CONFLICTS OF LAW – SPRING 2007 – PROF. ISENBERGHRULES OUTLINE

Rules/Schemes of Choice of Law:I. Restatement (First) of Conflicts

a. Info: jurisd’n-selecting rules; content of rules irrelevant. System of rules, not a method of analysis.b. Policy: concern w/uniformity of result, predictability, allowing parties to mold conduct to law (serving parties’

expectations)c. Rules:

i. Torts: law of the place of the harm governs. Carroll, p. 1ii. Contracts: law of the place where the K was made governs. Milliken, p. 2

iii. Property (movable and immovable): law of the situs governs. Barrie, Cammell, p. 2iv. Murder: law of place where act was committed governsv. Criminal acts: law of the place where the result was manifested governs (incl. poison); if the Ct has

jurisd’n, it applies its own law.vi. Marriage valid everywhere if legal where performed

d. Concerns:i. Domicile v. residence (only one domicile, can be destroyed only by establishing domicile elsewhere, White

v. Tennant, p. 3)ii. Escape devices to get around harsh results in this approach:

1. Characterization: i.e. calling a tort case a K case in Levy, p. 4, calling a tort case an immunity/family law case in Haumschild, p. 4, calling a vicarious liability case a tort question in Venuto, p. 4, etc.

2. Characterizing rule as procedural to take advantage of forum lawa. Rule re: survival of COA beyond tortfeasor’s death is procedural in Grant, p. 5b. Statutes of limitations can be procedural (when they affect remedy, not right, in Bournias,

p. 5) or substantive (when the same statutes creates the right and the remedy in The Harrisburg, p. 6)

iii. Public policy: can only rarely be sufficient to set aside COL in Loucks, p. 7, it’s possible to use characterization to achieve a policy interest, Mertz, p. 7. Can paint “policy” w/a broad brush to avoid getting to substance of law at issue Holzer, p. 7.

iv. Renvoi: 1. Apply whole law (incl COL provisions) in land (law of situs, Schneider, p. 6) and of domicile,

otherwise apply only substantive law, not COL.v. Foreign law: must be pled by P, otherwise complaint will be dismissed, Walton, p. 7

vi. COL in domestic setting: overrule decisions to achieve preferred allocative effect, MacPherson, p. 8.II. Statutory solutions to COL

a. Isenbergh’s model: i. Policy: uniformity of result, fair allocative effect over time.

ii. Rules: uniform statute that all states adopt; resolve false conflicts (so state w/greater interest has its law apply) and in true conflicts, ct should adopt the law of the other state. If both states would do this (renvoi?) ct should flip a coin.

b. UCC COL provisions (often litigated)III. Choice of the Parties

a. Policy: giving effect to parties’ expectations, predictabilityb. Rule of validation: apply the law that would make a K valid in the face of a contrary rule, Pritchard, p. 8.c. Party COL applies even if K is an adhesion K; this applies to COL in Siegelman, p. 9 and choice of forum in

Carnival Cruise, p. 9.d. Testamentary distribution: parties COL controls, Wyatt, p. 9.e. Inter vivos trusts: ct protects parties’ intent when the trust was created, Hutchinson, Shannon p. 10

IV. Restatement (Second) of Conflictsa. Info: Lots of discretion to courts, who rarely apply it mechanically (Phillips, p. 11); method of analysis, not rules

i. Closely related to the center of gravity rule, Auten, p. 11b. Policy: effectuating policy concernsc. Rules:

i. Three part analysis: 1. (1) Choose presumptively applicable law under appropriate jurisd’n selecting rule: in tort, it’s the

place of injury, in K it’s the COL of the parties.2. (2) Look at contacts (can get different weight)

a. Torts:i. (a) Place where injury occurred

ii. (b) Place where conduct causing injury occurred

iii. (c) Domicile/residence/nationality of partiesiv. (d) Place where the relationship (if any) btwn the parties is centered.

b. Contracts:i. (a) Place of K’ing

ii. (b) Place K was negotiatediii. (c) Place of performanceiv. (d) Location of subject matter of the Kv. (e) Domicile/residence/nationality of parties, place of incorporation and PPB of

corp’ns.3. (3) Consider factors relevant to COL (can get different weight)

a. (a) Needs of interstate/int’l systemb. (b) Relevant policies of forumc. (c) Relevant policies of other interested statesd. (d) Protection of justified expectationse. (e) Basic policies in the field of lawf. (f) Certainty/predictability/uniformity of resultsg. (g) Ease in determining applicable law to apply

d. Concerns:i. Renvoi: adopt whole law when the objective of the COL rule is to have the forum reach the same result on

these facts as would the courts of another state, p. 6.ii. Limits on party discretion: requires that state whose law is chosen hhas subst’l relationship to the parties or

that there’s another reasonable basis for the choice; prohibits COL that’s contrary to a fund’l policy of the state whose law would otherwise apply.

V. Interest Analysisa. Info: not an off’l doctrine, but it has been folded into R.2d analysis. Basic idea is that the exercise of COL is to

determine which among possible suppliers of law has a govn’tal interest in the application of its own law.b. Policy: less concern for uniformity; inherent forum shopping possibility w/true conflicts result; conflicts can be

categorized by allocative effect.c. Rules:

i. Ascertain purposes behind each law at issue:ii. Determine the nature of the conflict and apply solution:

1. True conflict (both states have interest in application of own law): apply the law of the forum Lilienthal, p. 17.

a. California Approach: Comparative impairment, p. 17: eliminate true conflicts by recalibrating interests (Bernkrant, p. 17), then apply the law of the state whose law would be impaired more by application of the law of the other state. Benhard, p. 17.

2. False conflict (one state has predominant interest in application of own law): law of state with interest applies, Tooker, p. 14.

a. NY Approach: Neumeier rules p. 14: (note: doesn’t just cover torts, but usually applies only to loss-allocating (not conduct-regulating) rules).

i. (1) Apply law of state of common domicile, if any1. Shultz, p. 15.

ii. (2)-(3) Place of injury rule: Cooney, p. 151. (2) If accident in D’s state and the law protects Ds (guest statute), that

law should apply2. (3) If accident is in P’s state and that law protects Ps (no guest statute),

that law should applyiii. (4) In all other cases, the law of the place of the accident usually applies unless

displacing that rule will advance substantive law purposes w/o impairing working of multistate system or producing uncertainty for litigants.

3. Unprovided-for case (neither state has interest): many approaches, predominant is to apply forum law, Erwin, p. 16.

iii. Concerns:1. Renvoi: foreign COL rules aren’t mandatory in interest analysis b/c these rules don’t speak to

states’ substantive interests in having their law apply, Pfau, p. 20.VI. The Better Law

a. Info: Not adopted by majority; methodology, not ruleb. Policy:

i. Better law in purely internal adjudication and false conflicts: the law w/ net favorable effect on social costii. Better law in true conflicts: the one that upholds reasonable expectations of parties

c. Rule: five choice-influencing considerations:i. (1) Predictability of results

ii. (2) Maintenance of interstate/int’l orderiii. (3) Simplification of the jud’l task;iv. (4) Advancement of the forum’s govn’tal interestsv. (5) Application of the better rule of law; this can be determined on a facial view of the law, e.g. Milkovich,

p. 19 or a specific view of the law in the instant case, e.g. Jepson, p. 19.VII. Choosing btwn State and Fed’l Law in Diversity Cases

a. Federal courts sitting in diversity apply state substantive law, Erie, p. 21i. Giving content to “substantive” – if a rule is outcome determinative (will lead to a substantially more

beneficial outcome) it’s substantive and the state rule must apply. Guaranty Trust, p. 21.ii. Fed’l cts sitting in diversity must follow COL rules of the state where they sit, Klaxon, p. 23.

iii. Law that applies doesn’t change b/c of transfer, Van Dusen, Ferens, p. 23-24.b. If the state rule would alter an essential characteristic of the fed’l jud’l system (e.g. right to a jury trial), the fed’l rule

applies. Byrd, p. 22.c. FRCP: if the FRCP is on point and const’l under the REA, it applies over a conflicting state rule, Hanna, p. 22

i. The FRCP must be at least as broad as the state rule to apply, Walker, p. 221. The scope of the FRCP must be sufficiently broad to cause a direct collision w/the state law or

implicitly control the issue, Burlington Northern, p. 23.ii. This applies to fed’l statutes, too Stewart, p. 23.

iii. If a fed’l rule and state rule appear to conflict, but effect can be given to both w/o detriment to the other, that’s what the Ct should do, Gasperini, p. 23.

d. Dismissal on SOL grounds in diversity has same preclusive effect as it would have had in the State ct, Semtek, p. 23.e. Fed’l CL:

i. Still exists; limited to matters w/in the exclusive province of the fed’l govn’t (comm’l paper is, Clearfield Trust, p. 24, but securities are not b/c jurisd’n is concurrent w/states, Parnell, p. 24)

ii. Act of state doctrine: countries don’t examine the validity of off’l acts of another country as long as legal where they occurred and jurisd’n/authority existed to take the acts, Banco Nacional, p. 24.

iii. Torts affecting the govn’t: all over the map, p. 24-25.

Choice of Law Concerns:I. Constitutional Limits on COL

a. Due process: state must have sufficient connection w/parties/transaction to apply its law, lest it violate due process, Dick, p. 25.

b. FFC: as long as a state has a sufficient interest, it may apply its own lawi. Balancing approach btwn state interests: Alaska Packers, p. 25.

ii. Any interested state can apply its law, notwithstanding the interest of the other state: Pacific Employers, p. 26.

c. Convergence of DP and FFC:i. State must have minimally sufficient contacts w/the accident/occurrence to apply own law; low threshold,

Allstate v. Hague, p. 26. State must not be arbitrary/unfair in selecting applicable law.ii. In class action, state must have sufficient contacts/aggregation of contacts w/each member of the class to

apply its law to the entire class, Phillips Petroleum, p. 26.iii. FFC includes obligation to provide a forum; can trump state policy when state statute would deny P a

forum, Hughes, p. 27.d. Equal Protection:

i. No unconst’l discrimination in COL; Piper, p. 27. 1. Privileges/immunities clause allows discrimination against nonresidents when (a) there’s a subst’l

reason for the differential treatment; and (b) the disc’n bears a subst’l relationship to the state’s objective.

ii. No discr’n against “foreigners,” forbids unreasonable distinctions btwn citizens of the state whose law is at issue.

II. Recognition of Judgmentsa. Res judicata/finality concerns

i. Claim preclusion vs. issue preclusion, p. 28.b. FFC to judgments:

i. Judgments must get the same weight as they would where rendered; not more or less.ii. A party may not attack a judgment that was fully and fairly litigated if it has become final where litigated,

even if the Ct that decided the issue made a mistake. Fauntleroy, p. 28. 1. This applies w/equal weight to jurisd’l facts/issues, Durfee, p. 30.

a. Party can always collaterally attack lack of PJ if he never appeared.b. SMJ can’t be waived, though R.2d would allow it in some situations, p. 30.

iii. Equitable decrees get the same preclusive effect as judgments at law, Yarborough, p. 28.iv. Limitations on application of FFC to judgments, p. 29.

1. Penal judgments not entitled to FFC, p. 29.2. State has no interest in preventing another state from granting a supplemental compensation award

(when second state had power in the first place), Thomas, p. 30.3. Judgment re: disposition of land doesn’t get FFC if given by any Ct other than one located in the

situs, Clarke, p. 31.a. Equity exception: a ct of equity w/PJ over the parties can indirectly act upon real estate in

another state through authority over the person, Fall, p. 31.v. Fraud/duress/coercion to attack sister-state judgment only if fraud is extrinsic (e.g. to the opp’ty to

appear/defend) but not if it’s intrinsic.vi. Non-final decrees: modifiable decree for spousal support can be modified/enforced in another state,

Worthley, p. 31.c. Int’l/Foreign judgments

i. Int’l comity requires reciprocity (old approach); Hilton, p. 32.1. R.2d takes compromise (broader) approach, w/policy in favor of recognition in limited

circumstances, p. 32.ii. Defenses against recognition of foreign judgments: (1) nation lacked jurisd’n, Schibsby, p. 32; (2)

fraud/violation of public policy.iii. Money judgments entitled to comity regardless of reciprocity.

III. Extraterritorial Reach of Statutes (Int’l Question)a. Criminal:

i. Five trad’l bases of jurisd’n over extraterritorial crimes1. (1) Territorial (based on place where offense is committed)2. (2) Nat’l (based on nat’ality of offender)3. (3) Protective (based on whether nat’l interest is injured)4. (4) Universal (based on physical custody of perpetrator of offenses considered particularly heinous

and harmful to humanity, incl. piracy, torture, genocide, war crimes), Yunis, p. 33.5. (5) Passive personal (based on nat’ality of victim – highly controversial), Yunis, p. 33.

b. Civil, etc.i. Effects doctrine: extraterritorial reach when effects felt in country seeking to apply law; SS Lotus, p. 33.

ii. Presumption against extraterritoriality in US law; American Banana, p. 34.1. Has been modified: deference to foreign law may be appropriate despite effects in the US when

conflicts could cause int’l tension, Timberlane, p. 34.2. Antitrust: consider other nations’ interest, but can apply US law, Harford Fire, p. 34.

IV. Extraterritorial Reach of the Const’na. 4th A (search/seizure) doesn’t apply to nonresident aliens outside the US, Verdugo-Urquidez, p. 35.b. Due process extended to everyone

V. European Perspective: more rules; statutes get more weightVI. Acts of State:

a. Courts of one country won’t question off’l acts of another country if legal where committed and that country had jurisd’n over the act when done. Banco Nacional, p. 35.

b. Unofficial acts of a foreign country don’t count, Kirkpatrick, p. 35.

CONFLICTS OF LAW – SPRING 2007 – ISENBERGHFULL OUTLINE

CHOICE OF LAW: THE BASIC MODEL

I. The Traditional Approach to Choice of Law (2-90 + McPherson v. Buick)a. Introduction: these rules were largely mechanical, known as the “mechanical rules” or the “mere mechanical rules”;

they follow mechanical, objective testsi. The system collapsed in less than a generation.

ii. Note: these are jurisdiction-selecting rules b/c the content of the rules/laws is irrelevant.b. Traditional Theory: Jurisdiction-Selecting Rules (Restatement (First) of Conflicts of Law)

i. Theory: 1. If a mechanical set of rules is applied everywhere, the outcome for similar disputes will be the

same regardless of where the suits arise. This also serves parties’ reasonable expectations (laws to guide behavior)

2. Competing theoriesa. Beale’s Vested Rights theory: events subject to the laws of a given sovereignty over a

specific territory have consequences in the form of rights that become vested b/c of conn’n w/territory.

i. Idea was that vested rights become absolute b/c of the connectionii. Criticism: (Isenbergh) almost certainly wrong one can derive rights that can be

asserted in other states b/c of a judicial proceeding/act in another state1. Doesn’t preserve the parties’ expectations; law isn’t a guide to behavior2. Critics were proponents of Cook’s Local Law Theory: courts using the

law of another sovereign actually adopt it as their own (as a rule of decision in the particular case)

b. Story’s Comity theory: the only thing that makes one country recognize and give force to the laws and principles of another legal system is its own free discretion to do so or not.

c. Huber’s Territorial Theory (See Carroll, infra): three maxims (1) every nation has exclusive sovereignty in its own territory; (2) no nation can bind/affect prop’ty outside of its territory or bind people not resident within it; (3) whatever force the laws of one country have in another country, they depend on the latter state’s tacit consent and laws.

ii. Torts: the law of the state where the wrong occurred (the place of the harm) governs1. The law of the place of the harm governs, even when the great balance of occurrences that led to

the harm happened in another statea. Workers’ Compensation:

i. Alabama Great Southern RR Co v. Carroll (Ala S Ct 1892): Injury (Miss); conduct leading to injury (Ala); V residence (Ala); D residence (Ala). Ala law is favorable to P, who can’t recover under Miss law. P (RR worker) injured in Miss as a result of negligence in Ala. Sued, seeking to recover under Miss law. Ct denied him recovery, holding that the law of the place of the injury governs in a tort case b/c a P has no right to recover until an injury happens. Ct refused to recharacterize the case as a K case (P argued that, since he had a K w/the RR, the Ala workers’ compensation statute which would have enabled him to recover became a part of that K).

ii. Note: the idea that the place of the injury is a clear event is probably wrong. Place of conduct leading to injury may be a better rule (more clear)

b. Intentional Torts: tortious conduct usually coincides very closely with the harm/injury, so the question is less difficult.

c. Defamation (reputational harm): the place of the wrong is where the defamatory statement is communicated (note: this is the most easily manipulable rule: the Nat’l Enquirer can set up in the state with the laxest laws)

d. Invasion of Privacy: the law of the place where the V’s feelings were wounded controls.2. The Place of the Wrong: when events occurred in different states, the R.1st used the “last event

test” reasoning that the tort is only complete when the harm took placea. Exceptions: standard of care cases: law of the place of actor’s conduct applies; when a

person is privileged/forbidden/req’d to act, the law of the place of acting applies.3. Extension of the Theory Beyond Torts

a. Murder: the law of the place where the act was committed governs (even if it’s not where the death occurred)

b. Criminal Acts: the law of the place where the result is manifested controls

i. Poison (R.1st) the law of the place where the harmful force takes effect governs (not the place where the V dies, if different)

iii. Contracts: the law of the place where the K was made governs (lex loci contractus)1. Where a number of steps are required to make a K, the law of the place where the last thing

necessary to make the K valid and binding on both parties governs (not necessarily the place where the K is signed if it’s delivered somewhere else)

a. Milliken v. Pratt (Mass S Ct 1878): K signed (Mass); K delivered/rec’d (Maine); D (W) rez (Mass); P (company) rez (Maine); Maine law is favorable to the company seeking to enforce the K (P). W guaranteed her H’s debts; signed the K in Mass (where she and her H were resident), delivered it to Maine (where P company was resident); H defaulted, company sued to get her to pay on the guarantee, she asserted Mass law (W incapable of K’ing). Ct – Maine law governs, holding that the law of the place of making of the K controls. This K was “made” when it was delivered to Maine (not when signed in Mass) b/c that was the last event necessary to make the K effective and binding on both sides.

2. Place of K’inga. R.1st:

i. Distinction between law of place of K’ing and law of place of performance for different rights/obligations:

1. Law of the place of K’ing applies re: capacity to K/form promises; mutual assent/consideration req’ments; fraud/illegality; time/place where K is to be performed; absolute/cond’l nature of the K

2. Law of the place of performance applies re: manner/time/location of performance, person to whom performance should be made; sufficiency of performance; excuse for nonperformance.

ii. Place of K’ing in different types of K’s1. Formal K: when effective on delivery, place of K’ing is where delivery

is made.a. When acceptance is sent from one state to another: if sent by

acceptor, place of K’ing is the state where the agent delivers it. If acceptance is by other means, the place of K’ing is the place from where acceptance is sent.

