule carried out. Similarly, there is no impairment of the procedural or substantive interests of the forum. Nonetheless, one is left with strong feelings of discomfort that a result is reached that is different from the one that the courts of the only substantively concerned jurisdiction would reach. Perhaps this is a case for application of Professor Cavers’s idea that results must be comprehensible to lay people or Professor Twerski’s notion that a rule developed for one purpose can give rise to expectations that deserve respect.
Professor Twerski has also pointed out the applicability of “process values” to the substance-procedure issue in conflicts law. His reference is to an idea put forward by Professor Robert Summers in Evaluating and Improving Legal Processes—A Plea for “Process Values,” 60 Cornell L. Rev. 1 (1974), in which Professor Summers pointed out that processes can be judged not only in terms of their efficacy in producing good results, but also in terms of certain values having to do with the process itself, such as participatory governance, fairness, rationality, and humaneness. In commenting on the implications of Summers’s observations, Twerski noted:
Professor Summers contends that we have placed inordinate emphasis on process as a means for obtaining good results, while very little emphasis has been placed on the intrinsic values to be achieved by the legal process itself.… He has … clearly identified a blind spot in our jurisprudential thinking. Its implications for the procedural-substantive dichotomy should be obvious. If we begin thinking of procedure qua procedure as implementing a broad range of social values, then we may have to reexamine the outcome-oriented approach that now dominates our thinking.
Twerski, Book Review, 61 Cornell L. Rev. 1045, 1061-1062 (1976).
Could Professor Twerski’s concerns for process values rationally lead a court to apply its own state’s guest statute if the announced purpose of that statute is to prevent fraud, on the grounds that the court does not want to countenance fraud in its process even if the other jurisdiction is more confident or less caring? Or are most process values of the kind we should be concerned with already encompassed in what we ordinarily call “procedure,” so that the traditional rule directing the forum to apply its own procedure automatically accommodates the process values of the forum? Rules having to do with the reliability of admissibility of evidence, for example, which certainly relate directly to the fairness and rationality of a proceeding, are usually treated as procedural matters to be governed by the law of the forum. Is State A’s “liberal” statute of frauds, which shows a willingness to expose its residents (and perhaps others) to the risk of fraud in the interests of enforcing valid oral contracts, a process- or substance-oriented value? Would emphasis on process values add to the difficulty of classifying rules as substantive or procedural?
4. Statutes of Limitations
Ledesma v. Jack Stewart Produce, Inc.
816 F.2d 482 (9th Cir. 1987)
Before NELSON, WIGGINS and NOONAN, JJ.
NELSON, J.:
Alfonso Ledesma, Josephine Rodriguez, Rafaela Gaytan, and Jennifer Santiago seek review of the district court’s dismissal of their personal injury claim on the ground that the statute of limitations had run. They argue that under the California choice-of-law rules the district court should not have applied the one-year California statute of limitations to their claim. They further argue that, even if the California statute of limitations was properly applied, the district court should have tolled it pursuant to Cal. Civ. Proc. Code §351 (West 1982). We agree with the first contention. Accordingly, we reverse and remand to the district court for further proceedings.
On May 13, 1981, Alfonso Ledesma, Josephine Rodriguez, Rafaela Gaytan, and Jennifer Santiago (“plaintiffs”), all California residents, were injured on an Arizona highway when their van was allegedly struck by a tractor driven by defendant John Wayne Mize, an Arkansas resident, and owned by defendants Jack Stewart Produce, Inc., an Oklahoma corporation with its principal place of business in Oklahoma, and Jack Stewart, an Oklahoma resident (“defendants”). On April 7, 1983, plaintiffs filed a diversity action in the Eastern District of California, seeking damages arising out of the accident. The defendants filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6), arguing that the one-year California statute of limitations applied and barred the action against them. See Cal. Civ. Proc. Code §340(3) (West Supp. 1987). The district court granted the defendants’ motion to dismiss the action as time-barred. Plaintiffs appeal from the order of dismissal.…
It is well-settled that in diversity cases federal courts must apply the choice-of-law rules of the forum state. California has adopted a “governmental interest” approach to resolve choice-of-law problems. Under that approach, the court must first determine if the laws of the two jurisdictions differ. If they do differ, the court should determine whether both states have an interest in applying their respective law. If only one state has an interest, there is no “true conflict” of laws and the court should apply the law of the interested jurisdiction. If both states have an interest in having their differing laws applied, a true conflict arises; in that case the court should apply the law of the state whose interest would be more impaired if its law were not applied.… Nelson v. International Paint Co., 716 F.2d 640, 644 (9th Cir. 1983).
California’s one-year statute of limitations clearly differs from the two-year statutes of limitations in effect in Arizona and Oklahoma and the three-year statute in Arkansas.… Therefore, we move to the second step of the analysis to determine whether each state has an interest in applying its law in this case. The district court, relying on Nelson, concluded that the governmental interest analysis invariably dictates that the statute of limitations of the forum state must apply. Nelson did not, however, set down a per se rule.
In Nelson, we were faced with a conflict between the one-year California statute of limitations and the two-year statutes of Texas and Alaska. A Texas plaintiff brought an action in California against a California defendant for injuries sustained in Alaska. Relying on the reasoning of Ashland Chemical Co. v. Provence, 129 Cal. App. 3d 790 (1982), we found that, in the particular circumstance of the case, only California had an interest in applying its statute of limitations. We based this decision on the California court’s explanation in Ashland that statutes of limitations “are designed to protect the enacting state’s residents and courts from the burdens associated with the prosecution of stale cases.… California courts and a California resident would be protected by applying California’s statute of limitations because California is the forum and the defendant is a California resident.” Nelson, 716 F.2d at 644 (quoting Ashland, supra). The Ashland court concluded that when both the forum and the defendant’s residence were the same, no state other than California had an interest in having its statute applied. We decided Nelson in accord with Ashland because Nelson “parallels Ashland, since the forum is in California and the only defendant is a California resident.” Id. at 645.
The present case differs from Nelson, both on its facts and in its policy considerations. Unlike Nelson, this case involves California residents who are plaintiffs, not defendants, thereby weakening the forum state’s interest in applying its own statute of limitations. Second, Arizona, the state in which the alleged injury occurred, has an interest in having its statute of limitations apply to cases involving accidents on its highways. Hence, this case presents a “true conflict” of law between California and Arizona.3 We move accordingly to the third stage of the analysis as required by California law, to determine whether the interests of California or Arizona would be more impaired by application of the law of the other state.
The California statute of limitations serves two purposes: it protects state residents from the burden of defending cases “in which memories have faded and evidence has been lost,” and it protects the courts of the state from the need to process stale claims. Nelson, 716 F.2d at 644 (quoting Ashland, supra). The first interest does not apply here because there is no California defendant in this case. All of the defendants reside in states that do not consider twenty-three-month-old claims to be stale. Therefore, neither California, nor Oklahoma, nor Arkansas has an interest in applying its statute of limitations in order to protect the defendants. Furthermore, although California has an interest in protecting its courts from stale claims,4 that interest is at least equally balanced by its interest in allowing its residents to recover for injuries sustained in a state that would recognize their claim as timely.
In addition, we note that the California statute of limitations is not inflexible when California plaintiffs are involved. Pursuant to Cal. Civ. Proc. Code §351, California courts will toll the statute of limitations during the time that a defendant is out of the state. That California is willing to toll its statute of limitations in order to assist resident plaintiffs in bringing claims for injury further indicates that little harm would be done to California’s interest by applying the two-year statute of limitations for the benefit of the California plaintiffs. We find that, for the foregoing reasons, California’s interests would not be greatly impaired by the application of Arizona’s statute of limitations in this case.
We cannot say the same for Arizona. On the contrary, we find that Arizona’s interest would be significantly impaired by a failure to apply its statute of limitations. The Arizona legislature has established a two-year statute of limitations for personal injury claims arising out of highway accidents. As the Supreme Court of California has recognized, “one of the primary purposes of a state in creating a cause of action … is to deter the kind of conduct within its borders which wrongfully [causes injury].” Hurtado v. Superior Court. Insofar as drivers tend to be more careful when their chances of incurring liability are more substantial, Arizona does have an interest in ensuring that its statute of limitations is applied in any case that arises from accidents occurring within its state borders. Were we to apply the California statute of limitations in this case, we would impede the legitimate interest of the state of Arizona in promoting highway safety by allowing a cause of action for a two-year period.
