Overview

Conflict of laws can simply be defined as “whose laws (which forum or which sovereign) are we going to follow as we strive to litigate this case?” In other words, conflict of laws is also known as “choice-of-laws” which was covered briefly in Civil Procedure I.

Despite this straightforward definition, there are several choice of law theories. The unfortunate matter is that none of the states have unanimously adopted only one theory. So, it is vital to be well informed of which state applies what theories. Below is a brief overview of each theory and the terms associated with them.

  • Traditional
  • Significant Contacts
  • 2nd Restatement
  • Interest Analysis
  • Lex Fori
  • Better Law
  • Combined Modern

Significant Terms

  • Comity – When one jurisdiction is not required to, but accepts the law of another jurisdiction.
  • Lex loci – “the law of the place.”
  • Lex loci contractus – “the law of the place of the contract.”
  • And lex loci delicti – “the law of the place of the tort.”
  • Vested Rights – When you have a claim to one state, then you have a claim in another.
  • Domicile – Where an entity resides.

Traditional Approaches

This approach is also shown in the First Restatement and has three steps:

  1. Characterize the Issue (contract or tort)
  2. Determine the connecting factor between the local rule and the claims
  3. Apply the law of the place identified by the connecting factor.

Although traditional choice of law methods are generally considered outdated, there are a few states that still adhere to the principles in torts.

Torts

Unintentional Torts

Alabama Great Southern Railroad v. Carroll, 97 Ala. 126 (1892).

For an unintentional tort, such as negligence, the choice of law will be where the injury was inflicted or felt.

Each state has the sovereignty to choose the laws for themselves. Although the contract was in Alabama, the parties from Alabama, and the negligence occurring in Alabama, no injury actually occurred (or was even inflicted) within the state. As such, the plaintiff has no recourse in Alabama and must rely on Mississippi law for a remedy. Here, Mississippi did not provide a remedy. Consequently, the plaintiff was out of luck (when suing the railroad company).

Levy v. Daniels’ U-Drive Auto Renting Co., 108 Conn. 333 (1928).

In this case, a car rental company contractually agreed to be vicariously liable for an accident caused in their car (Conn had the law and the parties agreed to follow that law).

First Restatement Sections

Also consider the following sections from the First Restatement of Conflicts: §§377-79, 382, 384-87, 390-91, 398-99, 412, and 421. Essentially, these sections say, for tort, “the last event necessary to make an actor liable.” As in Carroll, this is where the injury occurs “the place of the wrong”.

Intentional Torts

Bullard v. MRA Holding, LLC, 292 Ga. 748 (2013).

The place where the last event occurred to make an actor liable is the place where a remedy can be found. Typically, this is the place where the injury is felt.

This case was originally filed in a federal court. According to Klaxon v. Stentor, the federal courts will follow the choice of law of the state where the federal court is located.

Georgia says that they will follow the laws of the jurisdiction where the tort occurred.

Although the filming occurred in Florida, the injury was felt primarily in Georgia. Thus, the Georgia court says that the tort occurred in Georgia. As a result, the plaintiff could have a cause of action within Georgia.

A couple issues arise considering how this is an intentional tort. Because this is intentional, should the tortfeasor be sued in the place where the intent occurred? Also, the issue with intentional torts is that it can induce forum shopping, something the courts generally oppose.

Marra v. Bushee, 317 F. Supp. 972 (D. Vt. 1970).

In this case, the court said that the place of injury was also the place where the conduct occurred. Different, because it wasn’t just where the injury was felt.

Contract

First Restatement of Conflicts

§§ 7, 311-12, 314-15, 323, 325-26, 332-36, 340, 355, 358, 360-61, 372.

Essentially, the choice of law state will be based on where the contract was formed and becomes effective. The sections determine how we which state is where the contract was formed (e.g., where a telephone call for acceptance constitutes formation) Additionally, if there is a contract, performance will be measured by the state where the performance is to be completed. We will also need to ask who is breaching performance because different parties may be performing in different states.

Poole v. Perkins

A contract is formed and governed in the state where the performance is to be completed.

To determine whose laws will apply, the court will consider where the contract was formed. To determine where the contract was formed, the court will see what was the place of performance and where the parties intended to form the contract.

This case is at seeming odds with the First Restatement approach, because it focused so much on the intent of the parties. There are many debates about how much a court should rely on intent, because of how difficult the intent can be to discern.

The court also says that the contract formation is the place of performance, then goes on to say that performance occurred in Virginia. However, as a promissory note, wouldn’t performance occur when the loan was provided? Or was performance the repayment of the loan? Virginia appears to treat repayment as the act of performance.