2. Informal unilateral K: place of K’ing is where the event takes place that makes the promise binding

3. Informal bilateral K: the place of K’ing is where the second promise is made in consideration of the first promise.

b. Beale defined place of K’ing as the place where the final act was done that made the promise binding.

iv. Property: the law of the situs (where the prop’ty is located) governs1. Immovables (real prop’ty): even if a will is held invalid in another state, if it’s valid in the situs, it

still controls the disposition of property there (even if the prop’ty is left to someone the state in which the will is invalid)

a. In re Barrie’s Estate (Iowa S Ct 1949): land (Iowa); d rez (Ill); charity to receive the land (Ill). d lived in Ill, owned land in Iowa that she left to a charity in Ill. Before she died, the word “voided” was written on her will; this was effective to void the will under Ill law, and an Ill ct held that this was the case. The law in Iowa was different, however, and this did not void the will in Iowa. An Iowa ct held that the disposition of the Iowa prop’ty was still effective, conveying the prop’ty to the charity. Ct held that it is beyond the power of a ct outside the situs of real prop’ty to make a binding decision on land in the situs. This comports w/the general rule that the law of the place where prop’ty is located (situs) governs all questions about it.

i. Notes: 1. FFC doesn’t render foreign decrees of probate conclusive as to validity

of will; this is why Iowa ct didn’t have to respect Ill ct’s judgment.2. This outcome would occur today.

b. Why the law of the situs?i. Draft of R.2d gave three reasons: (1) land and things attached to it are w/in the

exclusive control of the state where they’re situated; (2) immovables are of greatest concern to the state where they’re situated; (3) certainty/convenience.

ii. Note that location of the land is rarely a matter of controversy. But see Durfee v. Duke, Recognition of Judgments, I(b)(iv), infra.

2. Movables (personal property) also governed by law of situs under trad’l theory (R.1st)

a. Cammell v. Sewell (England 1860): P (Eng); Cargo (from Russia to Eng); Damage (Norway); D rez (Norway). English firm (P) insured cargo going from Russia to England, ship stopped in Norway where it was damaged, captain had cargo sold at auction, it was resold to Ds and sold. Firm sued Ds to recover the cargo (or value) after it paid the original owners for their loss, judge held for Ds, applying the law of Norway (where the cargo was sold) which gave title to an innocent purchaser. Ct reasoned that if personal prop’ty is disposed of in a manner binding where it’s located, that disposition is binding everywhere.

b. Difficulties of this approach: (1) movable prop’ty doesn’t always remain in one place; (2) the rule covers intangible personal prop’ty (e.g. ins policy, shares of stock, etc.)

c. Exceptions: i. (1) Succession to movables controlled by law of decedent’s domicile (R.1st);

ii. (2) Rights of spouse in another’s movable prop’ty determined by domiciliary (rather than situs) law.

v. Domicile and Residence: a combination of location and intent1. Distinction: domicile is a jud’l concept (rarely in statutes); rez is a layman’s term, usually used by

legislators (definition depends on context in jud’l interpretation)a. Both distinct from nationality (COL in Europe) and habitual residence (US COL reforms)b. [What is the meaning of the distinction between dom and rez?]

2. Domicile: the place where (a) defendant lives with (b) the intent to make a domicile (the place where D intends to die/ “home is where the heart is”)

a. Everyone has a domicile, nobody has more than one (R.1st, § 11)b. Changing domicile: Domicile can be destroyed only by establishing domicile somewhere

else; but not much is required to establish a new domicile:i. R.1st: to change a domicile, one must be physically present and have the

intention to make the new place their homeii. White v. Tennant (W.Va. S Ct 1888): Old domicile (W.Va); d intended to move

(to Penn); sold house and all items in W. Va.; went to the W.Va side of the border but couldn’t stay overnight, went back to Penn to spend the night, died. Ct held that d had established a new domicile in Penn (applied Penn law, under which the surviving spouse gets ½ of the estate of a person who dies in intestacy; under W.Va. law, the entire estate goes to the surviving spouse). When the d arrived in Penn, it instantly became his new domicile.

1. Note: d may have established his new domicile in Penn even if he hadn’t gone there before going back to W.Va.

2. Variations:a. There would have been a change of domicile in White v.

Tennant if d died after taking a room at a Penn hotel while looking for a permanent home in the area. See Winans.

b. Conflict over whether there would have been a change of domicile in White if d had sent his W ahead to establish a home in Penn, but he died before arriving. R.1st said H couldn’t establish domicile w/o going there himself; R.2d says that sometimes the W’s travel to the location could substitute.

c. If the home straddles the border, the R.1st says that the occupant’s domicile is in the state where the preponderance of the house is, and if there’s no preponderance, the principal entrance is determinative.

c. Moving by legal/physical compulsion: old rule was that a person couldn’t establish domicile by any act done under legal/physical compulsion

i. This rule has weakened somewhat (See, e.g., Stifel v. Hopkins; fed’l prisoner serving live sentence in Penn was treated as a Penn domiciliary in a diversity case; otherwise this would define him out of the class of diversity)

ii. R.2d: a person does not usually acquire a domicile by presence under physical/legal compulsion.

d. Function: from R.1st, § 11, comment (c): people travel, but we want some legal interests to be determined by the same single law.

3. Residence: the place where (a) defendant lives with (b) the intention of remaining for a substantial period of time or indefinitely.

a. Some states have a rule involving a length of time a person is physically present in a state (i.e. 183 days; Ill rule is 7 mo)

vi. Other Traditional Rules:

1. A marriage is valid everywhere if legal where performed (R.1st § 121)a. Couples sometimes went to states with more permissive marriage laws; the 1912 Uniform

marriage Evasion Act (indorsed by R.1st) stated that couples who did this wouldn’t succeed in having their foreign marriage recognized when they went home. Problem: though only adopted by 5 states, Mass is one of them (gay marriage).

2. The legitimacy of a child at birth under R.1st determined by the law of the state in which the parent whose relationship is in issue was domiciled when the child was born.

3. Custody of legitimate children: determined by the law of the state where the father was domiciled4. Status of adoption could be created by the state of the child’s domicile or (if jurisd’n over any

person w/custody of the child) by the state of domicile of the adopting parents.5. Criminal law: if the ct has jurisdiction, it applies its own law.

vii. Criticism of the Traditional Rules:1. Too mechanical (called the “mere mechanical rules”)2. Often picked a single, narrow element of the fulcrum as the entire choice of law (no weighted

balance)c. Escape Devices:

i. Characterization1. Characterizing a tort case as a K case to take advantage of rule favorable to P

a. Levy v. Daniels’ U-Drive Auto Renting Co. (Conn S Ct 1928): car rented (Conn); P rez (Conn); D rez (Conn); injury (Mass); question is of rental agency’s liability to P; no liability under Mass law (higher standard), P seeks Conn law, which construes its civil penalty statute as a K’l element of rental car agreements. P injured in Mass in a Conn rental car. Under trad’l rule, in tort, law of state of injury (Mass) applies; Ct construed the case as a K case, said that the Conn statute was part of the K, so Conn law applied (P could recover). Purpose of Conn law: to incentivize renters to have safe cars (this is clearly at issue).

i. Note: Ct didn’t explicitly foreswear trad’l approach, but worked to get around it. This is a dubious characterization, and opens up forum-shopping possibilities.

2. Holding that the law of domicile governs questions of familial immunity from suit b/c it’s a capacity question, to apply a rule that allows recovery

a. Haumschild v. Continental Gas Co. (Wis S Ct 1959): H + W dom (Wisc), accident in Cal; W sued H to recover for injuries (they’d divorced), but Cal has spousal immunity (to avoid collusive suits by spouses); Ps seek application of Wisc law (no spousal immunity). Ct applies Wisc law, says that W can recover against H, characterizes this as a capacity/ family law question (not a tort question), applying the law of the domicile rather than the law of the place of the accident (trad’l approach).

3. More Characterizations:a. Vicarious liability is a tort question (R.1st), even though it looks like a K question

i. Venuto v. Robinson: D, truck’s owner-operator, leased his equipment to Ross and agreed to take a load from NC to New England; accident in NJ, killing people. Ct applied NJ law (which had vicarious liability, so Ross was laible) even though the K was made in NC.

ii. Carroll (supra): Ct rejected K characterization of tort suit when employee was injured working on RR in Miss.

b. Construction/validity of a release of liability is a K questioni. Preine v. Freeman: Ps (injured in Va accident) released some tortfeasors from

liability in Ks made in Colo/NY. Va provided that a release of one tortfeasors discharged all liability; Ct applied Va law, saying that the construction/validity of a release are governed by the place where executed, but its validity as a defense is governed by the law of the place of injury.

c. Injury to land governed by the law of the place where the injuring event occurs (tort)i. Caldwell v. Gore: D erected a dam in LA, obstructing flow of water to P’s

adjacent Ark land. Ct applied La law, under which lower estate owes a natural easement to upper estate to receive its drainage, holding that the obstruction was unlawful, to impose no greater hardship than if both parcels were in La.

4. Criticism: Leflar describes Ark decisions re: applicability of Ark statute providing damages for mental anguish caused by failure to deliver a telegram; all cases applied Ark law by choosing characterizations that would help in each situation.

ii. Substance or Procedure: the forum applies its own procedural rules (trad’l rule of COL in the R.1st); COL applies to substantive rules only

1. R.1st: matters of procedure are governed by the law of the forum, incl procedure in court, mode of trial, proof of facts, witnesses, evidence, SOL.

a. Explanation: rights/duties of parties shouldn’t be substantially varied b/c of the forum where the action is brought, but forum shouldn’t have to use the machinery of another state system (should be able to use its own).

2. Tests for distinguishing btwn substance/procedure:a. Erie Doctrine: Outcome Determinativeness: Recall Erie, pt IV(a), infra. There, the

question is whether one can predict the outcome of a case with some certainty from the rule (prior to the initiation of the procedure), it’s “outcome determinative,” a.k.a. a rule of decision, so it’s substantive.

b. Practical Convenience: Beale’s test: if the practical convenience to the Ct in adopting the local rule of law is great (and the effect on the rights of the parties is negligible) the forum law applies.

c. “Machinery” test: Cook: it doesn’t make sense for the forum to take the machinery of a foreign court.

3. Rule re: survival of COA beyond death of tortfeasors is procedural for COL purposes :a. Grant v. McAuliffe (Cal S Ct 1953): P rez (Cal); D rez (Cal); acc (Ariz); D (negligent

driver) died in Ariz. Ariz law prohibits tort suit b/c tort claims don’t survive death of tortfeasors if not brought before death; P sought to have Cal law apply. Ct held that the survival statute in Cal is procedural, thus, since the procedural rule of the forum applies, Cal law applies, P recovers. Ct notes that rules can be substantive or procedural depending on the purpose; decides that the Cal survival statute is procedural for COL purposes b/c, unlike wrongful death statutes, they don’t create a new COA, they just prevent the abatement of a COA for the injured person, providing for its enforcement (analogous to statutes of limitations, procedural for COL purposes and hence governed by forum law).

i. Dissent: the survival statute creates a right or COA, so it’s substantive and Ariz law should apply.

ii. Court here didn’t abet forum shopping possibilities; Cal was the only place to bring the case b/c one can only sue an estate in the domicile of the decedent.

iii. Case was still heavily criticized1. Weight of authority was that survival statutes were substantive2. Another notorious use of the distinction:

a. Kilberg v. Northeast Airlines, Inc: plane crash (Mass), forum (NY), P rez (NY), D (Mass corp’n); Mass statute limited recovery, P’s rep sued seeking application of NY law. NY ct held that Mass law should apply as the place of the wrong, but called the damages limitation was contrary to NY public policy, so it didn’t apply that part of the law.

b. Davenport v. Webb: retracted the idea, from Kilberg, that the damages limit was procedural, instead saying that the state had a strong policy re: limitations.

4. Statutes of Limitations (SOL): can be procedural or substantive :a. Determining classification:

i. From Wood & Selick, Inc.: (1) examine foreign law to see if the defense would be procedural or substantive; (2) examine the foreign law to see if the operation of the limitation would completely extinguish the right (substantive). Can also ask whether the SOL must be pleaded (substantive).

ii. From Goodwin v. Townsend: whether the foreign limitation is regarded as procedural or substantive by the Cts of the foreign state concerned, or whether the limitation is cast in “procedural” language.

b. Procedural SOLs: Distinction between right and remedy: statutes of limitations that affect a P’s remedy (not those that bar the right sued upon) are procedural (thus, forum SOL applies), even when worked directly into the law/statute.

i. Bournias v. Atlantic Maritime Co, Ltd. (2d Cir 1955): P was working on a boat belonging to D when its registry changed from Panama to Honduras; he sued, and the question was whether the Panamanian labor law’s 1-yr statute of limitations applied (Panama law allowed P to recover 3 months of wages in this situation). Ct held that the statute of limitations was procedural b/c it wasn’t integral to P’s right or claim and it wasn’t tied intimately to the claim or right (even though it was directly in the statute). Applied the forum (NY) statute of limitations but the Panamanian substantive law (allowing P to recover 3 mo wages). Ct noted that a foreign SOL could be substantive if it would bar the foreign right sued upon (not just the remedy). Ct looked to the purpose of the

SOL, said that, although the limitation pd was contained in the same statute as the right, that didn’t make it substantive b/c it wasn’t aimed at the particular rights the P seeks to enforce. Thus, P can recover.

1. Note: it seems strange to call a SOL procedural when it’s worked into the terms of the Panamanian statute.

c. Substantive SOLs: when a statute creates the right and the remedy (and the right is unknown at CL), the SOL is substantive:

i. The Harrisburg: SCOTUS held a SOL contained in a wrongful death statute substantive since the liability and the remedy are contained in the same statute. This applies to any statutory right unknown at CL.

ii. Davis v. Mills: SOLs are substantive when a statute creates a new liability, and in the same section/same act limits the time w/in which it can be enforced, whether the terms are cond’l or not.

5. Statutes of Limitations: Other Issues:a. Uniform Conflict of Laws—Limitations Act (1982): state’s decision to apply the

substantive law or another state carries the state’s limitation as well.b. R.2d 1988 amendment: unless exceptional circumstanes exist, the forum applies its own

SOL barring the claim and applies its SOL permitting the claim unless the limitations period of the state whose law governs the merits bars the action.

c. The idea that SOLs are procedural is being abandoned.6. Other Issues in Substance/Procedure:

a. The word “void;” Marie v. Garrison: the word “void” in the statute of frauds is a word of substance, not procedure.

b. Parol evidence rule: Beale says it’s a rule of substance.c. Direct action statute: mixed resultsd. Burden of proof is procedural. Levy v. Steiger.

iii. Renvoi: “return of service”1. Distinction between “internal law” (substantive rules) and “choice of law rules”; together, they

make up the “whole law.”2. Applying the whole law (incl. COL provisions of foreign law) of the situs of real prop’ty to a

question of its testamentary distributiona. In re Schneider’s Estate (NY 1950): d (American citizen); died (NY); real estate

(Switzerland). d’s will purported to dispose of land in Switzerland in a way contrary to Swiss internal law (confers fractions of interest in prop’ty on heirs, this can’t be divested by a will); land had already been sold. In deciding whether the law of the situs (which controls prop’ty located there) includes the situs’s COL rules, the ct noted the default rule, which is that the foreign internal law only applies (not the COL rules), and its exceptions as to land and divorce. Since this is a land case, the whole of the Swiss law applies; and since the Swiss COL rules refer the case to NY internal law, the testamentary plan is valid.

i. Note: recall Haumschild, supra: in the concurrence, the judge said he would dispose of the case b/c Cal law governs the existence of the alleged COA (as the place of injury), and in Cal, the immunity question is decided by the law of status (not the law of torts).

b. Alternate approach: Beale says we should ignore foreign COL rules, saying that the only COL rule that can be applied is that of the forum.

i. Cook’s counter: a right vests under the law of a particular state only if that state’s courts would recognize and enforce it; thus, a court following the vested rights approach must look at foreign courts’ COL rules. He took this as a reason to reject the vested rights theory.

3. “Accepting the renvoi” (= follow whole law, incl. foreign COL rule)a. Griswold/Rabel: courts should accept the renvoi b/c the rights provided by another state

are by definition the rights that would be provided by Cts in that state.b. Practical difficulty: the forum must inform itself of foreign rules about renvoi (in addd’n

to foreign substantive law and foreign COL rules)i. If every state accepted the renvoi, no case could ever be decided (would just

bounce back and forth); Dean Griswold noted that this would be extremely rare.c. R.1st directed Cts to ignore foreign COL rules except in land and divorce cases

(Schneider falls in this exception).4. R.2d: recognizes renvoi when the objective of the COL rule is that the forum reaches the same

result on the very facts involved as would the courts of another state.a. Criticism: this rule is met always and never.

b. Comment h clarifies: says the test is usually met when the other state clearly has the dominant interest in the issue, and the interest would be furthered by having the issue decided in the same way its courts would have.

iv. Public Policy, Penal Laws, and Tax Claims1. Public Policy: the New York cases

a. Following trad’l rules: forum’s policy is rarely sufficient to set aside COL.i. Loucks v. Standard Oil Co. of New York (NY Ct App 1918): P (NY rez); acc

(Mass), D (truck-owning company) (NY); forum (NY). After P was killed in an accident w/a truck driven by D’s servant, his W sued, seeking to apply NY law (Mass had a statutory cap on damages); under trad’l rules, Mass law would apply as place of the injury; but P claimed that the system of civil penalties in Mass was at odds w/NY policy re: recovery. Ct held that the Mass statute would apply, saying that the forum state’s policy is almost never sufficient to set aside a COL that decides the case; noted that there was nothing outrageous in the Mass law that would justify setting it aside.

b. Using characterization to achieve policy interest:i. Mertz v. Mertz (NY Ct App 1936): H + W rez (NY); acc (Conn); W sued H in

NY for accident in Conn; she sought to use Conn law, where W can sue H for negligence (NY has spousal immunity for tort suit; similar to Haumschild). Ct applied NY law (denying recovery), saying that NY wasn’t concerned with Conn policy and wouldn’t apply its law to change capacity to sue (governed by forum law).

1. Dissent: the NY law (spousal immunity) has no connection to the morals/welfare of the state; the policy of giving effect to other courts’ judgments should control here.