Applying the “governmental interest” analysis of California’s choice-of-law rules, we conclude that Arizona’s interests would be impaired by the failure to apply its statute of limitations more than California’s interests would be impaired by the failure to apply its statute. California has little interest in applying its statute of limitations when no California defendant is involved and when California plaintiffs seek to recover for injuries that occurred in a state in which the claim was not time-barred. Arizona’s legitimate government policy would be impaired by a failure to allow the cause of action that it has established for personal injury claims. Accordingly, we hold that the Arizona statute of limitations should apply in the present case and that the district court erred in dismissing the complaint.
We need not reach the plaintiffs’ argument that the district court should have tolled the California statute of limitations during the period the defendants were out of the state.
Reversed and remanded.
NOONAN, J., dissenting:
The Restatement of the Law of Conflicts states as black letter law: “An action will not be maintained if it is barred by the Statute of Limitations of the forum.… ” Restatement (Second) of Conflicts of Law, §142(i) (1971). California has followed this rule. Hall v. Copco Pacific Ltd., 224 F.2d 884 (9th Cir. 1955). If this normal rule is applied, Ledesma cannot proceed.
The landmark case in California adopting a “governmental interest” approach to the conflict of laws emphasized that the governmental interest should be weighed where “the substantive” laws of the states were in conflict. Reich v. Purcell. Chief Justice Traynor did not suggest that California departed from the normal rules on matters of procedure; nor did the Restatement, whose second edition came out four years later, acknowledge that Reich was a departure from established law.
California has characterized “an ordinary statute of limitations” as procedural, not substantive. Regents v. Hartford Accident & Indemnity Co., 21 Cal. 3d 624, 147 Cal. Rptr. 486, 581 P.2d 197 (1978). There is absolutely nothing to indicate that the statute before us is not “an ordinary statute of limitations.”
There are at least two cases, as the opinion notes, which consider statutes of limitations under the California practice in the same way as substantive law choices: Nelson v. International Paint Co.; Ashland Chemical Co. v. Provence. In both these cases, however, the result of the court’s deliberations was to apply the California statute of limitations. Strictly speaking, the indication that some other statute of limitations might have been applied is dictum and need not be regarded as controlling here.…
Even if we should make the assumption that California would depart from the normal rule, it is difficult to see the California “interest” here. The California interest in not burdening its judicial system with stale claims is equally great whether the California resident is a defendant or a plaintiff. Consequently, even in terms of the interest of California, the California statute should apply.
Global Financial Corp. v. Triarc Corp.
93 N.Y.2d 525, 715 N.E.2d 482 (1999)
Chief Judge KAYE.
This appeal places before us a long-simmering question: where does a nonresident’s contract claim accrue for purposes of the Statute of Limitations? [New York Civil Practice Law and Rules (“CPLR”) Section 202] requires our courts to “borrow” the Statute of Limitations of a foreign jurisdiction where a nonresident’s cause of action accrued, if that limitations period is shorter than New York’s. The primary issue presented by this appeal is whether, for purposes of CPLR 202, the nonresident plaintiff’s contract and quantum meruit claims accrued in New York, where most of the relevant events occurred, or in plaintiff’s State of residence, where it sustained the economic impact of the alleged breach.
According to the complaint, by contract dated February 1, 1988, defendant retained plaintiff to perform certain consulting services. In March 1989 plaintiff located an investment company that agreed to purchase all of defendant’s outstanding shares, and between February 1988 and August 1989, plaintiff additionally advised defendant regarding corporate planning. On November 6, 1989, plaintiff demanded payment of over nine million dollars for services rendered, which defendant refused the following week.
On November 9, 1995, plaintiff commenced an action in the United States District Court for the Southern District of New York to recover its commissions and fees. Because both parties were Delaware corporations, however, on April 10, 1996, the court dismissed the complaint for lack of subject matter jurisdiction. Three months later, plaintiff brought a substantially similar suit across the street, in Supreme Court, New York County. The parties do not dispute that this action is timely if the Federal action was timely when commenced on November 9, 1995 (CPLR 205).
Relying on CPLR 202, defendant sought dismissal of plaintiff’s claims for failure to comply with the Statute of Limitations of Delaware (where plaintiff is incorporated) or Pennsylvania (where, according to the Federal complaint, plaintiff had its principal place of business). Plaintiff’s claims would be time-barred in both States (see Del. Code Ann. tit. 10, §8106 [three-year limitations period for actions on a promise]; Del. Code Ann. tit. 10, §8111 [one year for actions for services]; 42 Pa. Cons. Stat. Ann. §5525 [four years for contract actions]). In opposing defendant’s motion, plaintiff maintained that New York’s six-year Statute of Limitations applied because most of the events relating to the contract took place in New York, and that the action was timely because the Federal action was commenced within six years after defendant refused plaintiff’s demand for fees and commissions (see CPLR 213 [2]).
Supreme Court agreed with defendant and dismissed the complaint, holding that under the borrowing statute plaintiff’s causes of action accrued where it suffered injury: its place of residence. In a separate order, Supreme Court denied plaintiff’s motion to renew the motion to dismiss. The Appellate Division unanimously affirmed both Supreme Court orders (251 A.D. 2d 17), and this Court granted plaintiff leave to appeal so much of the Appellate Division order as affirmed the dismissal of the complaint, in order to resolve the issue definitively and eliminate the need for courts to engage in “guesswork” when determining the place of accrual for contract actions under CPLR 202 (see Siegel, N.Y. Prac. §57, at 70 [2d ed.]). Because we agree that plaintiff’s cause of action accrued where it sustained its alleged injury, we now affirm.
When a nonresident sues on a cause of action accruing outside New York, CPLR 202 requires the cause of action to be timely under the limitation periods of both New York and the jurisdiction where the cause of action accrued.2 This prevents nonresidents from shopping in New York for a favorable Statute of Limitations.
Plaintiff argues that the New York Statute of Limitations applies because its claims accrued in New York, where the contract was negotiated, executed, substantially performed and breached. In essence, plaintiff urges that we apply a “grouping of contacts” or “center of gravity” approach—used in substantive choice-of-law questions in contract cases—to determine where contract and quantum meruit causes of action accrue for purposes of CPLR 202.
At the threshold, however, there is a significant difference between a choice-of-law question, which is a matter of common law, and this Statute of Limitations issue, which is governed by particular terms of the CPLR. In using the word “accrued” in CPLR 202 there is no indication that the Legislature intended the term “to mean anything other than the generally accepted construction applied throughout CPLR Article 2—the time when, and the place where, the plaintiff first had the right to bring the cause of action” (1 Weinstein-Korn-Miller, N.Y. Civ. Prac. P. 202.04, at 2-61).
CPLR 202 has remained substantially unchanged since 1902. While its predecessor, section 13 of the Civil Practice Act, used the word “arise” instead of “accrue,” the Legislature intended no change in meaning when it adopted the present provision, in 1962, as part of the CPLR. The legislative purpose was simply to ensure that the language of CPLR 202 conformed with other CPLR provisions. Because earlier iterations of the borrowing statute predate the substantive choice-of-law “interest analysis” test used in tort cases (see Babcock v. Jackson, 12 N.Y.2d 473 [1963]) and the “grouping of contacts” or “center of gravity” approach used in contract cases (see Auten v. Auten, 308 N.Y. 155 [1954]), these choice-of-law analyses are inapplicable to the question of statutory construction presented by CPLR 202.