Linn v. Employers Reinsurance Corp.

The contract is formed in the place where acceptance is spoken from (in the case of acceptance being communicated via telephone).

Acceptance by telephone, email, etc. is called the Dispatch Rule. This rule can have some issues though. For example, what if the person accepting is in a state completely disconnected from the contract or from the parties (the acceptor was on vacation or a business trip).

Sometimes there are situations where the case can be characterized by tort or contract, and may have several issues associated with those issues. So, you need to take the problem issue by issue, also known as “Depecage.”

Domicile

First Restatement of Conflicts

§§ 9-16, 18-21, 23, 25, 27, 41

Domicile is either where a person has settled (typically where their home is), or the place where the law determines. If it is by where the law determines, the forum state’s laws will define domicile. A party only has one domicile and a corporation has domicile in the state where they are incorporated.

Ultimately, this definition is summarized into two parts: 1) physical presence with 2) the intent to remain intentionally.

Domicile is usually not used, but has a time and a place. This usually occurs when the actions are people centered (e.g., will’s a trusts).

White v. Tennant

White did everything to show that he had established a home in Pennsylvania. As such, his domicile changed to Pennsylvania when they moved there. There was no other point where he considered moving from Pennsylvania back to West Virginia (missing intent), it was still his home, despite becoming ill and passing in West Virginia.

Here, this is a probate court with an intestate death. As such, we are using the decedent’s domicile to determine who gets what. Domicile makes sense to use because you want to make sure that there is uniformity of where the action takes place (makes it easier to avoid issues with parties traveling).

Also consider Rodriguez Diaz v. Sierra Martinez, 853 F.2d 1027 (1st Cir. 1988).

Marriage

First Restatement of Conflicts

§§ 121-23, 128-30, 132-34, 136-141

As long as the marriage was valid in the state where the marriage was formed, it will be recognized anywhere (unless they travel to another state to avoid the laws of their domicile or there is a strong public policy reason against it).

Chassemi v. Ghassemi

If the marriage is valid in the state of celebration, then it will be recognized in Louisiana unless it is a violation of strong public policy.

According to Iranian law, first cousins are allowed to marry. As such, this is a valid Iranian marriage. Additionally, although the marriage is prohibited by law, there is no strong public policy keeping this marriage from occurring. This is true because Louisiana has ratified people married first cousins who were married in violation of the law. Other states don’t recognize this kind of prohibition, and others who do allow it under certain circumstances. All this information shows that although there is a public policy reason for not allowing this marriage, that reason is not strong. Consequently, this marriage is considered valid.

Compare with In re May’s Estate, 305 N.Y. 486 (1953) where a niece and uncle were married in Rhode Island (allowed as a religious exception) but the lawsuit was filed in New York (not allowed). The question was whether the marriage was valid. Here, the court said that the legislature chose not to address marriages from everywhere, just New York. So, the marriage was considered valid in New York.

Purple v. Ezeonu

Generally, if the marriage is valid in the state of celebration, then it will be recognized in New York unless it is repugnant of public policy. Polygamy is considered a repugnant public policy in New York.

The rule is important because New York does not recognize rape if you are married to the woman. So it was important to determine whether the parties involved were married.

Although the marriage was valid in Nigeria, plural marriage is repugnant to public policy in New York. For these reasons, the court will not recognize the marriage and it cannot be used as a defense against the charged crime.

The characterization here is “validity of marriage.” The connecting factor is that we look at the “celebration of marriage” unless there is an exception. Here, the exception is that this action was against a strong public policy, that is, polygamous relationships (also a crime).

Property

Real Property

First Restatement of Conflicts (regarding real property)

§§ 211, 214, 217-23, 225-27, 237-38, 244-46, 248-51

The law governing property will take place in the state where the land is located at the time when the conveyance is made.

This is called the situs rule, and governs pretty much any type of interest in real property.

Note also that there is a difference between the capacity to contract and the capacity to convey.

Burr v. Beckler

Burr filed this lawsuit to foreclose on a trust deed made to him by Ms. Beckler and her then husband Mr. Tobey. The land was in Illinois, the deed transferred in Illinois, but the promissory note authorizing payment was made in Florida. Although the state where the land is located governs the land, the deed must only be valid if the contracted note was valid. Thus, the law that will apply is where the contract was formed. Here, that was in Florida. In Florida, Ms. Beckler did not have the capacity to enter into a contract, so the note is void, as is the deed. Consequently, Burr loses.

The important characterization of this case is that it was done in contract, rather than property.