2. Note: state defines “policy” as the law itself, not as legislative history or intent for enacting the law.

c. Ignoring substance of law, painting “policy” with a broad brush: although the substance of the law at issue was terrible, Ct said that the defense of acting under the compulsion of that law doesn’t violate public policy.

i. Holzer v. Deutsche Reichsbahn-Gesellschaft et al. (NY Ct App 1938): P (German nat’l); D (German corp’n); D brought suit in NY for wrongful termination and damages under K’l indemnity clause after he was fired in Germany b/c of the Nuremberg race laws (illegal to employ Jews); P argued that NY policy would prohibit a NY court from giving effect to this particular law (b/c policy is so against that of NY). The K said that P could recover under the indemnity clause if he was discharged for any reason w/o qualification. Ct held that the firing of P under the law doesn’t violate NY public policy b/c the company’s defense to firing him was that it was compelled by local law (Ct doesn’t look to the content of the law, just the fact that the D was compelled by it). Noted that the place of K’ing governs the K dispute.

d. Res judicata effect of a dismissal on public policy grounds? i. Brandeis: if a state declines to enforce a foreign COL, it just denies a remedy

(P’s substantive right survives); but a Ct may not refuses to give effect to a substantive defense under another state’s law. Bradford, pt. III(a)(2), infra.

2. Penal Laws: one state sovereign doesn’t enforce other states’/countries’ penal laws. R.1st § 611a. US states agree to enforce each others’ traffic lawsb. Crimes committed against US citizens in other countries: governed by US fed’l law.c. “Penal” can include some civil law: penalties incl punitive damages when action is

brought in a state that doesn’t award those damages b/c they’re penal in nature.i. Double/treble damages aren’t penal. See Chavarria.

3. Tax Laws: states don’t enforce other states’/countries’ tax laws.a. Policy: revenue laws affect states in matters as vital to their existence as criminal laws.b. Neely: Ark ct enforced an Okla tax claim, saying that the opposite rule would encourage

tax fraud/evasion. This isn’t representative of a trend to abandon the trad’l rule.d. Pleading and Proving Foreign Law

i. Foreign law is a question of fact which must be pled by the P. If he doesn’t plead it, cplt is dismissed1. Walton v. Arabian American Oil Co. (2d Cir 1956): P (Ark. rez); forum (NY); injury (Saudi

Arabia); D (mfr of injuring product) (Del corp’n, d/b/i NY and Saudi Arabia); P brought suit to recover for injuties; under NY law, D would be liable. T.Ct. wouldn’t take jud’l notice of Saudi Arabian law even though NY COL requires application of the law of the place of the injury. Gen’l rule is that law of a foreign country is a fact that must be proved, and ct must receive evidence if

admissible under forum law. P claimed that Saudi Arabia us “uncivilized” (Holmes said that lex loci doesn’t apply when a tort is committed in an uncivilized country); but P offered no evidence of this.Trial judge should have taken notice of Saudi law, which must be pleaded. P had the burden of pleading Saudi law, since he didn’t plead it, complaint dismissed, P can’t recover.

ii. Different Approaches to Notice/Proof of Foreign Law:1. Beale: foreign law must be treated as fact2. One modern solution: authorizes courts to take jud’l notice of foreign law (see Uniform Interstate

and Int’l Procedure Act)a. Not all statutes are so broad; American courts are usually authorized to take notice of the

law of sister states, but authorization for notice of law of foreign countries is usually discretionary where it applies.

3. Statutes permit courts to certify questions to the state whose law applies, if necessary.4. Some courts have adopted a presumption that foreign law is identical to forum law. See

Louknitsky.5. Currie: if foreign law isn’t proved, apply forum law. It’s easier for D to rebut the presumption that

NY law would apply than to make P prove foreign law.e. Overruling Decisions: Choice of Law in a Purely Domestic Setting

i. Overruling decision to achieve preferred allocative effect:1. MacPherson v. Buick (NY Ct App 1916): P was driving a car he’d purchased from a dealer (not

directly from the mfr), was injured in accident, brought products liability suit against Buick. Ct was faced with Winterbottom rule, which required privity btwn the customer and the mfr for liability to exist. Ct overturned that rule, introducing the “MacPherson” rule (no privity req’d); now, there’s liability for a defective product whenever harm befalls a consumer. Reasoning: shifting cost of defect from the consumer to the producer b/c the latter is in a better position to eliminate the defect (mfr is the lowest cost avoider).

ii. Effects of Overruling Decisions1. Allocative effect: immediate effect: cost of defective products shifted from consumer to mfr.

Long term effect: cost to consumers will probably go up as mfr spends more money testing products. Net social gain here (so the overruling decision creates a “better” rule)

2. Expectation effect: in isolation, there’s some disruption of expectation and the allocative effect of the overruling decision isn’t perfect (P gets recovery and he paid a lower price for the car that reflected the old rules scheme); but once established, overruling decisions become the standard of decision and the disruption of expectation is slight.

a. Legal purists proposed solution: type of overruling decision known as the purely prospective overruling; applying existing precedent to the case in court, but announcing that in future cases, the new rule applies.

i. Problem: no actual decision, the holding is the holding and the rest is dictum. There’s no “stare dictis.”

b. What about a hybrid regime (e.g. the new rule is applied on odd days of the month, Winterbottom rule applied the rest of the time); the cost to both parties would go up; this isn’t efficient.

i. This is why we follow rules predictably and regularly to minimize cost.II. Modern Approaches to Choice of Law (91-266)

a. Statutory Solutionsi. Could create COL statutes

ii. Problems: (1) it’s unclear which law determines preliminary issues (domicile, nationality, place of abode, etc.); (2) statutes are limited in scope; (3) it’s unclear whether statutes apply to formalities/substantive rules and how to tell the difference btwn them; (4) problems characterizing issues (e.g. UCC, R.1st); (5) whose SOL applies?

iii. Examples:1. The UCC (most litigated COL provisions), see p. 922. Borrowing statutes; some states have them, they direct the forum to dismiss claims under foreign

statutes of limitations in appropriate circumstances.3. Tolling statutes: suspend the running of a SOL against out-of-state Ds; if forum could apply its

own SOL, tolling statutes could create perpetual liability for a moving D.b. The Choice of the Parties and the Rule of Validation

i. Introduction: these are cases in which the parties explicitly or implicitly determine the law applicable to their transactions for themselves.

1. Story favored it; Beale was against it, saying it allowed parties to do a legislative act.2. R.1st critics favored allowing parties to select a law to govern their K.

ii. Party expectations and the rule of validation: applying the rule that makes a K valid in the face of a contrary rule (to effectuate intentions of the parties)

1. Pritchard v. Norton (SCOTUS 1882): P became guarantor of a potential judgment against a RR; D agreed to indemnify P for any payment under the guaranty, but did so w/o receiving any consideration. This type of agreement is unenforceable under NY law; but it’s enforceable under LA law (where P was operating and where P’s indemnity against RR liability was effective). Ct, in applying LA law (even though the trad’l rules would have NY law apply), held that if there’s uncertainty about the applicable law, cts should apply the law that will give effect to a K’l obligation rather than invalidate it. Ct also noted that it was unclear whether the locus of applicable law is the place where the K was entered into or the place of performance.

2. Note: in the framework of the trad’l rules, parties can’t change the law applicable to the K. Hand said the parties can’t change the effect of their legal environment when they’re in Ct.

3. Courts can still go to great lengths (w/o objection) to follow the parties’ COL; when parties do this, they knock off a range of problems. Courts usually try to follow parties’ choices unless there’s an overwhelming reason not to.

4. What if the parties choose a law that invalidates the K?a. Assumption is that it was inadvertent, but this isn’t necessarily always true. The accident

may have been in adding the clause that makes the K invalid under the selected law. Thus, there’s no reason to think that the rule of validation reflects the parties “true” intentions better than the choice explicitly made in the K.

iii. Parties COL controls even on a ticket (probably adhesion) K:1. Siegelman v. Cunard White Star Ltd. (2d Cir 1955): P bought a steamship ticket from D line;

during the trip, P’s W was injured, they sued to recover. Ticket built in its own SOL of 1 yr from date of passage. P inended to bring a claim, but was involved with negotiations during which D’s counsel said that they would extend the SOL to keep negotiations open. He relied on that, waited to file suit, eventually did (after 1 yr) and they said it was barred. Under US law, counsel’s statements would have estopped D from asserting its SOL, but under UK law, there was no estoppel (P would lose). Parties’ COL governs when (a) the COL is bona fide, and (2) the law chosen is of a jurisd’n having some relation to the agreement (either the place of making or the place of performance). Parties can stipulate which law applies for the interpretation of the K, but not which law applies for the validity of the K. This is interpretation. UK law applies.

a. Dissent: the ticket was a K of adhesion; P had no choice in COL; mechanical rules aren’t always best.

b. Note: the alternative scheme wouldn’t work; this case made most COL problems disappear.

i. Distinction between matters of interpretation and matters of validity: R.2d § 187 allows incorporation by reference to foreign law to spell out what the parties could otherwise have drafted for themselves re: matters of validity.

2. Carnival Cruise Lines, Inc. v. Shute: Ps bought a ticket in Wash to go on D’s cruise ship; ticket provided that all disputes would be litigated in Fla (D’s HQ); W was injured, Ps brought suit in Wash, SCOTUS enforced the forum selection clause and ordered the suit dismissed b/c, although it was a K of adhesion, the cl served important ends.

a. Note: this case is a major boost for party “autonomy” (read: forum selection clauses)iv. Reasons to apply parties’ COL clauses:

1. Sparing the Ct the pains of decision (Reese)2. Economic reasons: facilitating exit from inefficient mandatory terms, promoting interjurisdictional

competition, furthering development of efficient standard form terms, resolving problems of multiple state regulation, reducing uncertainty (Ribstein)

3. Extreme party autonomy (Prof Juenger): allow the parties to choose the best law, don’t require any connection to the transaction/parties.

v. R.2d Limits to Party Discretion:1. R.2d doesn’t give parties unlimited discretion: requires that the state whose law is chosen have a

subst’l relationship to the parties/trans’n or that there be some other reasonable basis for the choice. § 187(2)(a).

2. R.2d prohibits the COL that is contrary to a fund’l policy of the state whose law would otherwise apply. § 187(2)(b). Fund’l policy usually excludes formalities, obsolete rules, and general K rules.

vi. Testamentary distribution and COL1. Wyatt v. Fulrath (NY Ct App 1965): Duke/Dutchess were Spanish nat’ls/domiciliaries; during

political uncertainty in Spain, they sent cash/securities to NY (agreeing that NY law of survivorship would apply). In Spain, the prop’ty was community prop’ty. He died, she took control of the prop’ty and wrote a will under NY to dispose of it before she died. Administrator of the H’s will filed suit against executor of W’s suit to show that ½ of the prop’ty belonged to the H when he died. K was executed in Spain, and normally Spanish law would apply (as marital

domicile), but NY can choose to apply its law (and it does). The parties moved the prop’ty to NY knowing and hoping that NY law would apply to it.

a. Dissent: there’s no indication that the parties didn’t want Spanish law to apply.2. Validity of inter vivos and testamentary transfers of movable prop’ty: generally, when parties try

to get out of trusts valid when established, Cts won’t allow it and construe the trust as valid.a. Intention of parties when trust established controls:

i. Hutchinson v. Ross: conflict btwn NY CL rule allowing freedom of disposition and Quebec system that restricts inter vivos transfers btwn spouses, H and W had prenup that provided that H would set up a trust for his W and future children; after H went poor, he sued to have the trust set aside under Quebec law. Ct applied NY law and upheld the trust, citing the situs of the prop’ty and the intention of the parties when the trust was established.

b. Choice of law applies over domicile of settlor:i. Shannon v. Irving Trust Co: trust established in NY, providing that NJ law

would govern. Settlor’s son would receive small payments until age 35, but sued to invalidate the provision that ensured this (as violative of NY law). Ct applied NJ law, saying that the domicile of the settlor doesn’t resolve the issue.

vii. Corporate governance: two types of issues in COL in corporate setting:1. (1) Internal affairs principle of corp’n law: on questions involving relations btwn/among internal

constituents of a corp’n, the law of the state of incorporation controls.a. Adoption of a state as the place to charter a corp’n implies a COL even if the economic

center of gravity is outside the state.2. (2) Other issues are governed by the law of the state where they occur

c. Place of the Most Significant Relationship: Restatement (Second) of Conflict of Laws (1971)i. The Restatement (Second): from jurisdiction-selecting rules to policy analysis

1. Introduction: probably (barely) the concensus regime in the US; this is more of a framework than the R.1st, which was a regime of rules. Obvious committee product.

a. Reaction to criticism of the R.1sti. Judge Fuld: center of gravity theory

b. Result of R.2d: less certainty, more policy2. Application: in two steps:

a. (1) Choose presumptively applicable law under appropriate jurisdiction-selecting rule;i. E.g. § 156 for tort.

b. (2) Test the choice against the principles of §6 in light of relevant contacts ID’d by general provisions like § 145 (torts) and § 188 (K)

3. Choice of law principles: generally, courts follow state statutory directives on COL. Otherwise:a. Seven factors relevant to choice of applicable law (§ 6); note that the R.2d says that the

weight of each factor depends on context.i. (a) Needs of interstate and int’l systems;

ii. (b) Relevant policies of the forum;1. Gets predominant weight in the rule that transfers of interest in land

governed by the law that would be applied by cts of the situsiii. (c) Relevant policies of other interested states;iv. (d) Protection of justified expectations;

1. Gets predominant weight in the rule that allows parties to choose the law to govern their K.

2. Important in all fields of law, incl COL; want to allow people to mold conduct, but this concern doesn’t exist in negligence.

v. (e) Basic policies underlying the particular field of law;1. Gets predominant weight in the rule that allows parties to choose the

law to govern their K.vi. (f) Certainty, predictability and uniformity of result;

1. But sometimes finding “good rules” outweighs thisvii. (g) Ease in the determination and application of the law to be applied.

b. Tort cases (§ 145). Qualified presumption that COL in tort is usually the place where the injury occurred (§ 156(2)). COL determined by state with most significant relationship to the occurrence/parties: take the following contacts into account:

i. (a) Place where the injury occurred;ii. (b) Place where the conduct causing the injury occurred;

iii. (c) Domicil, residence, nationality, place of incorporation and place of business of the parties;

iv. (d) Place where the relationship (if any) btwn the parties is centered.

c. Contract cases (§ 188) parties’ rights and duties determined by the law of the state w/the most significant relationship to the trans’n and the parties under § 6. If no COL by parties, take these contacts into account:

i. (a) Place of K’ingii. (b) Place of negotiating the K

iii. (c) Place of performance;iv. (d) Location of the subject matter of the K;v. (e) Domicil, residence, nationality, place of incorporation and place of business

of the parties.ii. Carroll (supra) would have come out the other way; of the four points of contact in § 145 for tort cases, (a)

indicates Mississippi and (b), (c), and (d) indicate Alabama.iii. R.2d gives a lot of discretion to courts, who usually don’t apply it “mechanically”

1. Phillips v. General Motors Corp. (Mont S Ct 2000): P rez (Mont); acc (Kan); bought car in NC; driving to NC. After accident that killed three our of four family members, Ps sued GM for defects in car in Montana (which has generous products liability law). Ct looked at the four points of contact in tort in R.2d; (a) was Kan; (b) was Mich; (c) was Mich (for GM) and Montana (for Ps); (d) was NC. Michigan, at 1.5 points of contact would win under an objective view of the R.2d, but the Ct works through the interests of each state, saying that Kan has no interest (residents of Montana who bought product in NC); NC has no interest b/c NC would apply Kan law; Michigan law can’t apply b/c it would be unfair; so Ct decides to apply Montana law, since Montana has an interest in applying its products liability law to accidents involving residents (since it has no industry, it’s not interested in attracting business.

a. Note: everything boils down to one thing: residence of the parties. State adopted §6(b) as conclusive, ignoring all other policy considerations in §6. Technically, this is ok since §6 has no hierarchy.

b. Isenbergh: the R.2d doesn’t invite this type of analysis, but it doesn’t constrain it, either.iv. Reasonably restrained, “responsible” application of R.2d:

1. Wood Bros. Homes, Inc. v. Walker Adjustment Bureau (Colo S Ct 1979): P rez (Cal); D company (Del corp w/PPB in Colo); K negotiated (Cal/Colo/NM); K signed (NM); K to be performed (NM). P signed up to do sub-K work for D on a development in NM; project was shut down by NM authorities b/c P wasn’t a licensed K’er in NM. P brings suit for the amount he’s owed on the partially completed work under the K; under Colo law, he could recover, but under NM he can’t (that’s how it backs up the requirement that K’ers be licensed). Ct held that NM law applied; under the R.1st, Colo law would have applied, but under the R.2d, (a) is Colo; (b) is Colo/Cal/NM; (c) is NM; (d) is NM; (e) is Colo/Cal; so NM has 2 1/3, Colo has 1 5/6, and Cal has 5/6 (although Ct doesn’t use this math); question is where the COL, on balance, has the greatest allocative effect, and it’s clearly NM.

v. R.2d Difficulties:1. Illustrated by NY’s experience with the center of gravity test: cases with similar facts and different

results:a. Auten v. Auten: H + W lived in England, H moved to NY, W traveled to NY, parties

executed a support agreement; he stopped paying, she brought action in NY to enforce the agreement (she had brought an earlier action in England). H defended, saying that there was another suit which repudiated the K (this is a valid defense in NY, but not in England); Ct said that England (marital domicile, place where W and children were) had the greatest concern in defining/regulating the rights/duties in the separation agreement.

b. Haag v. Barnes: D (Ill) started poking his NY secretary, got her pregnant, she went to Ill, where the child was born, they executed a support agreement. K was valid under Ill law, but not NY; NY judge applied Ill law, held that the K was valid.

2. What good are the presumptions?a. How much weight to give them: two approaches:

i. (1) Pay them only lip service; Wood, Phillipsii. (2) End the analysis with the presumption, making it effectively irrebuttable.

1. Spinozzi v. IIT Sheraton Corp: P (Ill citizen) injured at D’s hotel in Mex. Ct applied Ill COL (R.2d), finding Mexican law applicable, dismissing the claim. Ct App ignored obligation to apply state law under Klaxon (infra), justifying the old place of injury rule on party expectation grounds.

d. Interest Analysis:i. Introduction:

1. Interest analysis in general:

a. Not an official doctrine, but it has overtaken the R.2d (most states have formally adopted the R.2d with considerable implicit/explicit adoption of interest analysis).

b. Interest analysis has always existed in conflicts, but Brainerd Currie expounded on it in 1963 (p. 124)

i. From combinations of the elements in Milliken v. Pratt, Currie developed a notion of state interest in the application of its own law.

ii. In the original form, it was very different from the R.2d: it’s concerned w/govn’t interests, not with specific points of contact, and there is an unequivocal default rule.

c. Basic idea: in a conflicts case, the exercise of COL is to determine which among the possible suppliers of law (state) has an interest in the application of its own law. This is a govn’tal interest, not a private or an allocative one.