Indeed, while this Court has not addressed the issue in the context of a contract case, we have consistently employed the traditional definition of accrual—a cause of action accrues at the time and in the place of the injury—in tort cases involving the interpretation of CPLR 202. Martin v. Dierck Equip. Co. (43 N.Y.2d 583) is illustrative. There, the plaintiff was injured while operating a forklift at his employer’s warehouse in Virginia. The forklift manufacturer and distributor were located in New York, and the forklift was sold to plaintiff’s employer in New York. Plaintiff sued the manufacturer and distributor in negligence and strict products liability. The Court held that for purposes of the borrowing statute, the negligence causes of action as well as the cause of action which plaintiff labeled “breach of warranty” accrued in Virginia: “[p]laintiff possessed no cause of action, in tort or in contract, anywhere in the world until he was injured in Virginia” (id. at 588, 591).
When an alleged injury is purely economic, the place of injury usually is where the plaintiff resides and sustains the economic impact of the loss. Here, plaintiff’s causes of action are time-barred whether one looks to its State of incorporation or its principal place of business. Thus, we need not determine whether it was in Delaware or Pennsylvania that plaintiff more acutely sustained the impact of its loss.
Plaintiff relies on Insurance Co. v. ABB Power Generation, 91 N.Y. 2d 180, 690 N.E. 2d 1249 (N.Y. 1997), for the proposition that the place where the relevant contacts are grouped, not the place of the injury, determines accrual for purposes of the borrowing statute. The question in ABB Power was whether plaintiff’s cause of action could accrue in California, even though the parties in their contract chose the forum and law of New York. The Court answered in the affirmative, holding that a forum-selection clause, or inability to obtain personal jurisdiction over a defendant in a foreign jurisdiction, would not override CPLR 202. Once the Court decided that CPLR 202 applied, it was clear that California was the State of accrual, as California was the place of the injury as well as the place where “all of the operative facts” occurred (id. at 183). Thus, the Court did not have to decide whether to use a choice-of-law analysis or place-of-injury rule in order to determine where plaintiff’s causes of action accrued.
Finally, as we underscored in ABB Power, “CPLR 202 is designed to add clarity to the law and to provide the certainty of uniform application to litigants” (id. at 187). This goal is better served by a rule requiring the single determination of a plaintiff’s residence than by a rule dependent on a litany of events relevant to the “center of gravity” of a contract dispute.
Accordingly, the order of the Appellate Division should be affirmed, with costs.
Questions and Comments
(1) Ledesma ignores the traditional assumption that statutes of limitations are procedural rules governed by forum law, and instead treats the statute of limitations choice-of-law issue like any other issue that is subject to interest analysis. Are you satisfied with the analysis? Why does California have a “weaker” interest in applying its statute of limitations to California plaintiffs than California defendants? Is the California statute of limitations designed to promote recovery for Californians? Why does it matter that “[a]ll of the defendants reside in states that do not consider the twenty-three-month-old claims to be stale”? Are statutes of limitations personal laws that travel with defendants wherever they may be sued? Why is it relevant to interest analysis that the “injuries [were] sustained in a state that would recognize their claim as timely”? Do you agree that Arizona’s interest “would be significantly impaired by” a California court’s failure to apply the Arizona statute of limitation in a case involving an accident in Arizona? Is it relevant that the year before Ledesma, the Arizona Supreme Court reaffirmed that under Arizona law, “statutes of limitation … are procedural and therefore governed by the law of the forum”? See Monroe v. Wood, 724 P. 2d 30, 31 (Ariz. 1986). Doesn’t this suggest that Arizona does not view its statutes of limitations to be applicable in non-Arizona courts?
Professor Symeonides reports that, as of 1999, “seventeen states have abandoned the traditional procedural characterization of statutes of limitation and have applied to conflicts involving these statutes the same choice-of-law analysis applied to substantive issues.” Symeonides, Choice of Law in the American Courts in 1999: One More Year, 48 Am. J. Comp. L. 143, 166 (2000). In light of Ledesma, is this a welcome trend?
(2) Is it incongruous for the New York Court of Appeals—a leader in the development of modern choice-of-law methodologies—to employ First Restatement criteria (“a cause of action accrues at the time and in the place of the injury”) in determining where a cause of action accrued for purposes of a borrowing statute? If the court really believes that the goals of clarity and uniformity for the borrowing statute are better met by the place of injury criterion than by the “center of gravity” approach, why not apply the place of injury in its common law choice-of-law decisions? Other courts that usually apply modern choice-of-law approaches but look to traditional criteria in interpreting a borrowing statute include Combs v. International Insurance Co, 354 F.3d 568 (6th Cir. 2004) (applying Kentucky conflicts law); Rajala v. Donnelly Meiners Jordan Kline P.C., 193 F.3d 925 (8th Cir. 1999) (applying Missouri conflicts law). For cases applying a modern conflicts analysis to determine where a cause of action accrues for borrowing statute purposes, see Kahn v. Royal Ins. Co., 709 N.E. 2d 822 (Mass. 1999) (applying most significant relationship test to determine where cause of action accrued); Celotex Corp. v. Meehan, 523 So. 2d 141 (Fla. 1988). See also Hall v. Summit Contractors, Inc., 158 S.W.3d 185 (Ark. 2004) (Tennessee statute of limitations applies because Arkansas borrowing statute directs court to apply foreign limitations period “if a claim is substantially based … upon the law of one other state.”).
(3) The 1988 revisions to the Restatement of Conflicts Second set out a new approach to statutes of limitations:
§142. Statute of Limitations
Whether a claim will be maintained against the defense of the statute of limitations is determined under the principles stated in §6. In general, unless the exceptional circumstances of the case make such a result unreasonable:
(1) The forum will apply its own statute of limitations barring the claim.
(2) The forum will apply its own statute of limitations permitting the claim unless:
(a) maintenance of the claim would serve no substantial interest of the forum; and
(b) the claim would be barred under the statute of limitations of a state having a more significant relationship to the parties and the occurrence.
Applying this new approach, the Supreme Court of Massachusetts ruled that the shorter Texas limitations period should apply to a claim brought by a Massachusetts resident for injuries sustained outside a Texas hotel when she was knocked to the ground when attempting to board the hotel’s transport cart. Nierman v. Hyatt Corp., 808 N.E.2d 290 (Mass. 2004). The hotel chain was incorporated in Delaware with its principal place of business in Illinois. The applicable limitation period was two years under Texas law and three years under Massachusetts law. After describing the standard articulated in the amended §142, the court stated:
The Appeals Court reasoned, essentially, that, because the Niermans are residents of this State, Massachusetts has a substantial interest in the maintenance of their claims.… Moreover, because Hyatt is not based in Texas, the Appeals Court assumed that Texas has no countervailing interest at stake.… The court’s resolution of the issue is appealing for its simplicity but fails to engage the proper choice of law analysis under the principles stated in §142.… Specifically, we must consider (1) whether Massachusetts has a substantial interest in permitting the claims to go forward, and (2) whether Texas has a more significant relationship to the parties and the negligence claim. The two criteria are necessarily related and should be evaluated with some sensitivity to one another, … focusing on the statute of limitations issue, and not on the underlying tort.…
We begin by noting that the more significant relationship test points clearly toward the use of the Texas limitations statute. All of the events constituting the alleged negligence took place in Texas, and Texas is where the alleged injuries were suffered. Hyatt, although not a Texas corporation, operates a business there and employs Texans. The operator of the transport cart, presumably, lives in Texas. Although the Niermans are Massachusetts residents, they travelled to Texas when the alleged accident occurred. The fact that their travel reservations were booked through Massachusetts travel agents carries little weight in our analysis, because that contact has no apparent bearing on any issue in this case, let alone the limitations issue. See Restatement (Second), supra at §142 comment e (emerging trend is to bar claim if barred by “the state which, with respect to the issue of limitations, is the state of most significant relationship to the occurrence and to the parties stated in §6” [emphasis supplied]).