Thomson v. Kyle

This case has the opposite result of Burr. In Burr, the place where the note was made (being a contract) was the place that governed the law. Here, however, the land was in Florida, the note executed in Alabama. The main conflict is whether a woman has the capacity to contract. In Florida, they did while in Alabama they do not. Although the note was executed in Florida, the woman still had capacity because the laws governing the mortgage is Florida, the property being located in Florida.

Personal Property

First Restatement of Conflicts (regarding personal property)

§§ 255-58, 260-61, 289-91, 300-302, 306-307

The location of the chattel at the time of conveyance will govern.

During life, we will look at the situs of the movables at the time of the transaction. Upon death, it’ll be the domicile of the decedent. For marriage, it is the domicile of the marriage.

Blackwell v. Lurie

Mr. and Mrs. Lurie had purchased a valuable painting in Missouri and sent that painting to New Mexico to be displayed in a gallery on consignment. Subsequently, Mr. Lurie’s law firm went into bankruptcy and Mr. Lurie was found to be over a million dollars deficient. Mr. Blackwell, the liquidating trustee obtained a writ of execution against the painting and sought to enforce it in New Mexico.

The issue in this case is whether Mr. and Mrs. Lurie were tenants by the entirety regarding the painting. If so, then the writ cannot be executed against the painting. Missouri recognizes that Mr. and Mrs. Lurie would be tenants by the entirety while New Mexico does not.

The court utilizes the “time-and-manner-of-acquisition” rule. This rule simply states that the law where the chattel was acquired will govern. Thus, Mr. and Mrs. Lurie are considered tenants by the entirety and their debt is considered separate. Consequently, the writ for execution must be quashed.

Morson v. Second National Bank of Boston

The executor of a the deceased is attempting to recover a stock certificate that was gifted to the defendant while on a trip in Italy. The gift process was sufficient under Massachusetts laws but was lacking formalities required in Italy. So, whose laws govern, Massachusetts or Italy? The court says that stock certificates are different than other types of chattel which allows Massachusetts to govern, despite not being the location where the transfer occurred.

This case was not characterized as a transfer of personal property because stock certificates are unique. Thus, stock certificates will be evaluated based on where the corporation was incorporated. § 53 First Restatement of Conflicts. Had this been characterized as personal property, the jurisdiction would have been where the chattel was located at the time of transfer (here, Italy).

Corporations

First Restatement on Conflicts

§§ 154-55, 165-66, 182-83, 187-88, 190-92, 205

Incorporation is governed by the state where the corporation was incorporation or where the attempt was made. If successful, incorporation in one state will result in recognition by every other state.

The essence of this principle is called the internal affairs doctrine. This doctrine simply states that the state of incorporation will govern disputes about the internal affairs of the corporation (e.g., disputes between shareholders and directors, etc.).

McDermott Inc. v. Lewis

The plaintiff’s were given an improper voting device in a corporation under the laws of Delaware. However, the corporation was incorporated in Panama, which allowed the voting device in certain situations (the voting device here met those standards).

Our analysis has two parts. Does Panama allow the law? If so, whose laws govern, Panama or Delaware?

Part one is easy, Panama does allow the voting device to be utilized in the present situation.

Part two is also easy. Due to the internal affairs doctrine, the state of incorporation is designed to govern the internal affairs of the corporation. Here, the corporation was incorporated in Panama, so Panama law will govern the rules regarding the voting device.

Because Panama allows the voting device, and we are applying Panama laws, the voting device is a valid application of corporate voting power.

In other words, the state of incorporation governed here because we are dealing with the shares of the international corporation (and this is an international issue). Although this is the primary doctrine applied, there are such things as migratory companies, and different laws may apply to them. See the case below.

State ex rel Weede v. Iowa Southern Utilities Co. of Delaware

The utilities company is incorporated in Delaware, but is a migratory company, doing all of its work, management, and physical presence in Iowa.

Presently, the company was in violation of a stock transfer process enacted in Iowa. The question is, does the law apply to a foreign corporation primarily doing business within Iowa?

Here, the court decided that the law could be applied to the foreign corporation because the foreign corporation subjected themselves to the Iowa law. There is no reason for the Iowa legislature to apply the law only to Iowa corporations (with a significant punishment). As such, it makes sense that foreign corporations should be subject to the law as well. This is especially true because the corporation was a Delaware corporation in a technical (only on paper) sense.

Wrinkles

Characterization

Characterization is the process of understanding what type of law will govern the case: tort, contract, property, etc. This characterization matters because the outcome may be different if a case is characterized as a tort instead of a contract.

Haumschild v. Continental Casualty Co.

When a tort occurs in another state, but the parties are spouses, it makes more sense to apply family law which uses the domicile to determine which law governs.