2. Policy:a. Uniformity: no concern for uniformity in true conflicts b/c the solution is mechanical.

i. Result devalues uniformity.b. Forum shopping: there’s an inherent forum shopping possibility with true conflicts resultc. Allocative effect: false conflict is a dispute where the effect of COL would be contained

in a single legal environment; in a true conflict the effect of the COL would be significant in more than one legal environment.

i. This makes Milliken v. Pratt a true conflict; the difference in effect (the way people frame their K’l relationships turning on COL) is substantial.

3. Criticisms of interest analysis:a. Weaknesses and courts’ solutions:

i. (1) The way true conflicts are resolved is unsatisfactory1. Courts have weakened or abandoned the on/off divide btwn true and

false conflicts Courts tried to decide whether conflicts were very false or a little bit false; only when there are very true conflicts will courts apply forum law.

ii. (2) Both the parties and courts (if artful) can shape the boundaries of false/true conflicts by asserting different interests.

1. Courts have given objective content to the notion of conflict; in a false conflict, the effect of the COL is concentrated heavily in one state rather than the other. In a true conflict, the allocative consequences of the COL are distributed more evenly btwn the two legal environments.

b. Potential Manipulation: can shift a false conflict to a true one by changing your view of the state interests:

i. Carroll (supra): Ala’s interest: clear interest in protecting Ala employees from injury resulting from the negligence of fellow workers and shifting liability to employers to make them more vigilant. Miss interest: there’s no real reason for Miss to care whether an Ala RR is held to a higher standard in supervising employers than a Miss RR. Thus, false conflict, apply Ala law.

ii. MacPherson: [facts: P (NY rez) buys Buick in NY, drives it to Ont where there’s an accident; P brings claim in NY court; under NY law, no privity req’d for liability, Ont follows privity rule]

1. Broad framing of interests: (NY in protecting drivers from defective cars, Ont. in shielding mfrs from liability to remote consumers) original situation is true conflict.

a. Variation 1: Ont. driver drives into NY for a weekend excursion, gets into an accident caused by car defect, sues Buick. True conflict: if brought in NY, its law would apply.

b. Variation 2: NY resident travels to Ont (by plane), while in Ont, borrows a car from a friend, he’s in an accident and is hurt. True conflict.

c. Variation 3: Ont rez goes to NY, borrows car, accident, sues in NY. True conflict, NY law applies.

2. Narrow framing of issues: (NY in concern w/safety of NY resident drivers; Ont in shielding mfrs from liability to remote consumers) original situation is true conflict; protecting NY resident drivers can’t be done w/o some slight to Ont interest in containing cost of auto industry.

a. Variation 1: now a false conflict b/c NY’s interest is in protecting the safety of its drivers; we don’t attribute to NY law the same solicitude to Ont drivers

b. Variation 2: still a true conflict.c. Variation 3: NY law doesn’t protect Ontario Rez driver; Ont

still puts the producers’ interest above the protection of drivers. It’s a false conflict b/c we can give effect to Ont’s interest (in containing cost of mfr) w/o curtailing the protection of NY-based drivers b/c the driver is from Ont. Ont law would apply.

4. Resolving discord in a purely internal setting:a. Chesny v. Marek (7th Cir 1983)/Marek v. Chesny (SCOTUS 1985): Two possible fed’l

rules at issue; the Ct attempts to impute certain interests/objectives to the laws and treats them two different ways.

i. Ct App: treats the conflict btwn Rule 68 (which allows a D to recover fees/costs after the date of a settlement the P doesn’t accept, if the judgment finally obtained by the P is less than the offer) and CRA costs provision (no similar provision) as a true conflict, resolving it (applying the CRA costs provision).

ii. SCOTUS: treats the apparent discrepancy btwn the rules as a false conflict, saying that any conflict can be dispelled and both can be given effect by interpretation.

ii. Process of Interpretation in Interest Analysis:1. Interpreting the purpose: application in two parts:

a. (1) Ascertaining the purpose that led to the adoption of the law in wholly domestic casesb. (2) Determining which contacts bring a multistate case w/in that purpose.

2. Problems with ascertaining purpose:a. All cases must be decided on an ad hoc basis (under classic interest analysis); b. Identical statutes can have different meanings/purposesc. How are courts to determine the purposes of other states’ laws?d. Arbitrary jud’l/academic preferences guide choicee. There can be many purposes for each law; this makes false conflicts really rare, but

courts have incentives to search for false conflicts (so they don’t appear to trample on one state’s interests).

iii. False Conflicts: apply the law of the state with the more significant interest (forum is irrelevant) – THE NEW YORK CASES

1. E.g. (from Milliken) Maine lender lends to a Maine married woman, but the K is entered into in Mass. Mass interest: protecting Mass married women over the expectations of creditors who have dealt with them; but there is no Mass married woman (only a Maine one). Maine interest: placing the expectations of creditors above the protection of married women (interest of the lender wins).

a. Trad’l rules: Mass law would governb. Interest analysis: this is a false conflict: Maine subordinates the protection of married

women to the expectations of creditors; so Maine law applies.2. Automobile Guest Statutes: often arose in NY, close to the border w/Ontario which has a strict

guest statute (no liability except for extreme recklessness by driver)a. Babcock v. Jackson: P (NY dom); Ds (car owner/operators) (NY dom), car reg/ins (NY),

acc (Ont); P asserted NY law in NY suit (under Ont guest statute, she couldn’t recover). Ct applied NY law, saying that Ont’s interest (preventing fraudulent assertions of claims in collusion w/drivers) was limited to Ont Ds and their insurance carriers, not NY Ds and their carriers, so Ont had no interest (false conflict) and NY law applied (its interest: requiring tortfeasors to compensate those they injure).

i. Note: this was the first case to explicitly reject the trad’l approach. In the opinion, it’s hard to tell whether it’s using the “center of gravity” approach from Auten, supra or the R.2d “most significant relationship” test. Not as straightforward as the Tooker opinion would have it sound.

b. Dym v. Gordon: P (NY dom); D (NY dom); acc (Colo); P and D knew each other from school in Colo, accident in which D was driving. P filed suit in NY, D asserted Colo guest statute as a defense. Purpose of Colo guest statute (not only preventing collusion, but also to grant injured parties in other cars priority over ungrateful guests in the car of the negligent driver) applied (it was broader than the interest in Babcock); this is a true conflict (b/c there were injured third parties, Colo had interest in application of its law), but the Ct applied Colo law based on a center of gravity test (not trad’l interest analysis, under which NY law would apply).

i. Note: Ct may have used center-of-gravity test b/c of the presence of the second car and other injured people. No question of priority in Babcock and Tooker.

c. Tooker v. Lopez (NY Ct App 1969): P (NY dom); D (NY dom); car (registered in NY); acc (Mich). P and D in accident, both killed, suit. D asserts Mich’s guest statute as a defense, P seeks application of NY law. Ct looked at Babcock framework, saying that Mich’s interest was only in protecting Mich insurers from fraudulent claims; NY’s interest was in recovery by NY domiciliary for injury occurring in a negligently driven car. Since Mich has no interest in whether a NY P is denied recovery against a NY D when the car’s insured in NY, it’s a false conflict and NY law applies.

i. Concurrence (Fuld) offers essentially an early version of the Neumeier rules to definitively solve guest statute cases.

ii. Dissent (Breitel): suggesting that when the location of the accident is adventitious, that state’s rule shouldn’t control.

3. Concrete Rules for Automobile Guest Statutes: Neumeiera. Introduction: neither interest analysis nor R.2d.

i. Note: many NY courts use Neumeier rules for all tort cases (See Schultz, infra)b. Conduct-regulating vs. loss-allocating: the ct in Cooney notes that the Neumeier rules

apply only with loss-allocating rules, not with conduct-regulating rules. [Is this true?] i. How to draw the line?

1. Look to the purpose of the rule: but many rules serve both purposesa. Padula v. Lilarn Properties Corp: NY dom injured on

construction site in Mass; NY labor law imposes tort liability on the owner of a scaffold in some situations; Mass applies ordinary negligence rules. Ct noted that NY regulations were both loss-allocating and conduct-regulating, held that Mass law should apply “because these provisions are primarily conduct-regulating” (so the Ct applied the Neumeier rules even though you normally wouldn’t w/a conduct-regulating rule).

2. Hay & Ellis: apply Neumeier rules in all cases, the distinction is too troublesome.

c. Neumeier v. Kuehner: NY rez drives to Ont and picks up a friend; accident, Ont guest brings suit against NY driver, who asserts the Ont guest statute as a defense. NY interest (unqualified recovery by NY residents) doesn’t apply b/c injured guest is Ont rez; Ont interest: preventing fraudulent/collusive claims against Ont insurers (doesn’t apply here); this was a no-conflict (un-provided for) case. Ct reframed the Ont interest (protecting owners of cars/drivers against ungrateful guests), held that it applied, so Ont had an interest; this would make it a false conflict so Ont law would apply (this is the result, but not the way the case was decided).

i. Ct introduced concrete rules for solving auto guest statute false conflict cases (policy included comes from Cooney, infra, and notes in the book)

1. (1) Law of state of common domicile controls, if it exists (this would dispose of all cases up to Neumeier)

a. Domiciliary jurisd’n, in loss allocating rules, has weighed the considerations and has the greatest interest in enforcing both parties’ decisions to submit to the state’s authority.

b. This reduces forum shopping.c. Simson suggests that we don’t apply the law of common

domicile if the state of injury has a law with a significant conduct-regulating purpose.

2. (2) If the accident is in D’s state and the law protects Ds, that law should apply.

a. “Place of injury” test for true conflict guest statute casesb. Protects expectations; Judge Kaye says it’s a neutral rule and

was the standard in trad’l COL.3. (3) If the accident is in P’s state (guest) and it doesn’t have a guest

statute (thus, protects Ps), that law should apply and allow the guest to recover.

a. “Place of injury” test for true conflict guest statute cases4. (4) In all other cases (e.g. split domicile, or when the driver’s domicile

has no guest statute), generally the law of the place of the accident applies unless displacing that normally applicable rule will advance

substantive law purposes w/o impairing the working of the multistate system or producing uncertainty for litigants.

a. Hay & Ellis: this exception gives courts an escape from the rules altogether.

ii. Rules draw on three sources: (a) reversion to mechanical rules w/in interest analysis; (b) classic interest analysis ((2) and (3) would be false conflicts, we’d get the same resolution; (4) would be a true conflict, in this case interest analysis would be displaced and R.2d would apply, leading to the law of the forum, whereas Neumeier leads to place of the accident; (b) specific points of contact from R.2d.

iii. Simplified view of the rules: they’re an exception to the trad’l place of injury rule for cases in which the parties share a common domicile. Korn.

4. Extension of Neumeier Rules Beyond Automobile Guest Statutes: but recall that they apply only with loss-allocating rules, not conduct-regulating rules (this may be a dubious distinction).

a. Applying law of the state of common domicile (Neumeier rule (1)).i. Schultz v. Boy Scouts of America, Inc. (NY Ct App 1985): Boy Scout troop from

NJ went on an excursion in NY, and the scoutmaster molested one boy who committed suicide in NJ after the trip. BSA HQ’d in NJ. Ps sue in NY Ct, seeking NY law b/c NJ has charitable immunity (they’d lose). Holding: Ct applies Neumeier NJ law applies to one D (Franciscan Bros) b/c it’s a state of common domicile. Ct invokes interest analysis, but rather than trying to ID interests, the Ct tries to ID the state with the greatest interest in the litigation (looks to the “matters of contact” btwn litigation and the states in question); NJ extends charitable immunity b/c charities are less well equipped to ward off liability; NY interest in not having charitable immunity is to protect NY rez victims from being harmed by charities. Framed this way, it’s a false conflict and NJ law would apply. Ct says that the law is a loss allocation provision, not a conduct regulating provision, so NY’s interest in charitable immunity is less significant than its interest in the substantive tort law. NJ law applies, charitable immunity (Ps can’t recover).

1. W/r/t the other D, Neumeier rule (4) applied (law of the place of the injury would normally apply unless displacing that law would advance the relevant substantive law purposes w/o impairing the working of the multistate system or producing uncertainty). Applies NJ law over NY law.

2. Dissent: majority overstates NJ interests and understates NY; the purpose of charitable immunities laws is to protect charities domiciled in the state (this isn’t at issue here). The NJ charitable immunity rule is a loss-distribution rule.

3. Note: ask whether a generation of modern COL has left us with a more satisfactory result than the trad’l rules.

b. The second and third Neumeier rules adopt a “place of injury” test in true conflicts. i. Cooney v. Osgood Machinery, Inc. (NY Ct App 1993): Machine was sold in NY,

lost for a few years, then sold in Mo; buyer modified the machine and P was injured using it; he sued the broker who sold his company the machine (he had already been compensated by Mo employer liability law). Under Mo law, P was entitled to no-fault recovery from the employer, but the law shields the employer from tort liability. In NY law, an employer has no further liability to the injured employee but may be liable to other tortfeasors under j/s liability. D sued the employer for contribution, which asserted Mo law as defense. Ct applied Mo law and dismissed the claim against the employer, applying the Neumeier rules. Ct determines that the contribution rules are loss-allocating, not conduct regulating. Mo interest: employer must pay injured employee and in exchange, it’s immunized from further liability; shielding employers from contribution claims helps keep costs down, also furthers the integrity of the workers’ comp system. NY interest: basic fairness to litigants. True conflict b/c they can’t be reconciled. This implicates rules (2) and (3) from Neumeier, so the place of the injury governs (that’s Mo); this protects the parties’ reasonable expectations

1. Note: The Neumeier rules apply only when rules allocate losses (not with conduct-regulating rules). Ct discusses difference btwn conduct-regulating and loss-allocating rules, stating that when conduct-regulating laws are at issue, the law of the jurisd’n where the tort

occurred will generally apply; if remedial rules are at stake (loss-allocating), the parties’ domiciles count.

2. Isenbergh: if you try to decide this case based on intuitive notions of equity, there’s no fair outcome.

3. Sedler: workers’ compensation cases should be decided under the law of the state where the employer took out workers’ comp insurance.

5. The NY approach: beyond tort:a. In re Allstate Ins Co: Acc (NY); P (NY dom); car owned/ins’d (NJ, but garaged in NY).

D’s insurer paid P money, and she sought more from her insurer, which said it was entitled to a setoff. Dispute over the meaning of “setoff”; Ct applied NJ law (which req’d setoff) to govern the policy, saying that, unlike in tort, K cases don’t ask which state has the strongest govn’tal interest b/c they’re concerned only with the private economic interests of the parties. Judge applied the center of gravity test, saying that the dispute overwhelmingly centered on NJ.

6. It’s hard to say what NY’s general approach to COL is after these cases; it’s probably Neumeier for tort (maybe all torts, maybe limited to loss-allocating rules), and in K, it’s probably center of gravity (in Allstate) or R.2d (Isenbergh).

iv. The Unprovided-For Case (neither a true nor a false conflict): multiple possible solutions:1. Critics of interest analysis point to the unprovided for case as a reason to drop interest analysis

a. Twerski: interest analysis puts a lot of emphasis on the interest of the parties’ domicile state in granting recovery; in the unprovided for case there are no domiciliary interests.

2. Possible solutions:a. Currie listed four ways to solve the unprovided for case:

i. (1) Apply the law that the judge things is more enlightened/humaneii. (2) Selfishly apply the law that helps the local resident litigant

iii. (3) Reach the same result as in (2) by applying a more sophisticated rule treating foreign claimants as they would be treated in their home states

iv. (4) Apply the law of the forum; this is the one Currie advocated1. Erwin v. Thomas (Ore S Ct 1973): P (W) and H (Wash rez); H injured

(Wash) by D (Ore); W sues D in Ore for loss of consortium re: injury to H. In Wash, P can’t recover (no loss of consortium COA for a W); in Ore, either spouse can recover. Wash interest: shielding Wash wrongdoers from claims of loss of consortium by wives of tortfeasor’s victims (so there’s no interest b/c there’s no Wash tortfeasors); Ore interest: allowing claims of loss of consortium to Ore wives against those who injure their Hs’. There is no conflict; but the Ct treats it as a true conflict, applying its own law (so P can recover).

a. Isenbergh: it all depends on the way you frame the issue – this could be a false conflict b/c Ore has an interest in recovery for loss of consortium for all wives, since Wash has no interest, it’s a false conflict, and the Ct should apply Ore law (b/c it has an interest).

b. Dissent: Ore law shouldn’t apply to Wash wives.b. Forum should apply law of the other state to prevent forum shopping (?) (Cavers)c. Apply the “better law” – re-examine state interests to find an add’l policy that will be

advanced by applying one law (Posnak)d. Apply broadly-framed common interests (Sedler)

i. In Neumeier, both states have a common interest in compensating injured car accident victims; this means that the only state interested in protecting both the insurer and the D (NY) doesn’t do so, and Ont law (which has this interest, but cabins it somewhat) shouldn’t apply b/c of the common policy of allowing Vs to recover from negligent drivers.

e. Frame issues in multistate context, not domestic one – no unprovided for cases (Kramer)3. Note that Neumeier was originally a no-conflict case before the Ct reframed the issues. See supra.

v. True Conflicts: apply the law of the forum 1. E.g. (from Milliken) Maine lender lends b/c of a guaranty from a married woman who was a

resident of Maine, but all formal elements of the K happened in Mass. Mass interest: protecting Mass married women over the expectations of creditors who have dealt with them. Maine interest: placing the expectations of creditors above the protection of married women.

a. Trad’l rules: Maine law would apply

b. Conflicts: this is a true conflict b/c the interest of one state in the appl’n of its law can be advanced only at the detriment to the interest of the other state in the application of its law. Thus, forum law applies.

2. Criticisms:a. Applying the law of the forum encourages forum shopping; this produces needless

disputes (Baxter)i. But Weinberg says that forum shopping is good; it advances shared pro-P

interests/policies.b. It may discriminate against nonresidentsc. Makes it impossible for parties to mold behavior in accordance w/the law

3. Traditional interest analysis: apply forum law in a true conflict:a. Lilienthal v. Kaufman (Ore S Ct 1964): D (Ore) legally declared a spendthrift by an Ore

Ct, delivered notes to P (Cal) in a business deal. P sued to recover, seeking application of Cal law. Ore law voids the obligations of persons legally declared spendthrifts, in Cal the notes are fully binding. Ore’s interest: protecting Ore spendthrifts from ill-considered obligations; Cal interest: upholding expectations of creditors. Thus, this is a true conflict (there’s an Ore spendthrift and a Cal creditor); Ct applied Ore law to void D’s obligation (P couldn’t recover).

i. Note: this is the opposite result from the similar case on Milliken v. Pratt (supra), but this is precisely how the case was supposed to come out under Currie’s analysis.

ii. Under the R.2d, Cal law would apply; (a) Cal; (b) Cal; (c) Cal; (d) probably Cal; (e) Cal/Ore; Cal has 3.5 points of contact.