We next consider whether, regardless that Texas is the State with the closer connections to the issue, Massachusetts has any substantial interest that would be advanced by entertaining the Nierman’s claims. We conclude that it does not. Massachusetts has a general interest in having its residents compensated for personal injuries suffered in another State. It cannot be said, however, that its interest in the timeliness of such an action is more compelling than that of Texas.… See also Restatement (Second), supra at §142 comment g (claim generally should not be maintained when some forum interest would be served, but at the expense of the State with closer connection with the case). The Texas legislature has prescribed a two-year limitations period within which the Niermans could have commenced this action. This time frame reflects its judgment as to the proper balance between the needs of its citizens to redress injuries and their right to be protected from protracted exposure to liability. Hyatt has a place of business in Texas, and all of the acts and events that gave rise to this litigation occurred there. Texas has the dominant interest in having its own statute enforced. We conclude that the Texas statute of limitations is the appropriate one to apply in this case.
Id. at 292-294. Is this analysis satisfying? Did the court ask the right questions? Should the applicable statute of limitations turn on the results of a complex legal analysis?
5. Public Policy
In Chapter 2 we considered the public policy exception to the usual conflicts rules. Does such a principle have any place in the new theories? As noted in our earlier look at the topic, Paulsen & Sovern, “Public Policy” in the Conflict of Laws, 56 Colum. L. Rev. 969 (1956), found that the principle was invoked in cases in which there were substantial connections between the forum and the case itself in the “overwhelming number of cases.” In such cases invocation of the principle ought to be unnecessary under interest analysis.
The forum, having an interest in the subject matter of the case itself, may simply impose its own law. For similar reasons, the public policy exception seems irrelevant to the Second Restatement approach. As the Phillips case, reproduced supra page 238, noted: “In order to determine which state has the more significant relationship, the public policies of all interested states must be considered. A public policy exception to the most significant relationship test would be redundant.”
The New York Court of Appeals appears to believe, to the contrary, that an interest analysis court can in certain circumstances invoke the public policy exception. In Cooney v. Osgood Machinery, Inc., 81 N.Y.2d 66 (1993), the court stated: “In view of modern choice of law doctrine, resort to the public policy exception should be reserved for those foreign laws that are truly obnoxious.” Does this make any sense? Should a court that lacks an interest in its law apply its law when foreign law is “truly obnoxious”? Should it dismiss the case on forum non conveniens grounds?
What about when there are factors connecting the case to the forum, but they do not give rise to an “interest” in the usual sense? This was the situation in Schultz v. Boy Scouts of America, Inc., discussed supra page 184, where the tort took place in New York but all other contacts pointed elsewhere, leading the New York Court of Appeals to rule that New Jersey’s charitable immunity law governed. The Schultz court rejected a public policy argument, reasoning that although “New Jersey’s statute might well run counter to our fundamental public policy,” it need not decide the issue because there were in any event “insufficient contacts between the parties, transaction, and New York to warrant enforcement of New York public policy.” Would the court reason the same way if it were asked to enforce a slavery contract made abroad? Does this suggest that the New Jersey statute does not in fact run afoul of New York public policy? What are the implications for the point made above about interest analysis not needing a public policy exception?
For commentary on the public policy exception under modern choice-of-law doctrines, see Comment, Choice of Law: A Fond Farewell to Comity and Public Policy, 74 Cal. L. Rev. 1447 (1986); Corr, Modern Choice of Law and Public Policy: The Emperor Has the Same Old Clothes, 39 U. Miami L. Rev. 647 (1985).
Paul v. National Life
352 S.E.2d 550 (W. Va. 1986)
NEELY, J.:
In September of 1977 Eliza Vickers and Aloha Jane Paul, both West Virginia residents, took a weekend trip to Indiana. The two women were involved in a one-car collision on Interstate 65 in Indiana when Ms. Vickers lost control of the car. That collision took both women’s lives. The administrator of Mrs. Paul’s estate brought a wrongful death action against Ms. Vickers’ estate and the National Life Accident Company in the Circuit Court of Kanawha County. Upon completion of discovery, the defendants below moved for summary judgment. Defendants’ motion contended that: (1) the Indiana guest statute, which grants to a gratuitous host immunity from liability for the injury or death of a passenger unless that host was guilty of willful and wanton misconduct at the time of the accident, was applicable; and (2) that the record was devoid of any evidence of willful or wanton misconduct on the part of Ms. Vickers. By order dated 29 October 1984, the Circuit Court of Kanawha County entered summary judgment for the defendants below. The order of the circuit court held that our conflicts doctrine of lex loci delicti required that the law of the place of the injury, namely, Indiana, apply to the case, and that the record contained no evidence of willful or wanton misconduct on the part of Ms. Vickers. It is from this order that the plaintiffs below appeal.
The sole question presented in this case is whether the law of Indiana or of West Virginia shall apply. The appellees urge us to adhere to our traditional conflicts doctrine of lex loci delicti, while the appellants urge us to reject our traditional doctrine and to adopt one of the “modern” approaches to conflicts questions. Although we stand by lex loci delicti as our general conflicts rule, we nevertheless reverse the judgment of the court below.
I
Unlike other areas of the law, such as contracts, torts and property, “conflicts of law” as a body of common law is of relatively recent origin. Professor Dicey has written that he knew of no decisions in England considering conflicts of law points before the accession of James I, and it is generally acknowledged that the first authoritative work on conflicts did not appear until the publication of Joseph Story’s Conflict of Laws in 1834. Accordingly, no conflicts of law doctrine has ever had any credible pretense to being “natural law” emergent from the murky mists of medieval mysticism. Indeed, the mention of conflicts of law and the jus naturale in the same breath would evoke a power guffaw in even the sternest scholar. In our post-Realist legal world, it is the received wisdom that judges, like their counterparts in the legislative branch, are political agents embodying social policy in law. Nowhere is this received wisdom more accurate than in the domain of conflict of laws.
Conflicts of law has become a veritable playpen for judicial policy-makers. The last twenty years have seen a remarkable shift from the doctrine of lex loci delicti to more “modern” doctrines, such as the more flexible, manipulable Restatement “center of gravity” test. Of the twenty-five landmark cases cited by appellants in which a state supreme court rejected lex loci delicti and adopted one of the modern approaches, the great majority of them involved the application to an automobile accident case of a foreign state’s guest statute, doctrine of interspousal or intrafamily immunity, or doctrine of contributory negligence. All but one of these landmark cases was decided in the decade between 1963 and 1973, when many jurisdictions still retained guest statutes, the doctrine of interspousal immunity, and the doctrine of contributory negligence. However, in the years since 1970, these statutes and doctrines have all but disappeared from the American legal landscape.…
Thus nearly half of the state supreme courts of the country have wrought a radical transformation of their procedural law of conflicts in order to sidestep perceived substantive evils, only to discover later that those evils had been exorcised from American law by other means. Now these courts are saddled with a cumbersome and unwieldy body of conflicts law that creates confusion, uncertainty and inconsistency, as well as complication of the judicial task. This approach has been like that of the misguided physician who treated a case of dandruff with nitric acid, only to discover later that the malady could have been remedied with medicated shampoo. Neither the doctor nor the patient need have lost his head.
The Restatement approach has been criticized for its indeterminate language and lack of concrete guidelines. Restatement of Conflicts Second of Law, Sec. 145-146 (1971) provides:
§145. The General Principle
(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principle stated in §6.
(2) Contacts being taken into account in applying the principle of §6 to determine the law applicable to an issue include:
(a) the place where the injury occurred,
(b) the place where the conduct causing injury occurred,
(c) the domicile, residence, nationality, place of incorporation, and place of business of the parties, and
(d) the place where the relationship, if any, between the parties, is centered.
These contacts should be evaluated according to their relative importance with respect to the particular issues.
§146. Personal Injuries
In an action for a personal injury, the local law of the state where the injury occurred 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 §6 to the occurrence and the parties, in which event the local law of the other state will be applied.
Section 6 of the Restatement lists the following factors as important choice of law considerations in all areas of law.
(a) The needs of the interstate and international systems;
(b) The relevant policies of the forum;
(c) The relevant policies of other interested states and relative interest of those states in the determination of the particular issue;
(d) The protection of justified expectations;
(e) The basic policies underlying the particular field of law;
(f) Certainty, predictability, and uniformity of results; and
(g) Ease in the determination and application of the law to be applied.