This is a tricky characterization. Should we characterize this case as a tort, or as family law (where domicile will determine the choice of law). If this case was characterized as a tort, California law would govern (and the wife will lose), because that is where the accident took place. However, if this case is characterized as a family law matter, the place of the marital domicile will govern (meaning Wisconsin law will apply and the wife will at least have the capacity to sue). Because this is a unique family matter, this court says that it makes more policy sense to apply family law, rather than tort law.

The court here makes the switch (from tort to domicile) for policy reasons. It makes more sense for a family based lawsuit to occur in the state where the parties are domiciled.

Renvoi

The doctrine of renvoi is the practice of selecting a foreign state’s laws, including their choice of laws rules. This could be problematic, resulting in circular reasoning. As a result, the First Restatement generally denounced the practice, except for in cases of title to land or the validity of a divorce.

Renvoi means “to send back” or “return unopened.”

Some additional terminology includes: “whole law” which is a combination of the conflicts rules + the internal laws. Most places use a partial version of renvoi (use the whole law of the first chosen state, but only the internal law of the second state); that way, the circle ends.

In re Estate of Damato

This court wants to avoid the circular reasoning of the doctrine of renvoi. So, instead of applying Florida’s conflict of laws rules, which might be circular, they instead look to their inner law. Here, Florida’s inner laws would give the balance to the beneficiary. Thus, the trial court’s ruling is affirmed.

University of Chicago v. Dater

The Dater’s were working on a sale of property in Chicago, Illinois. The note was signed in Michigan by a married woman, then sent to Illinois. However, execution of the note was dependent on receiving good title.

So, was this contract made in Illinois or Michigan. The majority says that it will apply Michigan choice of law rules (or if it applies Illinois, the result would be the same), because the note was signed in Michigan. Consequently, the woman did not have the capacity to contract and the note is void.

Here, the court uses renvoi. Value was delivered in Illinois, so use Illinois choice of law rules, where it directs it back to Michigan’s internal law. Because Michigan’s internal law says that a married woman does not have the capacity to contract, the note was void.

Substance v. Procedure

First Restatement of Conflicts

§§ 584-85, 588, 591, 594-97, 599-601, 606

The law of the forum will determine whether the issue is procedural and the law of the forum will govern all procedure. The only exception is that determination of whether a contract has been integrated is based on the state where the contract was formed.

Sampson v. Channell

Whether the issue is procedural will be determined by the forum state. If the issue is procedural, the forum state’s laws will apply regarding that issue.

The issue of the burden of proof in a contributory negligence claim is difficult to determine whether the issue is substantive or procedural in nature. This appears substantive because the answer may affect the outcome of the case. However, it is also procedural, because Massachusetts would characterize this issue as procedural. So, how do we determine whether this issue is procedural or not? Well, ask the court of the forum state. If the state would treat it as procedural, then the issue is procedural. Using Erie.

Here, Massachusetts would treat the burden of proof issue as procedural and say that the defendant has the burden of proof in contributory negligence claims. Because this rule was not applied at trial, the case must be reversed and remanded for further proceedings.

This case shows has an issue can be characterized as either substantive or procedural, depending on the jurisdiction.

O’Leary v. Illinois Terminal Railroad

In Missouri, the defendant has the burden of proof to show contributory negligence. However, in Illinois, the plaintiff has the burden of proof to show that no contributory negligence occurred.

The burden of proof in a contributory negligence claim is sticky in nature. On the outside, it appears procedural (who has to prove something at court). However, on the inside, the burden of proof becomes substantive because it affects the plaintiff’s right to recover. So, Missouri determines that the burden of proof is substantive and determines that Illinois substantive law should apply, being the place of the tort.

Burden of proof is one of the gray areas regarding procedural v. substantive conflict of laws. Other examples consider the statute of fraud, statute of limitations, joinder, survival of a cause of action, availability of equitable relief.

Grant v. McAuliffe

An issue is procedural if it is not an essential part of the cause of action, but relates to the procedures to be applied in the case.

This case is also difficult to ascertain whether the survival of a cause of action is procedural or substantive in nature. At first glance, it may appear substantive because success of a lawsuit depends on whether there is a cause of action. However, this case is merely procedural. There is not a new cause of action being granted (as is the case in a wrongful death action). Instead, this is simply the continuation of an ongoing cause of action with the local procedure of estate administration.

There are also policy implications to use California law. Specifically, the estate is located in California and it is easier and cleaner to adjudicate the estate in one place.