1. Allocative effect more likely to be felt in Cal; moral hazard (someone could borrow heavily in Cal, move to Ore and be declared a spendthrift).

iii. Isenbergh: this isn’t a satisfying outcome.4. The California Approach: Comparative Impairment in Cases that Appear to be True Conflicts:

introducing weighing into true conflicts. a. Created by Prof. Baxter

i. Policy: the extent to which a rule’s underlying purpose will be helped/hurt by application/nonapplication to certain cases is a measure of the rule’s pertinence and the state’s interest in the rule’s application to those cases.

ii. Benefit: implements state policies (normative criterion).iii. Only problem: uncertainty

b. Two steps:i. (1) Eliminate true conflicts by recalibrating interests; whittle away one state’s

interest to create a false conflict1. Bernkrant v. Fowler (Cal S Ct 1961): d (Cal rez at death, but rez at the

time of the K is uncertain, either Nev or Cal) made oral promise to cancel the debt owed to him by the Ps (Nev rezs) if they made a partial payment at the time of the agreement; they did, but after his death he’d made no provision for cancellation of debt; they asserted it as a defense when the executor came after them. This kind of oral promise is good in Nev, but not in Cal. Cal interest: applying the law to residents (if d was a Cal rez) to shield their estates; Nev interest allows reliance on oral Ks (esp when coupled with partial performance). Ct applies Nev law, saying that Cal has no real interest in upholding the promises of its residents out of state when they create expectations under some other law.

a. Isenbergh: the argument that Cal interests don’t reach is tortured; judge pares back Cal interest to the point where it’s heavily outweighed by Nev’s interest. This judge has a systematic inclination toward Ps (he also decided Grant v. McAuliffe, infra)

ii. (2) Comparative impairment analysis: apply the law of the state whose law would be impaired more by application of the law of the other state

1. Bernhard v. Harrah’s Club (Cal S Ct 1976): P (Cal rez); D (Nev bar) served driver (Cal rez); P injured just across the line in Cal. P sued the bar for serving the driver, seeking application of Cal law (Nev law is more favorable to bars/taverns and limits their liability). Nev interest: shielding tavernkeepers from liability; puts their interests above those

of third-party injured victims. Cal interest: protecting roads/residents from those who have been drinking (this happens in taverns); also notes that Nev tavern advertises in Cal, this is relevant in Cal’s interest. Ct says that this is a false conflict (but it looks like a true conflict) Cal law would be impaired heavily by application of Nev law, esp b/c Nev law already places a burden on tavernkeepers who let patrons drive away drunk (criminal penalty – fine), so Nev can’t really say its system would be severely undermined. Ct weighs the relative effect in advancing/setting back the interests of the states involved resulting from the COL; disavows assigning worth to the interests, it’s a quantitative judgment.

a. Note: this is almost certainly a true conflict; Cal law would apply (this is what happens, but the Ct doesn’t get there this way)

b. Isenbergh: if the accident had happened in Nev, the ct probably would have characterized the interests differently so its law could still apply.

c. Under the Neumeier rules: Cal law (mixed domicile, apply law of place of injury under (2) and (3)).

d. Under R.2d: exact tie in points of contact: (a) Cal; (b) Nev; (c) Cal/Nev; (d) doesn’t exist.

2. Offshore Rental Co v. Continental Oil: V (Cal) went to LA and was injured; his employer (Cal co) brought a claim under an ancient doctrine for loss of svcs of a key employee. Ct held that LA law applied; in comparative impairment analysis, Ct concludes that the Cal statute is on its last legs; and LA’s interest in applying its law is in full effect.

a. Class interest analysis: true conflict, Cal would apply own lawb. Isenbergh: this is a more restrained application of comparative

impairment analysis.5. Principles of Preference (Cavers)

a. Background:i. Policy: It’s better not to have ad hoc decisionmaking; we should still look for

rules/principles that would determine where the law of one state, serving one purpose should be preferred over the law of another state, serving another purpose (more structured).

ii. Origin of the theory: he has a territorialist bias; but we should be able to depart, at times, from territorial approaches to COL (not always, though).

b. Principles:i. In tort the law of the state of injury should apply if it’s more protective of Ps

than the law of the states where the D resides/acted.1. Other approach would hurt the regulatory scheme of the state of injury.

ii. The law of the state where a D acted/caused injury should apply if it’s less protective than the law of the P’s home state.

1. Cipolla v. Shaposka: P (Penn) went to school in Del w/D (Del); P was injured in Del while being driven by D. Del had guest statute barring claim, but Penn didn’t. Ct found a true conflict (Penn interest in compensating injured resident, Del interest in protecting its host/insurer from liability); applied Del law, citing this principle, saying that it’s fair to allow D to rely on his home state law when he’s acting w/in that state.

iii. K: apply protective law of a state if the party protected aw from that state and the affected trans’n was centered there.

6. A Return to Territoriality (Twerski): territoriality is basic; most consistent.e. Other Approaches and Problems:

i. The Better Law (p. 228): note that this is a methodology, not a rule.1. Prof. Leflar’s “Choice Influencing Considerations” (CICs) and Policy

a. (1) Predictability of results;i. Always a goal of COL theory

ii. Enables parties to plan transactions re: particular body of law; this validates their transactions and protects their expectations

iii. Sustaining legal arrangements in which parties have engaged themselves in GF

iv. Discourages forum shoppingv. CRITICISM: helpful only in limited situations

b. (2) Maintenance of interstate/int’l order;i. Smooth conduct of affairs across lines

ii. Want people to be able to easily move btwn nations/statesiii. Minimal interference w/sovereignty

c. (3) Simplification of the jud’l task;i. Courts shouldn’t do things the hard way if the easy way is just as good

ii. This is why courts use their own procedural rulesiii. Considerations can outweigh this factor; mechanical rules make the task easier,

but they’re not always preferable.iv. CRITICISM: helpful only in limited situations

d. (4) Advancement of the forum’s govn’tal interesti. If there’s a genuine interest, state courts should be expected to act in accordance

w/that concern. If the circumstances show that this exists, it’s a preference.e. (5) Application of the better rule of law

i. Controversialii. A state’s interest in facts can be analyzed only by reference to competing rules

of lawiii. If a judge feels that his state’s law is better than the other, he has forum

preferenceiv. Reasonable courts will prefer rules of law that make good socio-economic sense

when the court speaks.2. The CICs in Application:

a. Milkovich v. Saari (Minn S Ct 1973): Ds (Ont group) drive to Minn in a car (kept/insured in Minn); accident in Minn, P (Ont rez) guest sued, seeking application of Minn law (no guest statute). Noting that the first three CICs weren’t at issue, Ct looked at (4) and (5) and held that Minn’s lack of a guest statute is the better law, allowing recovery.

i. Dissent: the “better law” approach really mechanical application of forum law.ii. Classic interest analysis: false conflict

iii. This would have been the result in NY before Neumeier.b. Jepson v. General Casualty Co. of Wisconsin (Minn S Ct 1994): P (Minn) injured in acc

(Ariz); brings claim against his ins company (his company bought the policy in ND, where he works). P seeks Minn rules (only connection is his residence there at the time of the accident, but Minn has stacking rule); ND has anti-stacking rule. Ct is more restrained in its interest analysis here than in Milkovich, going through all the CICs and concluding that P is seeking redundant damages. Holds that ND law is better (don’t want to reward P with something he didn’t pay for).

3. Now, better law is no longer adopted as a scheme of COL, but its policies are importanta. What makes a law “good”? (Isenbergh) From class; get clarification.

i. Better law in purely internal adjudications and very false conflicts is the law with a net favorable effect on social cost.

1. e.g. MacPherson v. Buick (supra): the new rule entailed a net reduction of social cost (shifting the cost of defective cars to the producer, better able to prevent them); this is a net social gain. The rule isn’t “better” in the isolated case, but it is over time.

ii. Better law in true conflicts is the one that upholds the reasonable expectation of the parties (the effect on social cost is indeterminate)

1. The better law is the law of the legal environment in which the case will be decided the same way next time; the issue is whether the other state would do the same thing.

2. Commentators don’t understand this effect; they usually subordinate predictability/certainty to a higher objective.

a. Here, better is the enemy of good; the measure of “better” is almost exclusively a function of predictability and certainty, esp in a true conflict situation.

3. Criticism of application of CICs in true conflicts: in those situations, there are competing (but equally legitimate) versions of what’s “just” in a particular case (Kramer)

ii. Isenbergh’s Approach:1. Policy: an essential element of COL is to stop trying to determine the “better law”

a. What’s “better” is to choose a law around which people can build their expectations, can’t engage in forum shopping/other strategic behavior.

2. The Regime: [confirm this with him]a. (1) The most important element of COL is certainty/predictability/uniformity of result

i. This was a virtue of the old rules; it’s not just that the rules are mechanical that makes the results certain, but uniformity is nearly impossible w/o mechanical rules. Thus, it’s probably necessary that the rules be mechanical.

b. (2) To achieve uniformity, there must be a single/uniform COL statute, adopted by all 50 states.

i. This would be impossible; it would be hard for states w/the regime to deal w/states w/o it.

1. If a false conflict, solve the case by deciding it in the way that resolves the false conflict (the law that advances the interest of one state w/o slighting the interest of another.

2. If a true conflict, the Ct should determine how the other state would decide the case; but the state should work out a set of mechanical rules.

c. (3) When the forum law and the other state’s law are different, the forum should apply the other state’s law (discourages forum shopping)

i. What to do if the other state has the first line approach (would also apply the forum’s law)

1. This is unlikely to arise b/c litigants would have to be a lot more subtle, and this decision to apply the other state’s law is an unlikely feature of any state that hasn’t adopted the uniform act (or the problem wouldn’t come up)

2. In this situation, flip a coin to decide which law to apply; this is perfectly uniform (statistically speaking).

iii. Renvoi and Interest Analysis1. Foreign COL rules aren’t mandatory in interest analysis:

a. State substantive rule can be applied w/o the state’s COL rule (when that rule would apply the law of another state) b/c COL rules don’t speak to states’ substantive interests in having law apply:

i. Pfau v. Trent Aluminum Co. (NJ S Ct 1970): P/V (Conn dom); D (NJ dom, in car owned by NJ corp’n), accident (Iowa); Iowa has guest statute, P sues to recover for injuries, D asserts Iowa statute as defense (P seeks Conn law). Iowa policy for guest statute: ungrateful passengers, protecting drivers from ingratitude, preventing suits by hitchhikers, preventing collusion; but these policies aren’t relevant here b/c there is a Conn P and a NJ D in a NJ car. Conn would have interest in having its law apply, but Conn would apply Iowa law under “place of the accident” rule. Ct says that the place of accident rule doesn’t speak to a state’s interests in having its law apply, so the Conn substantive prov’n (no guest statute) applies, but not the Conn COL prov’n (which would have applied Iowa law).

ii. Criticism: Roosevelt says that this violates the FFC.2. Generally w/interest analysis, renvoi disappears; only the internal law of the forum state applies.

a. Commentators: foreign COL rules may be informative, but they’re not binding.b. Why to ignore foreign COL rules:

i. (1) State interests defined objectively (just b/c state says it’s interested doesn’t make it so); state is interested only when forum determines that applying its law advances a legit state domestic policy.

ii. (2) State interests defined subjectively by state’s declaration, but generalized COL rules don’t reflect states’ views on subjects. E.g. territorial rules don’t speak to state interests b/c they don’t ask about them.

c. Why to look at foreign COL rules:i. COL is an extension of substantive law; should treat the other state’s

determination re: the territorial scope of its law with the same deference as is given to the substantive law (Brilmayer).

ii. COL defines the scope of the law; it’s improper to ignore that (Kramer). To interpret a law, we have to ask whether the state has conferred a right; the scope of the law is relevant.

iv. Rules vs. Standards1. Why rules? Law = adherence to fixed precepts to limit arbitrary exercise of authority.

a. Paul v. National Life (W Va S Ct 1986): P (W Va rez) and D (W Va res) acc (Ind); P’s estate brought suit against D’s estate; D asserted Ind guest statute. T.Ct. applied place of injury rule, dismissing P’s complaint. Ct held that the Ind guest statute did not apply, commenting on the difference btwn rules and methods of analysis, applying the policy exception to the place of injury rule, saying that Ind guest statute would violate W Va public policy. Refused to use the R.2d or better law analysis.

b. Just b/c rules aren’t perfect doesn’t mean we can’t use them; the advantages are worth the infrequent awkward/doubtful result (Reese)

2. Why methods of analysis? Achieve substantive justice better than rules, which are over-/underinclusive and often yield unfair/inappropriate results.

a. Note: sometimes methods of analysis/standards lead to rules through application.III. COL in Diversity (695-760)

a. The Rules of Decision Act: where Const’n, treaties, or acts of Congress are inapplicable, the law of the state in which a fed’l court sits applies to civil actions.

i. Swift interpreted this to apply only to state statutes; Erie extended it to state CL.b. Diversity jurisdiction under Swift v. Tysen: The Problem

i. Pre-Erie, Swift v. Tysen (SCOTUS 1842) controlled: there, the Ct had held that the Judiciary Act req’d fed’l courts in diversity to apply state statutes but not state decisional law (CL), so fed’l courts were free to fashion their own rules for decision; as a result, decisional law (“federal general common law”) became so varied that out-of-state Ps could easily take advantage of diversity jurisd’n, suing under fed’l gen’l CL or voluntarily submitting to D’s jurisdiction, taking advantage of state CL. Swift also allowed fed’l courts to displace valid state law in a manner not allowed in the Const’n.

ii. Criticism of Pre-Erie state of affairs:1. Black & White Taxicab v. Brown & Yellow Taxicab: Two taxi companies competing for business

near a RR terminal; would have been against the law to create an exclusive livery agreement in that state, so one company reincorporated in an contiguous state, bringing suit in diversity to take advantage of favorable gen’l fed’l CL. Ct applied gen’l fed’l CL, SCOTUS aff’d.

c. Erie: Federal courts sitting in diversity apply state substantive law:i. Erie RR Co v. Tompkins (SCOTUS 1938): P was walking in Penn, on a path by a RR track, when he was

hurt by something that fell off the train. He brought a claim against the RR for negligence in fed’l court (in NY) in diversity to take advantage of the favorable fed’l gen’l CL. Under Penn law, P couldn’t recover (he would = trespasser). Ct held that the state law should apply b/c in diversity, fed’l courts act as state Cts. Ct said that there would be no more fed’l gen’l CL; this would create uniformity of results. Overruled Swift.

1. Argument in the case: the power of federal courts sitting in diversity is exactly coextensive w/those areas in which Congress can make dispositive legislation; anything outside of Congress’s legislative reach is not w/in the discretionary or CL adjudicative powers of fed’l courts in diversity cases. Isenbergh: this is almost certainly wrong

ii. The “twin aims” of Erie: preventing forum shopping and preventing inequitable administration of the law.d. Post-Erie problems: in requiring fed’l courts in diversity to apply state substantive law, the question of what was

“substantive” vs “procedural” became an issue.i. How to determine whether a state or fed’l rule applies under Erie’s “state substantive, fed’l procedural”

guidelines? Things to consider: (1) state interest in applying its rules, (2) fed’l interest in applying its rules; (3) outcome determinativeness (4) preventing forum shopping/inequitable administration of the laws.

1. Outcome Determinativeness: If choosing the fed’l “procedural” rule will change the outcome, it becomes “substantive” and the equivalent state rule applies.

a. Rule: if a rule will lead to a substantially more beneficial outcome, it’s “substantive” and the state rule must apply. Thus, if a fed’l SOL would change the outcome of the litigation, it’s “substantive” so the state SOL applies.

i. Guaranty Trust Co. v. York (SCOTUS 1945): P sued D for fraud re: transactions; suit filed in fed’l Ct in diversity. D pleaded NY SOL, saying that it had to apply despite Erie. Ct held that fed’l procedural rules should apply unless applying that rule would lead to a substantially different outcome than the state rule (this would, in effect, translate it from “procedural” to “substantive,” which makes the state rule apply under Erie). Ct noted that procedure = “manner and means” by which a right is recovered upon; substance = “whether something significantly affects the result of litigation for fed’l court to disregard state rule?” Case decided under the “preventing forum shopping” Erie aim, but interpreted Erie through policy, not as a rule re: “substance” vs. “procedure.”

1. Note: this case casts some doubt in the outcome of the remand in Sun Oil (class action, see supra), where SCOTUS held that state SOLs have historically been regarded as procedural (so in that case each state

could apply its own). But with the FFC bearing in COL, and in light of Erie, Sun Oil would have a choice to handle things differently now.

ii. Clarifying the meaning of th standard:1. State law to determine when service tolls the SOL:

a. Ragan v. Merchants Transfer & Warehouse Co: question was whether to apply FRCP 3 to toll a state SOL. Fed’l rule: suit commenced when complaint filed. State (Kan) law: limitations pd runs until svc made on D. Ct said that it would apply state law to determine when the SOL tolled (b/c of outcome-determinativeness).

2. No suit in fed’l court when state court wouldn’t allow the suit:a. Woods v. Intestate Realty Co: Tenn corp that hadn’t qualified

to do business in Miss couldn’t maintain a diversity action in Miss fed’l Ct if failure to qualify barred it from suing in state Ct.

3. State requirement applies even in absence of comparable fed’l one:a. Cohen v. Beneficial Industrial Loan Corp: fed’l court must

apply state statute requiring Ps in a shareholder derivative suit to post bond as security for expenses even though there were no such fed’l requirements.