As Javolenus once said to Julian, res ipsa loquitur. The appellant cites with approval the description of the Restatement approach set forth in Conklin v. Horner, 157 N.W.2d 579, 581 (Wis. 1968):
We emphasized that what we adopted was not a rule, but a method of analysis that permitted dissection of the jural bundle constituting a tort and its environment to determine what elements therein were relevant to a reasonable choice of law.
That sounds pretty intellectual, but we still prefer a rule. The lesson of history is that methods of analysis that permit dissection of the jural bundle constituting a tort and its environment produce protracted litigation and voluminous, inscrutable appellate opinions, while rules get cases settled quickly and cheaply.
The manipulability inherent in the Restatement approach is nicely illustrated by two cases from New York, the first jurisdiction to make a clean break with lex loci delicti. The cases of Babcock v. Jackson, and Kell v. Henderson, are aptly discussed by the Supreme Court of Virginia:
In Babcock, an automobile guest sued her host in New York for injuries sustained in Ontario caused by the defendant’s ordinary negligence. Under New York law, the guest could recover for injuries caused by the host’s lack of ordinary care, but the Ontario guest statute barred such a recovery. The court abandoned its adherence to the place-of-the-wrong rule and permitted recovery. It decided that, on the guest-host issue, New York had the “dominant contacts” because the parties were domiciled in New York, were on a trip which began in New York, and were traveling in a vehicle registered and regularly garaged in New York. The court noted that Ontario had no connection with the cause of action except that the accident happened to take place there.
Kell presented the converse of Babcock. There, the question was also whether the New York ordinary negligence rule applied or whether the Ontario guest statute controlled. The guest was injured by the host’s ordinary negligence while the parties, both residents of Ontario, were on a trip in New York which was to begin and end in Ontario. The New York court purported to follow Babcock but held that Ontario law would not apply.
McMillan v. McMillan, 253 S.E.2d 662, 664 (1979). It was perhaps recognition of just such gross disparities in result that prompted the Court of Appeals of New York to remark, in a towering achievement in the art of understatement, “candor requires the admission that our past decisions have lacked a precise consistency.”
II
The appellant urges us in the alternative to adopt the “choice-influencing considerations approach” set forth by Professor Leflar in “Choice-Influencing Considerations and Conflicts of Law,” 41 N.Y.U. L. Rev. 267 (1966). Professor Leflar has narrowed the list of considerations in conflicts cases to five:
(1) Predictability of results;
(2) Maintenance of interstate or international order;
(3) Simplification of the judicial task;
(4) Advancement of the forum’s governmental interests;
(5) Application of the better rule of law.
Professor Leflar’s approach has been adopted in the guest statute context in the landmark cases of Clark v. Clark, Milkovich v. Saari, and Conklin v. Horner. In practice the cases tend to focus more on the fourth and fifth considerations that the first three, and the upshot is that the courts of New Hampshire, Minnesota and Wisconsin simply will not apply guest statutes. This seems to us a perfectly intelligible and sensible bright-line rule. However, it seems unnecessary to scrap an entire body of law and dress the rule up in a newfangled five-factor costume when the same concerns can be addressed and the same result achieved through judicious employment of the traditional public policy exception to lex loci delicti.
III
Lex loci delicti has long been the cornerstone of our conflict of laws doctrine. The consistency, predictability, and ease of application provided by the traditional doctrine are not to be discarded lightly, and we are not persuaded that we should discard them today. The appellant contends that the various exceptions that have been engrafted onto the traditional rule have made it manipulable and have undermined the predictability and uniformity that were considered its primary virtues. There is certainly some truth in this, and we generally eschew the more strained escape devices employed to avoid the sometimes harsh effects of the traditional rule. Nevertheless, we remain convinced that the traditional rule, for all of its faults, remains superior to any of its modern competitors. Moreover, if we are going to manipulate conflicts doctrine in order to achieve substantive results, we might as well manipulate something we understand. Having mastered marble, we decline an apprenticeship in bronze. We therefore reaffirm our adherence to the doctrine of lex loci delicti today.
However, we have long recognized that comity does not require the application of the substantive law of a foreign state when that law contravenes the public policy of this State. West Virginia has never had an automobile guest passenger statute. It is the strong public policy of this State that persons injured by the negligence of another should be able to recover in tort. Accordingly, we have abolished the doctrine of interspousal immunity, and we have adopted the doctrine of comparative negligence in preference to the harsh rule of contributory negligence. We abolished charitable immunity for hospitals in Adkins v. St. Francis Hospital. We held that there is no common law governmental immunity for municipal corporations in Higginbotham v. City of Charleston. And we abrogated the doctrine of parental immunity to permit an unemancipated minor child to sue for injuries received in a motor vehicle accident in Lee v. Comer. Today we declare that automobile guest passenger statutes violate the strong public policy of this State in favor of compensating persons injured by the negligence of others. Accordingly, we will no longer enforce the automobile guest passenger statutes of foreign jurisdictions in our courts.14
For the foregoing reasons, the order of the circuit granting summary judgment in favor of the appellees is hereby vacated, and the cause remanded for further proceedings not inconsistent with this opinion.
Reversed and remanded.…
Questions and Comments
(1) Is Paul’s indictment of modern choice-of-law doctrines fair? Is Judge Neely right to suggest that modern doctrines were an unfortunate overreaction to a few backward substantive law doctrines (such as guest statutes)? In light of his resolution of the case, is he hypocritical to criticize the manipulability of the modern approaches? Which is worse—manipulating the rigid traditional rules to reach the “just” result, or manipulating modern approaches that invite judges to reach the “just” result? Do you think a state’s selection of a choice-of-law approach really affects decisional outcomes?
(2) Justice Neely is not the only judge who has decided to stick with tried-and-true methods, however imperfect. Three recent empirical studies have attempted to analyze the patterns of operation of the traditional as opposed to modern choice-of-law methods. See Solimine, An Economic and Empirical Analysis of Choice of Law, 24 Ga. L. Rev. 49 (1989); Borchers, The Choice-of-Law Revolution: An Empirical Study, 49 Wash. & Lee L. Rev. 357 (1992); Thiel, Choice of Law and the Home-Court Advantage: Evidence, 2 Am. L. & Econ. Rev. 291 (2000). In particular, these studies asked about possible biases in the new methods (their biases in favor of recovery, toward application of forum law, and on behalf of local parties and how the traditional methods fare, by comparison).
The Borchers study, interestingly, concluded that judges applying the First Restatement act in distinctly different ways from judges applying newer methods; in particular, they display less of the three biases just mentioned. However, courts applying any of the new methods do not act substantially different from one another. Since the new methods have rather different jurisprudential underpinnings, Borchers concludes that First Restatement judges are more sincere in their commitment to apply the method honestly than judges applying any of the newer methods: “Courts do not take the new approaches seriously.” 49 Wash. & Lee L. Rev. at 379. Of course, if one does not like what the First Restatement prescribes, the fact that judges take it seriously is not a cause for celebration.
Thiel, supra, using more sophisticated econometric techniques, found that the modern approaches all use forum law more often than states that use the First Restatement, and that states using interest analysis show a stronger bias toward residents in their determinations than do states using any other choice-of-law approach.
G. Statutory Resolution of Choice-of-Law Problems
Legislatures sometimes provide us with conflicts rules, especially in cases in which the courts have not produced satisfactory results.
It is doubtful that statutory conflicts rules are a general solution to the choice-of-law problem since legislators would face the same problems as the courts, the commentators, and the Restatement drafters. The Restatements in particular illustrate a central problem: The First Restatement offered a fair amount of certainty, but at the cost of fairness. The Restatement Second offers more flexibility, and thus potentially more fairness, but at the cost of certainty. How can a legislature do better?
Salavarria v. National Car Rental System, Inc.
705 So. 2d 809 (La. App. 4th Dist. 1998)
BYRNES, J.
The relator, National Car Rental System, Inc., filed a motion for summary judgment based on the rule in Louisiana that a self-insured car rental agency has the right to restrict the use of rental vehicles to “authorized users” and, therefore, cannot be held liable for accidents caused by unauthorized users. This motion was denied because the trial court found that Florida law applied. A reversal of the denial of the motion for summary judgment would terminate the litigation as to the relator. Therefore, we have consented to grant relator’s application for writs, reverse the judgment of the trial court and render judgment dismissing plaintiffs’ claims against relator.
This writ presents a conflicts of law issue. The plaintiffs were the driver and passengers in a car which collided with an automobile owned by National Car Rental Systems, Inc. in 1994. The car had been rented to Mitchell Brogdon, and the driver of the National car, Heather Trempe, was not an authorized driver of the car. The plaintiffs are Louisiana residents. Brogdon and Trempe are Florida residents. National is a Delaware corporation which was doing business in Florida. The contract was entered into in Florida. The accident occurred in Louisiana. National filed a motion for summary judgment arguing that Louisiana law applies. The trial court denied the motion, finding that Florida law controls the contractual obligations arising from National’s rental agreement with Brogdon.
The Louisiana Supreme Court has ruled that a self-insured rental car company has the right to limit operation of its vehicles to only those individuals to whom it gives express permission, i.e., those individuals listed as authorized drivers in the rental agreement. Hearty v. Harris, 574 So. 2d 1234 (La. 1991). Florida law apparently does not distinguish between authorized and unauthorized users of rental cars because it simply holds owners vicariously liable for mere ownership of the vehicle under a dangerous instrumentality law. Relator argues that the trial court improperly ruled that because the National Car Rental System, Inc. car rental agreement was entered into in Florida, Florida law should apply. The relator argues that because Trempe was not a party to the contract, the existence of the contract and whether Florida law applies to the obligation between Brogdon and relator is of no moment in determining the relator’s obligation to Trempe. The plaintiffs do not contest the applicability of Louisiana law to the issue of the liability of Trempe, but they contest the issue of the applicability of Louisiana law to the liability of the relator, as owner of the car.
The general conflict of law statute, LSA-C.C. art. 3515 provides:
Except as otherwise provided in this Book, an issue in a case having contacts with other states is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue.
That state is determined by evaluating the strength and pertinence of the relevant policies of all involved states in the light of: (1) the relationship of each state to the parties and the dispute; and (2) the policies and needs of the interstate and international systems, including the policies of upholding the justified expectations of parties and of minimizing the adverse consequences that might follow from subjecting a party to the law of more than one state.
LSA-C.C. art. 3542, the general conflict of law provision dealing specifically with delictual obligations would apply the:
Law of the state whose policies would be most seriously impaired if its law were not applied to that issue.
That state is determined by evaluating the strength and pertinence of the relevant policies of the involved states in light of: (1) the pertinent contacts of each state to the parties and the events giving rise to the dispute, including the place of conduct and injury, the domicile, habitual residence, or place of business of the parties, and the state in which the relationship, if any, between the parties was centered; and (2) the policies referred to in Article 3515, as well as policies of deterring wrongful conduct and of repairing the consequences of injurious acts.
Comment (b) to LSA-C.C. art. 3542 directs that the rules contained in Articles 3543 through 3546 are more specific, and where applicable, prevail over Article 3542. LSA-C.C. art 3543 provides that issues pertaining to standards of conduct and safety are governed by the law of the state in which the conduct occurred. In the instant case there is no dispute that the conduct that resulted in the plaintiffs’ injuries occurred in Louisiana, and that Louisiana’s standard of care must apply. Comment (a) to Article 3543 states, “by way of illustration, so-called ‘rules of the road’ establish or pertain to ’standards of conduct and safety,’ whereas rules that impose a ceiling on the amount of compensatory damages or provide immunity from suit are ‘rules of loss distribution and financial protection.’” Relator’s derivative liability is a question of “loss distribution and financial protection.” LSA-C.C. art. 3544 provides that issues of loss distribution and financial protections are governed, as between a person injured by an offense and the person who caused the injury, “by the law designated in the following order: … (2) If, at the time of the injury, the injured person and the person who caused the injury were domiciled in different states; (a) when both the injury and the conduct that caused it occurred in one of those states, by the law of that state.” (Emphasis added.) Since the injured persons in this case are Louisiana residents, and the person who caused the injury (Trempe) is a Florida resident, LSA-C.C. art. 3544(2)(a) is applicable. Since both the injury and the conduct that caused it occurred in Louisiana, and the plaintiffs are Louisiana domiciliaries, Louisiana law should be applied under LSA-C.C. art. 3544(2)(a).
Comment (g) under LSA-C.C. art. 3542(2)(a) reinforces the already clear language of LSA-C.C. art. 3542 in this regard:
Domicile of either party. Subparagraph (2) deals with cases in which, at the time of the injury, the tortfeasor and the victim were not domiciled in the same state. Clause (a) of that subparagraph provides that when both the injurious conduct and the resulting injury occurred in a state where either the tortfeasor or the victim was domiciled, the law of that state shall apply, regardless of whether it provides for a higher or lower standard of financial protection than the law of the domicile of the other party. For rationale and supporting authority, see Symeonides, “Choice of Law for Torts”, 453-456. When a person is injured in his home state by conduct in that state, his rights should be determined by the law of that state, even if the person who caused the injury happened to be from another state. The law of the latter state should not be interjected to the victim’s detriment or benefit. By the same token, when a person acting within his home state causes injury in that state, he should be held accountable according to the law of that state, even if the injured person happened to be from another state. The law of the latter state should not be interjected to the tortfeasor’s detriment or benefit.
The plaintiffs do not contend that relator, National Car Rental System, Inc., is liable to them by virtue of any provision in the rental car agreement. If relator is liable to the plaintiffs, it is only by operation and application of Florida law, not by virtue of any contractual provision. In fact, the terms of the rental contract specifically prohibit the use of the vehicle by any unauthorized driver. It is undisputed that Heather Trempe was not an authorized driver. In boldface uppercase type the rental agreement states:
I UNDERSTAND THAT IF THE VEHICLE IS OBTAINED OR USED FOR ANY PROHIBITED USE OR IN VIOLATION OF THIS AGREEMENT, THEN ANY LIMITATION OF MY RESPONSIBILITY UNDER THIS AGREEMENT SHALL BE VOID AND I SHALL BE FULLY RESPONSIBLE FOR ALL LOSS AND RESULTING DAMAGES, INCLUDING LOSS OF USE, CLAIMS PROCESSING FEES, ADMINISTRATIVE CHARGES, COSTS AND ATTORNEY’S FEES. ALSO, WHERE PERMITTED BY LAW, THE LAW OPTION SHALL BE VOID AND THE LIABILITY, PAI, PEC AND SLI INSURANCE SHALL BY VOID.
We respectfully disagree with the analysis of the First Circuit in Oliver v. Davis, 679 So. 2d 462 (La. App. 1996), which involved a fact situation with much in common with the instant case. In Oliver the court stated that applying Florida’s “dangerous instrumentality” theory of liability could be of benefit to the car rental agency:
A rental agency would thereby be able to determine its risk of liability under the law of one state rather than having to determine the risk of liability under the laws of each state through which the vehicle travels.
Id. at 467.
The relator in this case resists having this unwanted “benefit” conferred upon it just as vigorously as did the rental agency in Oliver, leading this Court to conclude that it is not really a benefit to car rental agencies. The conclusion of this Court is supported by the language underlined in the boldface quoted above from the rental agreement (“WHERE PERMITTED BY LAW”). This language is a clear indication that the rental agency contemplated the potential application of different laws in different jurisdictions and sought to take advantage of those variations where permitted. We conclude that multi-state consistency of results for the benefit of the car rental agency is not a valid basis for preferring Florida law under the facts of this case.
The Oliver court suggested that we should also consider which state’s policy would be most seriously impaired if its law were not applied to the issue pursuant to LSA-C.C. art. 3515. The Oliver court suggests that a Louisiana court might conclude that Florida’s law of vicarious liability would be most seriously impaired if Louisiana law were not applied. But that is not what seriously impaired means. By that standard the state whose law is not applied would always be the most seriously impaired. “Seriously impaired” refers to the interest the state has in seeing its policies effectuated relative to the facts of the case, i.e., does the state have such contacts with the cause of action that the failure to apply its laws results in a disproportionate frustration of that state’s policies relative to the contacts with that state giving rise to the litigation. In the instant case, Louisiana’s policies governing “loss distribution and financial protection” would be most seriously impaired by the application of Florida law because the overwhelming preponderance of the contacts out of which this litigation arises are with the state of Louisiana.