2. Balancing: if a state rule would alter an essential characteristic of the fed’l jud’l system, the fed’l rule applies.

a. Byrd v. Blue Ridge Rural Elec. Co-Op, Inc. SCOTUS 1958): P (NC rez) sued D (SC power co) for damages sustained in injury when P was shocked connecting power lines. P sued D in fed’l Ct in diversity; D raised aff defense that P couldn’t recover more than workman’s comp. Under state rule, this was a question for the judge (no jury). SCOTUS held that the state rule couldn’t be applied b/c it would alter an essential characteristic of the fed’l system (the jury trial). Ct said that fed’l cts in diversity would have to balance the preference for state law against the depravation of fed’l rights that would accompany the application of the state law. This test is separate from

ii. The Federal Rules of Civil Procedure (FRCP): 1. The Rules Enabling Act (REA): SCOTUS has the power to prescribe by gen’l rules, forms,

practice and procedure of D.Cts in the US in civil actions. “Such rules shall not abridge, enlarge, or modify any substantive right and shall preserve the right of trial by jury.”

a. How to tell whether a Rule is const’l under the REA:i. Sibbach test: whether the rule really regulates the jud’l process for enforcing

rights/dueites and for justly administering remedy/redress. 1. Criticism: too broad, ignores statutory requirement (Ely – who would

strike down any rule offending substantive state policy).2. If the FRCP is on point and constitutional, it controls over a conflicting state rule.

a. Hanna v. Plumer (SCOTUS 1965): P (Ohio rez), D (dead Mass rez); P brought suit in diversity in D. Mass re: SC car accident. P wants fed’l law (under which service was proper) D wants Mass state law (under which suit would be dismissed). Ct held that the FRCP for service of process applied (so P can continue w/the suit). Ct held first that the FRCP was const’l as w/in the scope of the REA because it affects parties’ rights no more than most rules. Ct then held that application of the fed’l rule isn’t outcome determinative (just changes the way P would have served process) any more than every rule is outcome determinative, rejecting D’s argument that the state rule must apply b/c it’s “outcome determinative” (in that choice of rule determines whether the case may go forward or not). Limiting the scope of Byrd and York.

i. Concurrence (Harlan): Erie’s concern was broader than the Ct said; it was about affecting conduct trad’lly left to the states. Says that if there’s any way th efed’l rule could be characterized as procedural, it must apply.

b. Interpreting fed’l rules:i. The FRCP must be at least as broad in scope as the State rule for FRCP to apply.

1. Walker v. Armco Steel Corp. (SCOTUS 1980): P (Okla rez) sued D (foreign corp’n) in fed’l ct in diversity after he was injured by a nail mfr’d by D company. D says that P’s claim is barred by the statute of limitations b/c of service (P followed FRCP, but under State law service was improper and the case would be time barred). Ct held that the state SOL would apply to determine when the action was commenced b/c the FRCP didn’t cover the tolling of the SOL, but only

whether the action was commenced. Thus, since the state SOL was broader than the FRCP, they weren’t coextensive and the state rule would have to apply.

ii. If the scope of the FRCP is sufficiently broad to cause a “direct collision” w/the state law (or to implicitly control the issue), the rule must be applied (if valid)

1. Burlington Northern Ry. v. Woods: D awarded damages in Ala D.Ct..; after verd aff’d on appeal, Ct App assessed D a penalty on the damages (after unsuccessful appeal) mandated by Ala (state) law. D objected, saying that under FRCP 38, penalties were appropriate only if the appeal was frivolous. SCOTUS held that the FRCP governed, refining Hanna and Walker w/the “direct collision” requirement.

iii. Rule applies w/fed’l statutes, too, not just FRCP1. Stewart Organization, Inc. v. Ricoh: K btwn the parties had a forum

selection clause (NY); suit filed in Ala D.Ct., one party moved to transfer under fed’l transfer statute, D.Ct. denied the motion, saying that transfer was governed by state law and the state disfavored forum selection clauses. SCOTUS rev’d, saying that the fed’l statute governed, asking first whether it was broad enough to control the issue, whether it was const’l, and applied it. D argued that both the state and fed’l law could be applied, but Ct didn’t buy it.

iii. If a fed’l and state rule appear to conflict, but can be worked together so that each can be given effect w/o detriment to the other, that will be done

1. Gasperini v. Center for Humanities, Inc. (SCOTUS 1996): P news reporter lent his pictures to D Center to use in an educational video; they lost the slides, he sued for their value and was awarded $1500/day (an amount an expert testified they may be worth. Ct thought that was excessive, and used NY state law to review the verdict and order a new trial. The 7th A (the “federal rule” here) says that no fact tried to a jury shall be otherwise re-examined in any fed’l ct other than according to the rules of the CL. Ct noted that NY law is outcome determinative, a statutory damages cap is substantive (not saying that that’s what the NY law is), and that the NY law is a procedural instruction that’s substantive in nature/objective. Held that both standards could be applied together, as long as the NY rule was applied with an “abuse of discretion” standard (acceptable under 7th A and the NY rule).

iv. Preclusive effect of dismissal on SOL grounds1. Semtek International, Inc. v. Lockheed Martin Corp. (SCOTUS 2001): P sued D in Cal state Ct; D

removed action to fed’l D.Ct. which dismissed P’s complaint under Cal’s 2 year SOL, speficyin in the order that the claims were “dismissed in their entirety on the merits and with prejudice.” P then filed in Md (longer SOL) which granted D’s motion to dismiss for res judicata. In Cal, a dismissal of a claim as outside the SOL isn’t res judicata on the underlying claim (otherwise, this would extinguish all rights among parties but also all other claims that could have been brought). Ct held that the diversity-case dismissal had the same preclusive effect as a dismissal for failure to file w/in the state SOL in state court.

a. Note (Isenbergh): The fed’l Ct muddied the waters by dismissing the claim “in its entirety on the merits w/prejudice” – it looks like it was trying to give the dismissal res judicata effect. This statement is wrong. The opposite result would be contrary to the REA as an invalid extension of civil procedure (if the dismissal were res judicata that would infringe on state substantive rights)

b. Note: this isn’t a FFC question b/c it’s the first adjudication.e. Choice of Law in Federal Court Cases Involving State-Created Rights

i. Fed’l courts sitting in diversity must follow COL rules of the state in which they sit1. Klaxon Co. v. Stentor Electric Mfg.Co. (SCOTUS 1941): P transferred business to D and later sued

for breach of best efforts clause D had signed; after P got a judgment, he moved to add interest under NY state law, which said that he was entitled to it (= state created right). Ct held that fed’l courts sitting in diversity must follow COL rules of the state in which they sit; this is obvious b/c COL rules are rules of decision. Twin aims of Erie: if we didn’t use state COL rules, the result would change (would lead to forum shopping and inequitable administration of the laws)

a. Note: this issue was already implicitly decided in Erie.ii. Change of Venue and COL: law applied doesn’t change b/c of transfer.

1. Van Dusen v. Barrack: Mass plane crash; many actions filed in Penn. D sought to transfer to Mass, Ps argued that this wouldn’t serve “the interest of justice” b/c under Mass law their recovery would diminish (damages cal). Ct approved transfer and said that Mass law would apply. Said that the transferee D.Ct. must apply the state law that would have been applied if there had been no change of venue; Ps don’t get a change of law as a bonus for change of venue. Noted that

superficial reading of the idea that fed’l courts should apply the law ‘of the state in which they sit’ might suggest opposite result, but the whole essence of Erie was that the “accident” of diversity shouldn’t lead to a different result.

2. Ferens v. John Deere Co: P injured in accident on his farm in Penn, filed suit in Miss fed’l ct to take advantage of Miss’s long SOL. P then had the case transferred back to Penn (where SOL had run). Ct held that transfer wasn’t intended to affect the outcome, so it let Miss SOL apply.

a. Dissent (Scalia): Van Dusen compels the opposite result: the P was forum shopping.f. Federal Common Law

i. There is a fed’l CL: holding in Erie that there’s no fed’l general CL doesn’t mean that there is no fed’l CL.1. Fed’l CL is limited to matters w/in the exclusive power of the fed’l govn’t (not the powers

Congress shares w/the states). In those situations (of concurrent power), the ROD act requires that state law apply in diversity cases.

ii. US rights re: commercial paper it issues determined by fed’l law1. Clearfield Trust Co. v. United States (SCOTUS 1943): Check (issued by the US) stolen,

endorsement forged; US delayed in drawing P’s attn to the forged endorsement (this is a defense for P under Penn law to having to pay on the check). P filed suit in D.Ct. in Penn, which applied Penn law. SCOTUS rev’d (wouldn’t apply Penn law), holding that the rights and obligations of the US in connection w/its own negotiable paper is a matter of fed’l law. Note that there’s no statute on the issue; the power comes from the spending power. Fed’l Ct in these areas adopts the rule of the law merchant, which wouldn’t allow a defense for the delay here.

a. Note: if this case were filed in state ct, they’d have had to have applied fed’l law, too.b. Source of authority? Ct was unclear about the source of authority for the creation of this

fed’l CL: would have been easy to say that when the US is a party, fed’l law applies. iii. Securities =/= commercial paper; state law applies

1. Bank of America v. Parnell (SCOTUS 1956): Private bank took US equity bonds that had probably been stolen, in subsequent suit question was whether they took the bonds in GF. Under fed’l law, the owner of the bonds from whom they were stolen has the burden of proving BF on the part of the Bank (very difficult b/c the bank accepted the bonds from an intermediary). State law is less burdensome. Ct applies state law. Idea is that securities aren’t w/in the exclusive province of the fed’l govn’t, there’s overlapping state power, so state power applies (compelled by the ROD Act).

a. Dissent (Black): would apply fed’l law, saying Clearfield isn’t distinguishable.iv. The act of state doctrine (AOS): countries won’t examine the validity of other countries’ official acts as

long as they were legal where they occurred and authority existed to take those acts (jurisd’n):1. Banco Nacional de Cuba v. Sabbatino (SCOTUS 1964): Cuba expropriated sugar, then sold it to a

commodities broker in the US who asserted the sale as a defense when sued by the original owners of the sugar. P challenged the Cuban govn’ts expropriation as invalid. Ct held that it wouldn’t examine the validity of the acts of Cuba under the act of state doctrine, which says that courts in one country don’t examine the validity of acts done in another country. The expropriation was valid under Cuban (but not American) law, so the Ct

a. Note: this is somewhat akin to the political question doctrine; Ct just won’t look at the Q.v. Courts are often unclear about the source of authority for the creation of fed’l CL.

1. In Clearfield it would have been easy to say that fed’l law applied b/c the US was a party2. Courts sometimes infer common lawmaking authority from fed’l statutes

a. Textile Workers v. Lincoln Mills: SCOTUS held that the purposes of the Taft-Hartley Act demanded a fed’l judge-made law governing enforcement of CBAs (even though statute spoke only of jurisd’n.

3. “Spontaneous generation”?a. Sabbatino?b. US v. Standard Oil Co: Ct held that the govn’ts right to recover for injuries to a soldier

was a matter of fed’l CL, reasoning that the point of Erie was to bring fed’l jud’l power under the subject of state authority in matters of local interest/state control; didn’t intend to broaden state power over matters of fed’l character.

vi. Torts affecting the Govn’t: demonstrate how difficult it is to tell whether the Ct will use fed’l CL or not.1. Govn’t can sue for trespass even though no fed’l statute authorizes suit (this was established early,

in Cotton v. US)a. BUT during Swift era, Ct still held that the measure of damages for conversion of oil

from fed’l land was a “local” matter governed by state law (Mason v. US)2. Fed’l Tort Claims Act (FTCA) makes tort liability of the US depend on the “law of the place

where the act/omission occurred”a. In 1963, SCOTUS held that the liability fo a fed’l officer in tort was based on state law.b. Howard v. Lyons (diversity case) Ct held that the extent of a privilege accorded fed’l

officers for statements allegedly defamatory under state law was a matter of fed’l law.

3. Most recent case: Boyle, which held that military suppliers have a fed’l CL immunity in tort actions brought by injured soldiers and their families. Here, fed’l law preempts state law b/c applying state law would undermine fed’l interests.

vii. Fed’l and State law1. Fed’l law is interstitial; Congress acts against the backdrop of state rules (Hart and Wechsler)2. Content of fed’l law (but not scope) can be determined by state law. De Sylva v. Ballentine.

a. Fed’l CL can preempt state law only when the scheme in question shows a distinct need for nationwide legal standards or when express provisions in analogous statutory schemes show congressional policy choices applicable to the issue at hand. Kamen.

IV. The Constitution and Choice of Law (316-377)a. The Limits of Legislative Jurisdiction

i. Due Process: a state that attaches prop’ty to bring a D into court, which has insufficient connections with the action, deprives the D of due process.

1. Broader ideas of due process somehow constrain courts’ power to apply their own law to affect Ks made/performed outside of the state. NOTE: this is probably wrong (Isenbergh)

a. Home Ins. Co. v. Dick (SCOTUS 1930): P (Tex); D insurance co (Mex corp’n). P didn’t file suit in Tex (to take advantage of 2-yr statute of limitations) until more than a year after the date of loss of ship to fire, but the policy had a 1-yr statute of limitations (OK under Mex law). Everything happened in Mex (issued in Mex, covered the boat only in Mex waters, premium paid in Mex, made subj to Mex law, etc.); only connection w/Tex was P’s permanent residence (he was living in Mex the whole time). P didn’t bring suit directly against the D ins co, he brought a claim against two NY reinsurance companies (who had some presence in Tex) and attached the assets of the D Mex insurer (the prop’ty interest in the claim of the Mex insurer against the reinsurer) in Tex. Ct held the attachment violated due process since everything related to the policy happened in Mex and Te wasn’t really involed; thus, Tex didn’t have the power to affect the terms of the K. Ct also holds that the Tex statute (w/statute of limitations) is an unjustified extension of power.

i. Recall Harris v. Balk: A P can get jurisd’n over someone to the extent of the value of their prop’ty physically located in a sovereign environment. Dick involves attachment of a transitory personal obligation, not just physical/real prop’ty.

ii. Comment: this case is almost certainly wrong, and today’s SCOTUS wouldn’t decide the case the same way. Courts don’t have to have a rational basis for applying their own law; the Ct was just concerned about the procedural unfairness of subjecting a foreign person/corp’n w/no connection to Tex to the compulsory power of its courts.

1. Now that the Ct has retreated entirely from substantive due process, this case wouldn’t come out this way.

ii. Full Faith and Credit (FFC) and Statutes:1. It doesn’t make sense to apply FFC to COL b/c if the FFC req’d states to give effect to other

states’ statutes in their own COL process, it wouldn’t make sense.2. Old, probably inaccurate approach: States owe each others’ statutes FFC:

a. Bradford Electric Light Co. v. Clapper (SCOTUS 1932): P (Vt rez) employed by company (VT electric utility w/ppb in Vt); entire employer-‘ee relationship centered in Vt. Company had lines in NH, sent P there for maintenance where he was electrocuted. Widow brought claim against D company in NH Ct (sought appl’n of NH law). D said that NH couldn’t const’lly apply its own law; must acknowledge limitations under Vt’s workers’ compensation statute (which expressly says it applies to injuries outside the state). Ct held that NH couldn’t apply its own law b/c it had to afford FFC to the VT statute. Read the text of the FFC (requires states to give full effect to “public laws”) to require states to give effect to statutes. Interest analysis: NH’s interest was casual at best.

i. Comment: this is almost certainly wrong.ii. Trad’l rule: NH lwa would apply as place of the injury

b. But it seems clear that “public acts” in the FFC means statutes; the modern view recognizes that the CL is w/in the clause, but not statutes.

3. Using the FFC to impose constitutionality on interest analysis/COL: as long as a state has sufficient interest, it may apply its own law (applying a balancing approach)

a. Alaska Packers Ass’n v. Industrial Acc. Comm’n (SCOTUS 1935): P entered into an employment K in Cal, lived in Cal, with D company d/b/i Cal, to do seasonal work in Alaska, where he was injured. The K specified that Ala law would apply; Cal law conflicts w/the K (says that it will have jurisd’n over all controversies re: injuries suffered

outside of Cal when the injured employee is a Cal resident and the K was made in Cal). P got an award under Cal law, D objects and says that Alaska law wouldn’t have given him that award. Ct says the award doesn’t violate FFC or DPCt didn’t overrule Bradford, but the case emphasizes what was wrong with that case: the implication is that FFC would apply to statutes, but the statutes may have conflicting interests. Ct says that every state is entitled to enforce its own lawful statutes in its own courts (foreign statute doesn’t always win). The Ct applies FFC to essentially give const’l dimensions to interest analysis, saying that Cal will apply its own law unless Alaska’s interest in the case is greater (but says that Cal’s interest is significant and it can apply its own law).

4. Rejecting rigid reading of FFC (essentially leaving nothing left of Bradford): any interested state can apply its law notwithstanding the interest of any other state (weakening Alaska Packers balancing approach).

a. Pacific Employers Ins. Co. v. Industrial Acc. Comm’n (SCOTUS 1939): D (Mass bus) has Mass employee (P) it sends to Cal for work where employee was injured. He got an award under Cal law (more than he would have gotten in Mass); D says the Cal ct should have looked at Mass law. Note: this case is essentially the same as Bradford. Ct says that Cal asserted in its employee compensation statute that its provisions couldn’t be displaced by another state’s laws; that Mass allows redundant recovery shows an interest/concern in injured employees. Ct says that FFC doesn’t require Cal to w/hold a remedy; the clause doesn’t require states to substitute other states’ statutes for their own when they’re competent to legislate. It would offend Cal policy to apply the Mass law.

b. Exception to this rule:i. Order of United Comm’l Travelers v. Wolfe: Ohio ass’n (fraternal benefit

society) sold ins to a SD member, requiring that claims be filed w/in 6 mo of his death. SD ct applied its own law to invalidate the limitation, SCOTUS rev’d under FFC (saying that Ohio limitation had to stand); said that the law of the state of incorporation of a fraternal benefit society controls the validity of its terms of membership.

iii. Convergence: the FFC and the DPC converge to impose constitutional constraints on COL1. The beginning of convergence:

a. Watson v. Employers Liab Assur Corp (SCOTUS 1954): P (LA citizen) injured using a product mfr’d by Ill subsidiary of D Mass corp’n. He sued in LA, relying on statute (ins policy—negotiated/issued in Mass and Ill—prohibited these types of actions). Ct held that the ins contract protected D against claims anywhere in the US, saying that LA had interest in applying its direct action statute b/c P was a citizen.

2. State must have minimally sufficient contacts with the accident/occurrence to apply its own law. This is a low threshold (here, being a member of the workforce, w/D company d/b/i the state, and moving to the state post-accident was sufficient)

a. Allstate Ins. Co. v. Hague (SCOTUS 1981): P (Wisc resident, car, ins) dies in motorcycle accident in Wisc; he had worked in Minn, but wasn’t on his way there. His will was probated in Minn after his widow moved down there (post-death); Minn law allows stacking, so she could recover more (Wisc doesn’t). Ct says that, if a state has only insignificant contacts w/the parties’ occurrence, it’s unconst’l (fundamentally unfair and arbitrary) to apply its law (citing Dick to say that residence alone isn’t enough and Yates to say that post-accident change of residence to forum isn’t enough); Ct holds that Minn contacts are significant b/c (a) P was a member of Minn’s workforce, (b) D company did business in Minn; and (c) the widow became a Minn rez before the litigation started. Ct distinguishes Yates, saying that although post-accident relocation alone isn’t sufficient, that wasn’t the only contact here. Thus, it’s const’l to apply Minn law.

i. Concurrence (Stevens): the FFC and DP are separate questions: (1) does the FFC require Minn to apply Wisc law? No; (2) does the FADPC prevent Minn from applying its own law? No. Thus, it’s ok to apply Minn’s law.

ii. Dissent (Powell): court should invalidate a forum’s decision to apply its own law only when there are no significant contacts; there were none here.