Oliver states that “the application of Florida law to the vicarious liability issue would not impair the policies promoted by Louisiana of protecting its injured citizens.” Id. at 468. The effect of this approach would be to apply the law of greatest recovery in all conflict situations, because affording the greatest recovery would never “impair the policies promoted by Louisiana of protecting its injured citizens.” But that is not the proper standard. Comment (g) to LSA-C.C. art. 3544(2)(a) quoted above makes it clear that the choice is not to be based on either the benefit or detriment to the litigants.
The Oliver court treats the enforcement of Florida’s “dangerous instrumentality” law as an end in itself from Florida’s perspective. However, it is not the enforcement of any particular law that is at issue when “impairment of policies” is referred to in conflict of law situations. It is the state policies that those laws seek to effectuate that are at issue. We must determine what Florida is trying to achieve through the mechanism of its “dangerous instrumentality-vicarious liability law.” If the goal of the Florida law is to make Florida roads safer, its application to the facts of this case will not achieve that purpose. The accident occurred in Louisiana. If the goal of the Florida law is to ensure recovery for Florida residents or those injured on Florida roads, its application to the facts of this case will not achieve that purpose. The injured parties are all Louisiana residents, injured in Louisiana. Florida’s policies are only impaired if those policies include a concern for the safety of Louisiana roads, or a concern for the protection and recovery of Louisiana residents injured in Louisiana. Clearly Florida has no such policies or concerns, and any attempt by Florida to enact extra-territorial laws to effectuate such policies would represent an unconstitutional overreaching, and are obviously not the policies of the state of Florida. Neither Oliver, nor respondents have been able to articulate any genuine interest that Florida might have in the application of its law of vicarious liability to the facts of the instant case. Nor have the respondents any legitimate expectations that if injured while driving Louisiana roads that Florida law would apply.
There are no genuine issues of material fact.… Therefore, we reverse the judgment of the trial court and render judgment in favor of relator, National Car Rental Systems, Inc., dismissing plaintiff’s claims against relator with prejudice at plaintiffs’ cost, and remand for further proceedings consistent with this opinion.
Questions and Comments
(1) Louisiana’s 1992 choice-of-law statute is the most ambitious state choice-of-law codification in the United States. The central principle of the Louisiana statute is set forth in article 3515, which calls for application of the law of “the state whose policies would be most impaired if its laws were not applied to that issue.” See also La. Civ. Code §3542 (comparative impairment rule for torts); La. Civ. Code §3537 (comparative impairment rule for contracts). The rest of Louisiana’s choice-of-law code explains how this general principle applies in specific substantive contexts. See Symeonides, Louisiana’s New Law of Choice of Law for Torts: An Exegesis, 66 Tul. L. Rev. 677 (1992) (describing these more specific rules as “a priori legislative determinations of ‘the state whose policies would be most impaired if not applied’”). As Salavarria makes clear, in the tort context these more specific rules incorporate the distinction between loss-allocation and conduct-regulating rules. See La. Civ. Code §§3543-3544. Finally, Article 3547 provides for escape from these more specific rules “if, from the totality of the circumstances of an exceptional case, it is clearly evident under the principles of Article 3542, that the policies of another state would be more seriously impaired if its laws were not applied to the particular issue.” The Louisiana choice-of-law code’s approach to torts thus seems like a mixture of comparative impairment, New York’s approach, and the Second Restatement. One scholar has described this mixture as “an important effort to codify the best of modern conflicts understanding.” Perdue, A Reexamination of the Distinction Between “Loss-Allocating” and “Conduct-Regulating Rules,” 60 La. L. Rev. 1251, 1251 (2000). Do you agree?
(2) Does codification promote predictability in governing law? Does the answer depend on the content of the codified rules? Or does a codified rule necessarily reduce judicial discretion (and thus increase predictability) when compared to the same rule applied in a common law fashion? We have two empirical analyses of the operation of the Louisiana choice-of-law code, but they cut in two directions. Professor Borchers studied tort cases under the code. He found that trial court choice-of-law decisions under the code were affirmed on appeal 76.2 percent of the time, as compared with a 52.9 percent affirmance rate in pre-code Louisiana conflicts cases. Viewing affirmance rates as a proxy for decisional predictability, Borchers concludes that the Louisiana choice-of-law code has increased predictability. See Borchers, Louisiana’s Conflicts Codification: Some Empirical Observations Regarding Decisional Predictability, 60 La. L. Rev. 1061 (2000). Professor Weintraub studied the contracts provisions of the code and obtained less happy results. Of the 32 contractual choice-of-law cases decided under the Louisiana code, 25 or so make “fundamental” errors in applying the code. See Weintraub, Courts Flailing in the Waters of the Louisiana Conflicts Code: Not Waving but Drowning, 60 La. L. Rev. 1365, 1365-1366 (2000).
Assume that Borchers is right about the code increasing choice-of-law predictability. Is this attributable to the codification itself, or the content of the rules that happen to be codified? Even if the Louisiana code increased the predictability of Louisiana conflicts law, would this increase conflicts uniformity? Doesn’t uniformity require national regulation?
(3) Professor Gottesman argues that we need a federal choice-of-law statute because our current decentralized system produces enormous waste, frustrates rational planning, and is unfair. See Gottesman, “Draining the Dismal Swamp”: The Case for Federal Choice of Law Statutes, 80 Geo. L.J. 1 (1991). Gottesman is largely agnostic about the content of the federal statutory rules. He argues that within fairly large bounds, many choice-of-law rules codified at the national level would address the problems with the current system. But does Congress have the power to enact such rules? Is Congress institutionally competent to craft such rules? Would such a statute make every interstate case a federal question? Gottesman addresses these and many other questions, and surveys the literature.
(4) In 2009, the Oregon legislature enacted choice-of-law statutes to govern legal disputes involving (1) contracts (ORS §§81.100-135 (2009)), and (2) torts and other noncontractual settings (ORS §§31.850-890 (2009)). With these statutes, Oregon has become the second U.S. state and the first state with a common-law tradition to adopt a broadly applicable choice-of-law statute. For both contracts and torts, the statute provides a list of situations where Oregon law will apply, a list of presumptively applicable rules, and a set of factors to take into account in situations where the presumptive rules appear to produce inappropriate results or where presumptive rules are lacking.
For contract disputes not governed by an effective choice-of-law clause, the Oregon statute provides that Oregon law applies to certain contracts, including those involving construction to be performed in state, consumer contracts where the consumer resides and accepts the goods in state, and employment contracts where services are to be performed primarily in state. Presumptive rules are specified for particular types of contracts, including franchise, personal services, real property, and licensing contracts, among others. The presumptive rules are to apply unless “clearly inappropriate.” Appropriateness is to be determined according to the statute’s general rule, which also governs choice-of-law for contracts not otherwise addressed in the statute. It provides:
§81.130. General Rule
To the extent that [other provisions in the statute fail to govern this contract], the rights and duties of the parties with regard to an issue in a contract are governed by the law, in light of the multistate elements of the contract, that is the most appropriate for a resolution of that issue. The most appropriate law is determined by:
(1) Identifying the states that have a relevant connection with the transaction or the parties, such as the place of negotiation, making, performance or subject matter of the contract, or the domicile, habitual residence or pertinent place of business of a party;
(2) Identifying the policies underlying any apparently conflicting laws of these states that are relevant to the issue; and
(3) Evaluating the relative strength and pertinence of these policies in:
(a) Meeting the needs and giving effect to the policies of the interstate and international systems; and
(b) Facilitating the planning of transactions, protecting a party from undue imposition by another party, giving effect to justified expectations of the parties concerning which state’s law applies to the issue and minimizing adverse effects on strong legal policies of other states.
For torts and other noncontractual disputes, the list of actions to be governed by Oregon law includes actions filed against an Oregon public body; professional malpractice actions when the services were performed in Oregon; and actions between employer and employee when the latter works primarily in Oregon and is injured in state, among others. Otherwise choice-of-law rules are specified according to possible patterns of the place of conduct, place of injury, and domicile of each party within or without Oregon. The rules are presumptive; they can be displaced if the application of another law would be “substantially more appropriate” according to ORS §31.878. Moreover, to the extent that these rules fail to provide a governing law, guidance regarding an appropriate governing law is found in this same §31.878, which states:
§31.878. General and Residual Approach
Except as provided in ORS 31.870, 31.872, 31.875 and 31.885, the rights and liabilities of the parties with regard to disputed issues in a noncontractual claim are governed by the law of the state whose contacts with the parties and the dispute and whose policies on the disputed issues make application of the state’s law the most appropriate for those issues. The most appropriate law is determined by:
(1) Identifying the states that have a relevant contact with the dispute, such as the place of the injurious conduct, the place of the resulting injury, the domicile, habitual residence or pertinent place of business of each person, or the place in which the relationship between the parties was centered;
(2) Identifying the policies embodied in the laws of these states on the disputed issues; and
(3) Evaluating the relative strength and pertinence of these policies with due regard to:
(a) The policies of encouraging responsible conduct, deterring injurious conduct and providing adequate remedies for the conduct; and
(b) The needs and policies of the interstate and international systems, including the policy of minimizing adverse effects on strongly held policies of other states.
Compare the Oregon statute with the Second Restatement approach to choice of law. In what ways are they similar? In what ways are they different? The drafters of the Oregon statute, led by Symeon Symeonides, sought the certainty of rules as well as the flexibility and fairness of standards. Can these goals be simultaneously satisfied? Perhaps Dean Symeonides means that the statute attempts to optimally balance the relative degrees of certainty and flexibility, a conceptually appealing goal. If so, where do the Oregon statutes and the Second Restatement sit on the spectrum between rules and standards? Where on that spectrum should courts be located?
(5) One of the most litigated statutory conflicts provisions has been section 1-105(1) of the Uniform Commercial Code, which provides:
Except as provided hereafter in this section, when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties. Failing such agreement, this code [i.e. the law of this state] applies to transactions bearing an appropriate relation to this state.
Courts disagree about the meaning of the “appropriate relation” criterion. Some view it to permit application of local law on the basis of minimal contacts, regardless of whether another state has more significant contacts. See, e.g., Whitaker v. Harvell-Kilgore Corp., 418 F. 2d 1010, 1016 (5th Cir. 1969). Most courts, however, equate the “appropriate relation” test with the Second Restatement’s “most significant relationship” test. See, e.g., In re Merritt Dredging Co., Inc., 839 F. 2d 203, 206-207 (4th Cir. 1988).
In 2001, a revision of Article 1 of the UCC, which included a revision of section 1-105(1), was presented to the states for approval. The replacement provision, section 1-301(c), provided in pertinent part, that “the rights and obligations of the parties are determined … by the law that would be selected by application of this State’s conflict of laws principles.” The official commentary stated that the revision was intended to remove the forum law bias present in the pre-2001 version and direct states to resolve UCC-related legal disputes by reference to the same choice-of-law principles they would use for other disputes. For a variety of reasons mostly not related to this change, §1-301 proved unpopular with state legislatures, so in 2008 the 2001 version was again amended to essentially restore the pre-2001 language from §1-105.
Should choice of law under the UCC be treated the same or different from other choice-of-law problems? To what extent should it matter that the UCC attempts to achieve uniformity? What choice-of-law provisions, if any, could be inserted into the UCC to promote that goal?
* This phenomenon is well (and amusingly) documented in Reppy, Eclecticism in Choice of Law: Hybrid Method or Mishmash?, 34 Mercer L. Rev. 645 (1983).
1. F. Von Savigny, System des Heutigen Romischen Rechts (1849).
* Baxter, Choice of Law and the Federal System, 16 Stan. L. Rev. 1 (1963).
2. “Traditionally the search for choice-of-law rules focused upon the interests of the immediate parties to the action in terms of their private rights. Thus, it concentrated “upon the same factors that would be dispositive in a similar case wholly internal to a single state. I cannot escape the conclusion that a search so oriented must prove unrewarding. Every choice-of-law case involves several parties, each of whom would prevail if the internal law of one rather than another state were applied. Each party is ‘right,’ ‘worthy,’ and ‘deserving’ and ‘ought in all fairness’ to prevail under one of the competing bodies of law and in the view of one of the competing groups of lawmakers. Fact situations which differ only in that they are internal to a single state have been assessed by the different groups of lawmakers, and each has reached a different value judgment on the rule best calculated to serve the overall interest of its community. If attention is confined to the circumstances of the immediate parties, the conflict between the internal laws and between the value judgments they are intended to implement cannot be resolved by the judge unless he is prepared to impose still another value judgment upon the controversy.…
“These difficulties can be avoided if normative criteria can be found which relate to the very aspects of a conflicts case that distinguish it from an analogous internal case. That such criteria can be elaborated in many, if not all, conflicts cases has been demonstrated by several writers who have urged that conflicts cases be resolved on the basis of the governmental interests involved.…
“[T]he process of resolving choice cases is necessarily one of allocating spheres of legal control among states. His [Professor Currie] thesis, like mine, is that the process of allocation should not be performed unconsciously, that the private interests in choice cases are necessarily in balance, and that the cases can be decided by viewing them as instances of conflicting states interests rather than of conflicting private interests.” Baxter, Choice of Law and the Federal System, supra, 16 Stan. L. Rev. 1, 5, 6, 22, fn. omitted.
1. In analyzing the place of manufacture, we fully addressed the relative significance of General Motors’ principal place of business under this principle. Neither party asserts that Delaware, General Motors’ place of incorporation, has any interest in having its product liability or wrongful death statutes apply to this case.
4. We note in this connection that contrary to defendants’ contention, it is not clear what substantive law Iowa would apply to this case. That state has recently departed from the traditional lex loci delicti rule, and it cannot be assumed that Iowa would apply its guest statute to this case. Additionally, although Connecticut remains a lex loci delicti state, it has in the past employed some of the traditional escape devices to avoid the doctrine’s harsh results.… If, as defendants urge, we should look to Connecticut’s whole law, i.e., both its substantive law and its choice-of-law rule, why should not Connecticut look to Iowa’s whole law if suit were brought in Connecticut? If it did look to Iowa’s whole law, Connecticut might well be led back to its own substantive law.
3. There is no conflict between Arizona, Arkansas, and Oklahoma law in this case, because application of any of these states’ statutes of limitations would not bar the plaintiff’s suit. The case does not present a “true conflict” of law between California and either Arkansas or Oklahoma because neither of the latter two states has an interest in having its statute applied. The alleged wrong occurred in Arizona, the courts of Arkansas and Oklahoma are not involved, and any interest that these states might have in barring the plaintiffs’ suit is satisfied in this case by the Arizona statute. Hence, we treat this case as primarily involving a choice between California and Arizona law.
4. While the processing of the claim in this case would affect a federal and not a California court, a federal court sitting in diversity applies the “governmental interest” analysis as would a California court. This approach ensures that “the accident of diversity of citizenship would [not] constantly disturb equal administration of justice in coordinate state and federal courts sitting side by side.” See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941).
2. CPLR 202 states: “An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply.”
14. Although we intend this to be a rule of general application, we do not intend it as an invitation to flagrant forum shopping. For example, were a resident of a guest statute jurisdiction to sue another resident of a guest statute jurisdiction over an accident occurring in a guest statute jurisdiction, the simple fact that the plaintiff was able to serve process on the defendant within our State borders would not compel us to resist application of any relevant guest statute. The State must have some connection with the controversy above and beyond mere service of process before the rule we announce today will be applied. In other words, venue must be proper under some provision other than W. Va. Code 56-1-1(a)(4) [1986].