3. State must not be arbitrary or unfair in choosing substantive law that applies in a given case; this requires that the state whose substantive law is to apply have significant contact (or aggregation of contacts) w/the transaction/accident/parties; in a class action lawsuit, the state must have significant contact/aggregation of contacts with each member of the class.

a. Phillips Petroleum Co. v. Shutts (SCOTUS 1985): D company agreed to pay a %’age royalty from sales of oil/gas, but it held the royalties for a pd of time (not allowed) and Ps sued to recover interest on the royalties. Many cases were consolidated, brought in Kan ct which held that D had to pay the interest. Ct notes that the Kan ct applied its own law

even though most Ps had no connection to Kansas. Ct holds that the Kan judgment is effective as to those w/ties to Kan, but can’t extend to cover all Ps, saying that the FFC/DPC require that a state select the substantive law that applies in a const’lly permissible manner, which requires that the state have a significant contact (or sig aggregation of contacts) creating state interests such that the COL is neither arbitrary or unfair. Ct reads this to require that Kan have an aggregation of contact w/the claims of each class member. Because only a few Ps were resident in Kan, and b/c there was no common fund in Kan, there aren’t sufficient contacts for the Kan j’mnt to cover all Ps.

b. Getting around this result:i. What if on dissent in Shutts, D argues that claims are time-barred and Kan has a

longer statute of limitations. If the Kan ct held that limitations questions were procedural (= apply forum law), it could apply its own law to all claims. This happened on remand in Sun Oil Co. v. Wortman.

ii. Consequences: Ferens v. John Deere Co: P (Penn) injured in Penn while using machine mfr’d by D (Del corp’n, ppb in Ill); P sued after two years (too late for Penn SOL) in Miss (6-yr SOL) basing jurisd’n on the fact that D d/b/i Miss; then P moved to transfer the case back to Penn “for convenience of parties ...” Under Van Dusen, transferor ct must apply law that would have been applied by the ct where the case was originally filed (Miss); SCOTUS allowed the P to take advantage of Miss’s SOL and then bring the claim back.

b. The Obligation to Provide a Forumi. FFC can trump state policy: when a state statute that might deny P a forum conflicts with the FFC

(requiring states to give effect to other courts’ statutes), FFC wins and the state policy violates the clause.1. Hughes v. Fetter (SCOTUS 1951): P died in an acc in Ill, his admin brought suit in Wisc Ct

seeking application of Ill wrongful death statute. T.Ct dismissed the complaint, saying that the Wisc statute creates a COA only for deaths caused in Wisc, and that this establishes a local pub policy against Wisc entertaining suits brought under the wrongful death acts of other states. Ct held that Wisc couldn’t close the door to the COA created by Ill’s statute, saying that although the FFC doesn’t require the forum to subrogate its interests for those of another state, the FFC has a competing policy (which must trump Wisc’s) that requires states to give effect to obligations/rights created/recognized by other states. Wisc policy could deny P a forum (not in this case, but in others); thus, this violates the FFC.

a. Dissent: the Wisc legislature decided not to allow these rules, and there is no conflict in the policies of the Wisc and Ill rules; the Ill courts would have dismissed the case too.

ii. The Equal Protection Component of Full Faith and Credit: 1. Tennessee Coal, Iron & RR Co v. George (SCOTUS 1914): P worked in Ala and was injured

there, he sued his Tenn employer (D) in GA ct, seeking Ala law (more liability for employer). D noted that Ala statute said that it could only be brought in Ala Ct. Ct held that it was ok for the GA Ct to apply the Ala law, saying that the place where P brought suit isn’t a part of the COA, and venue isn’t part of the substantive provision of the statute. It doesn’t matter that this was a statutory, rather than a CL, COA.

iii. State Power to Keep Litigation at Home1. Interests: ensuring proper administration of the law or minimizing harassment/expense.2. If a state applies another state’s law, can it apply as much or as little as it wants? Apparently.

a. Pearson v. Northeast Airlines, Inc.: NY P killed in crash in Mass; judge said that P’s right to recover came from Mass law, but the Ct wouldn’t apply Mass’s damages limitation. Dissenters said this violated FFC.

c. Unconstitutional Discrimination in Choice of Lawi. Supreme Court of NH v. Piper (SCOTUS 1985): VT P lived near the NH border, applied to take the NH bar

but was denied under a rule that only NH residents could do so. She sued, claiming the restriction violated the Ps/Is Cl in Art IV (the Ps/Is of state citizens, not the 14th A one which refers to US citizens). Ct holds that practicing law is a P/S of state citizenship b/c lawyers have a role in the nat’l economy and out-of-state lawyers represent unpopular clients. Thus, the practice of law is protected by the Ps/Is cl. Ct holds that lawyers don’t fall w/in the public function exception (lawyers aren’t officers of the Ct). The Ps/Is clause allows discrimination against nonresidents when (a) there’s a subst’l reason for the difference intreatment and (b) the disc’n bears a subst’l relationship to the state’s objective. Neither of these apply here; thus, NH’s residency requirement violates the Art IV Ps/Is cl.

ii. If this is true, is interest analysis unconst’l (it denies to nonresidents the protection of the state law)? No.1. Why use residence/domicile in interest analysis as a basis for limiting the scope of a state’s laws

w/Ps/Is cl? Ct has held that this is a legitimate basis for finding a state interest

2. Interest analysis is const’l b/c a state that’s interested in applying its law b/c of the party’s residence w/holds the protection of that law from a nonresident in the interest of comity. Furthering comity is a substantial reason for differential treatment under Piper.

iii. Equal Protection and COL: the EPC is relevant to COL in two ways (Currie, Schreter): (a) it prevents disc’n against “foreigners” (not all of whom w/in the Ps/Is cl, but the protection is similar); the test for reasonableness is the same under EPC and Ps/Is; (b) EPC forbids unreasonable distinctions btwn citizens of the state whose law is in issue.

RECOGNITION OF JUDGMENTS: DOMESTIC AND INTERNATIONAL

I. Domestic Judgments (477-532)a. Introduction: Res Judicata and Finality

i. Policy of finality: to minimize the jud’l energy devoted to individual cases, establish certainty/respect for court judgments, and protect parties relying on prior adjudication.

1. Attacks on judgment: a. Direct attack (appeal, FRCP 59 or 60 motion); b. Collateral attack (subsequent litigation raising an issue re: the binding effect of earlier

litigation; res judicata)2. Finality of judgments:

a. Determining identity of the parties: if parties are in privity, they are the same for purposes of claim/issue preclusion.

b. Two finality issues:i. Claim preclusion: no further suits are allowed on the same COA after final

judgment1. Definition of a “claim”: the COA is the same if (a) the same principles

of substantive/procedural law are applicable; (b) the same right is alleged infringed by the same wrong in both actions; (c) the judgment sought in the second action would infringe rights established in the first; (d) the same evidence would support both actions; or (e) the operative facts are both the same.

ii. Issue preclusion/Collateral estoppel: if the issue was (1) litigated; (2) determined; (3) necessarily so, the issue can’t be litigated again.

1. This is both broader and narrower than claim preclusion. E.g. default judgment may preclude a subsequent suit involving the same claim, but it has no issue preclusive effect b/c there’s no actual contest over facts.

b. Full Faith and Credit to Judgments: the FFC enabling statute indicates that it means not less, not more.i. A party may not attack a judgment that was fully and fairly litigated if it has become final where litigated,

even if the ct that decided the issue made a mistake. Thus, a judgment is entitled to the same amount of finality as in the ct of its rendition.

1. Fauntleroy v. Lum (SCOTUS 1908): P and D entered into a K for future delivery of a commodity (somewhat similar to gambling); Miss law made these types of Ks unenforceable and treated entering into these Ks as a misdemeanor. P was awarded recovery by an arbitrator in Miss (not bound by statutory law), sought to enforce it in a Miss court, which wouldn’t enforce it b/c of the statute. P then took the case to a Mo. ct and obtained judgment on the arbitration award, then took that judgment to the Miss ct for satisfaction of the claim. D claimed that the Mo ct denied the Miss ct FFC. Ct says that it doesn’t matter whether Mo made a mistake in enforcing the judgment (illegal in Miss); as long as there was a full and fair adjudication, one may not attack a judgment that has become final where litigated.

ii. Equitable decrees are entitled to the same preclusive effect as judgments at law1. Historical approach: determinations in equity rarely (if ever) had same degree of finality as

judgments at law (theory: degrees in equity imply continuing supervision; since circumstances could change, judgments weren’t final).

2. Current approach: post-merger of law and equity, equitable judgments and judgments at law are given the same effect.

a. Yarborough v. Yarborough (SCOTUS 1933): H/W/D lived in Ga until divorce awarded by Ga ct, which subjected H to a support order for D’s maintenance (D wasn’t a party to the proceeding); years later, she sued in SC (where she lived) to get more support from her father (H). Ct held that FFC applies to a final equitable decree for child support, so the child couldn’t alter the alimony judgment. Decree was final b/c (test): (1) it was intended to release the father from future payment to the daughter, (2) the GA decree was binding on D, who wasn’t a party to the suit, (3) the initial order was binding on D when entered, and (4) the judgment isn’t any less final just b/c the D is now a SC resident.

i. Dissent (Stone): the daughter should be able to get more support: there was no evidence that the decree was meant to control the relationship outside of Ga; deciding the other way gives Ga a lot of control over other states. FFC is not limitless, and it makes no sense for a state to make a child support order final when circumstances change.

ii. Note: after this case, Congress enacted the Uniform Reciprocal Enforcement of Support Act (URESA), a version of which has been adopted by all states and DC. Major accomplishment: provides that the state that entered the initial child support order maintains continuing exclusive jurisd’n to modify its support orders. State called on to enforce the order applies the law of the issuing state.

iii. Judgments and the Interest of the Forum1. Giving greater effect to a sister-state judgment?

a. Hart v. American Airlines, Inc.: NJ victims of Ky plane crash sued (won) D airline in Tex. NY Ps brought another action based on the same accident in NY, saying that the Tex judgment collaterally estopped the D from contesting liability; D disagreed, saying that Tex required mutuality, so Ps wouldn’t have been bound if the Tex judgment went the other way. Ct applied collateral estoppel to avoid inconsistent/windfall results since NY no longer req’d mutuality.

iv. Limitations on Full Faith and Credit and the requirement (from the implementing statute) that the credit should be neither less nor more than in the issuing state:

1. Situations in which states don’t have to give effect to other states’ judgments: (from Yarborough dissent, supra)

a. Judgments for conviction of crime/penalties procured in another state Pelican Ins Cob. Intervention of another state’s judgment won’t overcome a local policy against allowing

foreign corp’ns the use of local courts in settling foreign disputes Davis Prov’n Co.c. State of matrimonial domicile may preserve rights in the marriage status to its own

residents when another state seeks to terminate w/o getting jurisd’n over him Haddock.d. State has complete interest in controlling legal incidents of real prop’ty in its boundariese. A divorce decree that forbids remarriage of one/both parties has no effect outside of th

estate rendered.f. Maintenance/support of children domiciled in a state is subject to the state’s exclusive

interest.g. Exception to FFC where recognition of another state’s judgment would infringe on a

second state’s interests? Yarborough suggests this, but Ehrenzweig disagrees.2. Mutuality of Estoppel (MOE):

a. Definition: for a party to estop an adversary from relitigating an issue that party must have been a party (or in privity to a party) in the previous action.

b. Modern regime: no MOE. i. This can be distorting re: mass torts (lots of parties) if the parties attempt to take

tactical advantage of the absence of MOE to lock in a single D to a verdict of liability against multiple Ps on the strength of one or two separate determinations.

ii. Can fix this problem with compulsory joinder (must join all parties with interest); net effect can be better than MOE b/c there’s tendency for consolidation of mass torts litigation.

iii. Recall Hart v. American Airlines, supra 3. Fraud, duress, coercion

a. Old approach: fraud was no defense to a sister-state judgment:i. Christmas v. Russell (SCOTUS 1866): Ct held that fraud was no defense to a suit

on a sister-state judgment b/c it couldn’t be raised collaterally in the judgment state.

b. Current approach: permits attacks on domestic judgments if the fraud is extrinsic (going to the opp’ty to appear and defend) but not if it’s intrinsic (perjury as to the merits).

4. Penal/govn’tal claims:a. It was assumed that sister-state judgments based on penal/govn’tal claims didn’t get FFC.b. Penal judgments still not entitled to FFC (same with tax claims not reduced to judgment)

but tax claims reduced to judgment get FFC:i. Milwaukee County v. ME White Co: SCOTUS held that state couldn’t const’lly

refuse to respect a sister-state judgment for taxes. FFC has exceptions, but this isn’t one of them; Ct assumed that penal judgments and tax claims not reduced to judgments didn’t get FFC, but said that credit must be given to the (money)

judgment of another state even if the forum wouldn’t have to entertain the suit if it were before it.

5. Supplemental workers’ compensation awards: a state has no legitimate interest in preventing another state from granting a supplemental compensation award when the second state had the power to apply its law in the first instance.

a. Thomas v. Washington Gas Light Co. (SCOTUS 1980): P (DC rez); D (DC co); work in DC, temporarily in Va, injured in Va, compensated by Va workers’ industrial comm’n. After P (employee of D company) was injured at work on a project in Va, he got an award from the Va industrial comm’n (he initially proceeded in their Comm’n instead of DC’s, although he was free to proceed in both. P then sought compensation in DC, which D opposed, saying that b/c the Va award excluded other recovery “at CL or otherwise” b/c of the Va injury, so DC would have to give the Va judgment FFC (which would preclude another award in DC). Ct held that P could recover in DC b/c the Va award doesn’t preclude add’l recovery in DC despite the fact that the VA award purports to be exclusive (based on the fact that the Va tribunal isn’t a Ct of gen’l jurisdiction). Ct says that the Va award isn’t binding in DC b/c no state’s law is effective under the law of any other state. In add’n, a supplemental award gives FFC to the facts determined by the first award, also allowing full credit for payments pursuant to the earlier award. This isn’t double recovery.

i. Note: this reasoning is circular at best and wrong at worst (Isenbergh). b. Note on Administrative awards/orders: they are now treated the same as judgments if the

agency is empowered to adjudicate, its procedures comply w/the essential elements of adjudication, and its actions are conclusive where made.

v. The Foreclosure of Jurisdictional Issues1. As long as a jurisd’l fact has been fully/fairly adjudicated (note: no default judgment) it is entitled

to the same weight as other facts (is conclusive).a. Durfee v. Duke (SCOTUS 1963): At issue was land that had been on the bottom of the

Missouri River; it was exposed when the river moved. Claim depends on whether the land is located in Neb or Mis b/c the state where land is located has power to accord title. P brought claim in Neb Ct which concluded that it had jurisd’n and awarded title. The other party filed suit in Ms, saying that the Neb decision was wrong; that Ct held that Ms had jurisd’n and awarded title to that party. Ct held that the Ms judgment was incorrect, saying that a long as there has been a full/fair adjudication on the merits, judgments about jurisd’l facts get as much weight as anything else and thus the Neb judgment was conclusive. In the absence of fraud, no reason to question; policy of finality (can be trumped, e.g. by fraud, but they aren’t here)

i. Note: it’s hard to imagine the opposite result here.ii. Note: deference to finding of jurisd’l facts has to be w/in reason; if in Clarke,

infra, the SC Ct found that it had jurisd’n over the land, it wouldn’t be entitled to deference. Findings of fact have to be supported by at least minimal rational basis to get FFC.

2. Personal jurisdiction; D is universally allowed to attack a judgment collaterally for want of personal jurisdiction if he made no appearance at all.

3. Subject matter jurisdiction: no collateral attack.a. No waiver of lack of SMJ:

i. Kalb v. Feuerstein: farmer lost land through state foreclosure proceedings while he had a fed’l Bankruptcy Act claim pending (deprived state courts of jurisd’n); Ct stated that collateral attack on the foreclosure judgment would have been permitted even if the issue was contested in state Ct b/c Congress had a strong policy that would be injured by this impermissible exercise of jurisd’n. (Permitting collateral attack).

b. When jurisd’l statute later becomes unconst’l, judgment can still be finali. Chicot County Drainage Dist v. Baxter State Bank: explicit litigation of jurisd’l

issue Is unnecessary; fed’l court exercised judgment pursuant to a fed’l statute that SCOTUS later held unconst’l (different action); Ct held that the judgment was res judicata against participating bondholders in second action in same court, even though the issue of const’ality of the jurisd’l statute hadn’t been raised/litigated in the first case.

c. R.2d of Conflicts suggests a balancing test to determine whether collateral attack of SMJ should be allowed: would allow collateral attack for policy reasons; must weigh policy re: res judicata against policy prohibiting a Ct from exceeding its powers.

i. Important factors:

1. (1) Whether the lack of jurisd’n is clear/doubtful2. (2) Whether the determination as to jurisd’n or competence depends on

questions of fact or law3. (3) Whether the Ct is one of gen’l or ltd jurisd’n4. (4) Whether the question of jurisd’n or competence was actually

litigated; and5. (5) The strength of the policy underlying the denial of competence to

the Ct.d. Last-In-Time Rule:

i. What about when two judgments are issued and only the first court had jurisd’n? Last in time rule would apply the second judgment.

ii. R.2d of Judgments § 15: when in two actions inconsistent final judgments are rendered, it’s the latter judgment that’s accorded conclusive effect in a third action under res judicata.

vi. The Land Taboo1. A judgment re: disposition of land isn’t entitled to FFC if it’s given by a Ct that doesn’t have

jurisd’n over the land (any Ct other than the situs)a. Clarke v. Clarke (SCOTUS 1900): d, H, and D (SC rez); land (Conn); d left land in Conn

in equal shares to H and two Ds; one D died and the question was how to divide up that share (H wanted the entire share; other D wanted ½ of it; H wanted SC law). B/c of the way the SC ct understood the effect of the will, it was subj to distribution under its law. Conn later concluded that it need not recognize the award of title in SC, saying that the SC Ct didn’t have the power to dispose of title to land in Conn. Ct agreed and held that the SC judgment wasn’t entitled to FFC (so the D wins).

b. Actions re: land in another state?i. Livingston v. Jefferson: Ct held that action for trespass to LA land was local and

couldn’t be maintained outside LA; rule had old origins and formed part of the basis for the Clarke holding.

1. Rule has been criticized as old-fashionedii. R.2d of Conflicts would permit actions for harm done to land in another state b/c

it doesn’t seek to affect title to foreign land or require off’l action in the state where the land lies.

2. The equity exception: a ct of equity (w/personal jurisdiction) can indirectly act upon real estate in another state through authority over the person.

a. Fall v. Eastin (SCOTUS 1909): H and W lived in Neb while married, acquired land. Then moved to Wash and got a divorce. Question of title to land: H claimed it was his, it came up in the divorce settlement. Wash Ct granted the W the prop’ty, she seeks to quiet title and claims that the land is hers (FFC must be accorded to Wash judgment). Ct applied the equity exception to the Clarke doctrine, which says that a court of equity having authority to act on the person may indirectly act on real estate in another state (thus, Wash judgment is given effect, land goes to W). It is only ok to affect the land incidentally; thus, the decree can’t transfer legal title, which must be executed by the party (obedience can be compelled by contempt or attachment). Burnley: A ct of equity (w/the parties present) can enforce SP of a K to sell land (compelling a party to sell it) but the Ct can’t make such a decree to sell land w/o the SP/K issue.

i. Controversy: What did the Ct hold? Was it that the Wash decree was valid insofar as it directed H to convey the prop’ty? If the Wash Ct had jurisdiction, why wasn’t the decree given FFC? Is there any reason not to do this other than overruling Fauntleroy v. Lum?

ii. Lessons from this case (Curre)1. Decree should purport to do no more than exercise the jurisdiction

that’s acknowledged.2. It should make appropriate findings of fact/law and order the D to make

the conveyance, but nothing more (otherwise it looks like it’s affecting the land directly).

3. P must avoid saying she seeks relief b/c she got the land by foreign decree.

vii. Non-Final Decrees1. A modifiable decree for spousal support can be modified and enforced in a different state.

a. Worthley v. Worthley (Cal S Ct 1955): H and W married in NJ, separated, got divorce (still in NJ); W got a modifiable support order, H left NJ and refused to make further payments. W filed suit in Cal (where H was then living) for arrerages, to increase the

amount of support, and to establish the NJ decree as a Cal decree. She got the H in Ct in Cal, where the Ct held that it had at least as much leeway as NJ to modify the order (SCOTUS has approved of this); there was no reason for a Cal ct not to hear the case, it would be burdensome to require the parties to go back to NJ (original issuing state)

b. Recall Yarborough: if the NJ decree had purported to be final/dispositive like the one in that case, the Cal Ct would’ve had to have followed it.

2. Problems:a. Lack of finality: met if further jud’l action by the issuing/rendering Ct is req’d to resolve

the matter; when this is the case, issues aren’t res judicata anywhere.i. Whether pendency of appeal precludes a judgment being considered as “final”

depends on the law of the state rendering the judgment.b. Modifiability: these orders are subject to modification for future events and must be able

to be enforced in different states.i. SCOTUS hasn’t explicitly req’d enforcement of sister-state judgments that

remain subject to modification.c. Conflicting state support orders has been conclusively resolved by the UIFSA:

i. Spousal support: issuing state retains exclusive jurisdictionii. Child support: issuing state may lose continuing exclusive jurisdiction to modify

the order if it’s not the residence of the obligor (H), the obligee (W) or the child when the request for modification is filed.

II. International/Foreign Judgments (881-893)a. Interntaional comity requires reciprocity:

i. Hilton v. Guyot (SCOTUS 1895): D (litigator of bankrupt French firm) got a judgment against securities traders working in France (NY REzs); he sued on the French judgment in NY Ct hoping to avoid retrial by invoking comity (countries accord judgments of other countries a certain dispositive effect). NY Ct held that it would not give the French judgment dispositive effect b/c a French Ct wouldn’t give an American judgment effect if the situation were reversed.

1. Note: this is the US standard; the degree of F&C afforded judgments can change with treaty. Most foreign countries don’t accept US judgments b/c they think our legal system is odd.

2. This case was decided before Erie: it’s not an issue of fed’l CL, it’s an issue of private int’l law (would come under Parnell, not strictly subject to Erie.

a. SCOTUS has viewed the underlying question of the dispositive effect of a diversity judgment in a fed’l court as a matter of fed’l CL (Semtek); the question in Hilton wasn’t about this, had nothing to do with diversity.

b. These questions are decided as matters of general law.b. Recognition of Foreign-Country Judgments

i. R.2d of Conflicts takes a compromise approach, saying that a valid judgment rendered in a foreign nation (after a fair trial in a contested proceeding) is recognized in the US so far as the immediate parties and the underlying COA are concerned.

1. States a gen’l policy in favor of recognition, but limits its application to contested causes and effects on the immediate parties and underlying COAs.

2. Criticism: von Mehren and Trautman say that the principles underlying domestic res judicata practice and recognition of sister-state judgments aren’t readily transferable to int’l recognition practice.

ii. Reciprocity Requirement:1. Some commentators think it’s based on a theory of retaliation.2. R.2d disapproves y in recognition of foreign country judgments and in COL in general.3. Courts generally reject the requirement, too. Our legal system has adopted finality policy; it

doesn’t matter whether a foreign court would recognize an American judgment, and it aids finality to end cases brought before foreign courts.

iii. Defenses against recognition of foreign judgments:1. (1) The nation lacked legislative jurisdiction

a. Schibsby v. Westernholtz: Action in English ct to enforce French default judgment; French Ct exercised jurisd’n under a notorious article w/broad exercise of jurisdiction to France; English Ct refused to recognize the judgment b/c of the jurisd’l bias, saying that countries can’t bind the world w/their laws.

2. (2) Fraud/violation of public policy: a judgment from a foreign country is subject to attack on the grounds that it was procured by fraud, violated local public policy, or is contrary to natural justice.

iv. Recognizing a foreign judgment subject to collateral attack when rendered: Ct allowed it in Pemberton v. Hughes, p. 889.

v. Money judgments: the Uniform Money-Judgments Recognition Act (adopted in 16 states) provides that a foreign money judgment is enforceable in the same manner as the judgment of a sister-stsate which is entitled tO FFC (no reciprocity req’d)

INTERNATIONAL QUESTIONS

I. Extraterritorial Power (784-864)a. The Scope of Legislative Jurisdiction: Extraterritorial Regulation: two questions: (1) should the country apply its

own law? And (2) to what extent does it have the power to extend its own law? It’s rare in an int’l COL setting that a country is prevented by const’l limitations from applying its law to a case.

i. Present limits of jurisd’n to prescribe in the US are in the R.3d: 1. State has jurisd’n to prescribe re: (a) conduct that (wholly or in subst’l part) takes place w/in its

terrotiry; (b) status of persons/interest in things present in territory; (c) conduct outside territory that has/intended to have subst’l effect w/in territory, etc. (p. 793).

ii. The reach of extraterritorial jurisdiction: in int’l law (+ domestic), “jurisd’n” denotes the competence of a nation to act.

1. Five trad’l bases of jurisd’n over extraterritorial crimes under int’l law (from (from Yunis)a. Territorial : jurisd’n based on the place where the offense is committed

i. Note: according to the R.3d, this is the normal exercise of jurisdiction; most often used, most accepted.

ii. Effects doctrine (below) treated as an aspect of territoriality.b. Nat’l : jurisd’n based on the nat’ality of the offender

i. Blackmer v. US: Ct upheld service of a subpoena on a US citizen in France b/c, by virtue of his citizenship obligations, the US had authority over him and he was bound by laws made applicable to him in another country.

c. Protective : jurisd’n based on whether the nat’l interest is injuredi. Less frequently employed than the first two, more controversial.

ii. Has been strictly construed to cover only offenses directed against the security of the state or crimes like espionage, counterfeiting, falsification of off’l documents, etc.

iii. Distinct from effects b/c permits a state to protect govn’tal interests from threat of harm (effects permits a state to protect private interests from actual injury)

d. Universal : jurisd’n conferred in any forum that obtains physical custody of the perpetrator of offenses considered particularly heinous and harmful to humanity

i. United States v. Yunis (D. DC 1988): Plane hijacked in Lebanono, US citizens on board. One of the hijackers came into the US custody, they tried him. Question was whether jurisd’n was valid. Ct held that D could be tried in the US. Ct based jurisd’n on universal and passive personal principles of int’l law (see immediately below) but charges were dismissed anyway (diff reason). Ct applied this principle b/c airline piracy and hostage taking are in this calss of offenses.

ii. Used in genocide, torture, war crimes (e.g. Nazis).e. Passive personal : jurisd’n based on nationality of the victim.

i. Policy: each state has a legitimate interest in protecting the safety of its citizens when they’re outside the country.

ii. Yunis Ct held that this would also provide jurisd’n in that case.iii. This is the most controversial (US fears for fate of its citizens involved in crimes

abroad, so it doesn’t rush to use this one.)1. Use is most compelling in terrorism, acts on people b/c of their

nationality, and attacks on govn’t off’ls.2. Effects doctrine:

a. By early 20th Cent, notion of territoriality as exclusive basis of jurisd’l competence became more and more implausible (more travel).

i. SS Lotus (France v. Turkey): French and Turkish boats collided, killed people. French ship landed in Turkey, their off’ls tried and conv’d an officer for negligence. France brought an action protesting this exercise of jurisd’n b/c of a rule that only the flag state of the vessel on which acts were taken had jurisd’n to punish (this would be France). Ct upheld the exercise of jurisd’n, saying that the effects of the negligence were felt in Turkey (since their ship sank); this is the “effects doctrine” (or “objective territoriality principle”). Ct then made a broader statement of jurisd’n in int’l law: wide measure of discretion to countries, limited only in certain cases by prohibitive rules.

ii. Alcoa: conspiracy to regulate competition in the aluminum industry (all foreign corp’ns); no acts were done in the US, but the Ct held that the Sherman Act applies to agreements intending to affect or affecting interstate commerce.

b. Effects doctrine is considered controversial in application of US antitrust laws; some countries have enacted blocking statutes to prevent its application.

iii. Presumption of no extraterritorial effect of US laws:1. American Banana Co. v. United Fruit: Ct held that American antitrust laws didn’t extent to

proscribe/repress a monopoly over commerce in a central American country, exerted by a US corp’n at the expense of another through the support of a foreign govn’t.

a. Narrow interpretation wasn’t long-lived; in later cases, the Ct applied US antitrust law while speaking of effects.

2. EEOC v. Arabian American Oil Co.(Aramco) (SCOTUS 1991): D was working for a US corp’n in Saudi Arabia and was fired in a way that would be illegal under Title VII of the CRA (in America). Question was whether that law applied. Ct held that the CRA did not reach the acts, saying that when Congress adopts a law w/o specified territorial extent, there is a presumption that the law doesn’t extend beyond the geographic limits of the US/its territories. Contrary intent can overcome the presumption against extraterritoriality.

a. Steele: Ct held that the Lanham Act applied in Mex based on its broad jurisd’l language (referred to “all commerce”) and effects in the US. That case wasn’t analogous.

b. Note: Congress overturned Aramco, making clear that Title VII does apply to relations btwn American employers and employees abroad.

3. Modification of the Presumption:a. Other nations’ interests: deference to foreign law may be appropriate despite effects in

the US in situations where conflicts could cause tension in foreign interests.i. Timberlane Lumber Co v. Bank of America: Ct said the effects test is incomplete

b/c it doesn’t consider other nations’ interests. Must weigh following factors in determining whether to give deference to foreign law: (a) degree of conflict w/foreign law/policy; (b) nationality/allegiance of parties and locations of PPB of corp’ns; (c) extent to which enforcement by either state can achieve compliance; (d) the relative significance of effects on the US (as compared w/those elsewhere); (e) the extent to which there’s explicit purpose to harm/affect American commerce; (f) the foreseeability of such effect; (g) relative importance to violations charged of conduct w/in the US as compared w/conduct abroad.

b. Extraterritoriality exists re: American leases on foreign land.c. The Jones Act (extending the Fed’l Employer’s Liability Act to seamen)

i. Chisholm: FELA applies only to injuries in the US based on presumption against extraterritoriality.

ii. Lauritzen and Romero: Ct acknowledged Chisholm and ignored it. Considered contacts and found preponderance in favor of applying Danish law (for Dane seaman on a Danish ship injured in Cuba, who had joined crew in NY).

1. Lauritzen principle: although statute appeared to apply quite broadly, said that it should construe the statute to apply only to areas/trans’ns in which American law would be considered operative under prevalent doctrines of int’l law.

d. Labor: Ct has adhered to the presumption.iv. Antitrust and Extraterritoriality

1. Considering other nations’ interests in determining whether to apply US antitrust law: statutes must be construed in light of int’l law.

a. Hartford Fire Ins. Co. v. California (SCOTUS 1993): Small group of US insurers conspired w/foreign re-insurers to restrain trade in various comm’l liability lines of ins in the US. They’d pay for losses arising from a claim that happened during the policy period (one characteristic of these “occurrence-based liability” policies is that they have a long tail b/c actual loss may not surface for years/decades, e.g. in chemical contamination). Reinsurers decided to cover only claims-based policies (clear restraint of trade, violation of Sherman Act); went through the underwriter’s ass’n, whose function was to draft/analyze standard form policies, present them to state ins regulators, who would approve them and put them in the ins policy. B/c no ins policy can be sold w/o approval by an underwriter’s ass’n, the ass’n (ISO) has exclusive monopoly power over the reform of ins policies. Insurers put pressure on the ISO as a group. Question was whether Timberlane qualification of extratrerritoriality (other nation’s interests) protects

the UK reinsurers. B/c there was no direct conflict btwn domestic and foreign law, US law applies (if there was a direct conflict, we’d have to decide which law to apply).

v. Extraterritorial Application of Securities (and other) Laws: 1. Aramco’s presumption against extraterritoriality doesn’t apply to antitrust laws.2. Choice btwn Hartford and Aramco has implications for many US laws.

vi. Extraterritorial Reach of the Constitution1. Applicability of the Const’n in a foreign nation:

a. Reid v. Covert: Congress tried to subject wives of American servicemen (who had killed their husbands) to trial by military tribunals w/o protection of 5th/6th As (court martials). Ct held it unconst’l to apply the Uniform Code of Military Justice to the trials of the American women for capital crimes b/c they were citizens.

2. The 4th Amendment has no extraterritorial reach:a. United States v. Verdugo-Urquidez (SCOTUS 1990): P (Mexican nat’l) was searched for

drugs in Mex as a result of a US DEA request. He asserted 4th A as a defense. Question was whether the 4th A (Const’n) applied to the search/seizure (by US agents) of prop’ty owned by nonresident alien located in Mex. Ct held that the Const’n did not apply b/c a foreign nat’l physically outside the US doesn’t count as part of “the people” in the words of that provision. The drafters of the Const’n were precise; could have referred to “everyone,” and the situation would be different if the P were a US citizen.

i. Concurrence: endorses the outcome, but would use a different way. Says that the “reasonableness” of a search w/in the 4th A is a function of territorial setting and exigencies of the particular search. Would set aside the question of who “the people” are, focusing on the “reasonableness” language of the amendment.

3. Due process is extended to everyone; question is only what process is due.4. Aliens:

a. Aliens are entitled to many const’l protections when in the US, incl 5th/6th As (Wong Wing) and EPC (Yick Wo).

b. Entitled to const’l protection re: prop’ty located in the US (Asahi)b. The European Perspective

i. Conflict of Law in Western Europe:a. Sources of law: statutory rules, case law, academic writings. Scholars have a lot of

influence.i. Conventions/statutes are primary sources, others are secondary. Statutes more

respect than in America.ii. Case law/scholarship: both important. In some countries, COL is mostly a

matter of case law (Scandinavia). b. Rules/method of analysis: European COL drives for clarity of concepts and precision of

rules; prefers rules (ideally, they’ll yield results by direct application to the facts).c. Values: rather than finality, they’re concerned w/stability, consistency, and social welfare

ii. W. v. Ms. W (Swiss Fed’l Supreme Court 1992): H and W married in Canada, became naturalized US citizens, lied in Tex and moved around a lot; she filed for divorce in Swiss Ct, it was granted and he was ordered to pay support under Swiss law. They’re both US citizens, but only W lived in Switzerland; doesn’t matter b/c Swiss law applies (Ct uses a lot of discretion); H and W didn’t have state citizenship in the US so Tex law doesn’t apply (no other US state law applies); fed’l law doesn’t apply.

II. Acts of State (864-881)a. Banco Nacional v. Cuba v. Sabbatino (SCOTUS 1964), see supra: P (previous owners of sugar) filed suit for

proceeds of sale of sugar that had been expropriated by the Cuban govn’t (allowed under Cuban law, not under American law). Ct held that it would not review the validity of the off’l acts of a foreign state as long as they were legal where done and jurisd’n existed. Note that this is not a comity issue; the Ct (w/in the range of its discretionary power) takes a step back (not a matter of imperative).

i. Note: shortly after the decision, Congress enacted an amendment that specifically removed expropriations of prop’ty in violation of int’l law from the act of state doctrine in US courts; applies only to expropriations of actual, physical prop’ty, not K’l rights.

1. Even w/this amendment, the doctrine has a wide swath.b. Unofficial acts of foreign nations don’t get the protection of the AOS doctrine

i. W.S. Kirkpatrick v. Environmental Tectonics Corp. (SCOTUS 1990): D (Kirkpatrick) bribed a Nigerian off’l to get a large K; the company that lost out on the K ratted out D, who was subject to US criminal prosecution (under foreign corrupt practices act, pled guilty). P then brings a civil RICO action, and D asserts the AOS doctrine as a defense, saying that this would embarrass the Nigerian govn’t. Ct notes that in normal AOL cases, the US ct hearing the case would be required to declare invalid the off’l act of a foreign sovereign performed w/in own territory. That doesn’t exist here b/c the Nigerian govn’t action wasn’t an off’l one. Ct holds that the RICO case can proceed, rejecting the AOS defense.

1. Recall Pasquantino (p. 84): SCOTUS said that a criminal RICO action (brought by the US) involving a predicate violation of foreign tax law does not amount to forbidden enforcement of that foreign law.

2. European Community v. RJR Nabisco: EC brought a civil RICO claim against D claiming damages for criminal tax evasion in Europe. Ct distinguished Pasquantino, saying that in that case, the US justice dept was bringing the prosecution, so it wasn’t explicitly endorsing a departure from the principle of not applying foreign revenue laws. Ct said that in a purely private civil claim (w/o explicit participation by the justice dept) can’t draw the same inference. Razor thin distinction.