Statute of Limitations

First Restatement of Conflicts

A cause of action will be governed by the statute of limitations of the forum unless the condition for bringing the cause of action is based on the statute of limitations within the substantive part of the foreign state.

Duke v. Housen

The statute of limitations of the forum state will apply unless the forum state will apply the statute of limitations of another state.

Because Wyoming is the forum state, the statute of limitations will apply except for the borrowed statute. Thus, the statute of limitations will apply from a foreign state where the cause of action arises in accordance with the First Restatement § 377, the place of the wrong. Here, the majority determines that at the place of the wrong is New York, because it was the last state where the parties engaged and can therefore be the last possible state where the tort took place. Because New York has a two-year limitation period, the case is barred.

The concurrence agrees with the reasoning but says that Washington D.C. would be the place of the wrong because that is actually where the injury was discovered and felt. The last act.

However, the dissent argues that the forum state will govern and the borrowing statute does not apply. This reasoning is because either all the possible states need to have barred the action (and Nebraska hasn’t). If not, then there is no clear way of telling where the wrong actually occurred (no way of knowing when she actually contracted the disease). In this situation, the limitation period of the forum state would apply.

Wyoming (and many other states) had enacted these borrowing statutes (the forum will use the statute of limitations where the cause of action arose. But pay careful attention to the language of the statute). The main purpose of these statutes were to avoid forum shopping. Borrowing statutes are considered choice of law rules, rather than statute of limitations rules (that way renvoi doesn’t apply).

However, consider the Uniform Conflict of Laws – Limitations Act which determines that if the statute of limitations is substantive in nature, the forum will apply the another state’s statute of limitations.

Also consider the difference between statutes of repose v. the statute of limitations. A statute of repose bars a lawsuit after a set period of time, regardless of when the cause of action accrues. Most courts determine that the statutes of repose are going to be substantive.

Public Policy

A law will not be enforced in another state if it is a violation of their strong public policy. However, this rule only applies for when the parties are trying to establish a cause of action rather than when trying to establish a defense. First Restatement of Conflicts § 612.

Laboratory Corp. of America v. Hood

If the lack of a cause of action is a violation of strong public policy, then the court will still allow the cause of action to occur.

Public policy is defined as “some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal.”

Holzer v. Deutsch Reichsbahn-Gesellschaft

The contract was formed in Germany so German law will apply. German law did not allow a cause of action to arise so there can be no remedy for wrongful termination. However, there may be a cause of action for breach of contract (if the facts lead to that discovery during discovery).

So, what makes Holzer different from LabCorp where the public policy exception would not apply? There are two main distinctions. First, in LabCorp, the parties were all domiciled in Maryland where most of the actions took place. Second, in Holzer, this is a foreign country, and the States within the United States has even more respect for foreign law.

Penal Laws

First Restatement of Conflicts §§ 610-11, no action can be maintained to recover a penalty enforced in another state.

Paper Products Co. v. Doggrell

If a law is penal in nature (instituting a penalty), then it will not be upheld in another state.

The entire purpose of the Arkansas statute is to punish individuals who fail to fully complete the incorporation process (a penalty to enforce compliance). For this reason alone, Tennessee is unwilling to enforce the law, being penal in nature. Additionally, the court argues that the incorporation process is complete at the time when the articles of incorporation are filed with the Secretary of State office. At that point, stockholders obtain their liability shield, thus barring recovery.

At the same time Paper Products Co. was pending, another case was heard under the same issue and determined that the statute was not penal. So, The plaintiffs filed a petition to rehear. However, the court upheld that the judgment stands for public policy reasons in addition to the penal aspect.

Huntington defines penal as “a punishment of an offense against the public.”

Proof of Foreign Law

Tidewater Oil Co. v. Waller

Waller was employed in Oklahoma but sent oversees to Turkey to repair mobile homes in Tidewater’s oil field. Tidewater provided a plane for Waller, which crashed upon landing and caused injuries for which this lawsuit is filed.

There is no doubt that the law governing would be Turkish law. However, there is no knowledge of what that law is or how it would be enforced.

Thus, the court assumes that Turkey would also say that a person who does a wrong to another would be liable for those damages. Using this assumption, it is reasonable for a jury to find that there was negligence in maintaining the landing strip that caused the injury.

When we do not know what the foreign law is, there are three options: (1) dismiss the claim, (2) apply the law of the forum, or (3) assume what the foreign law is.

There are two issues with this wrinkle. First, how do you prove what the foreign law is? This is resolved by providing a copy of the law, affidavits, etc. Second, what are the consequences of incorporating that law? This may be answered by presuming the foreign law is the same as the forum, presume common law, presume fundamental principles are applied the same everywhere, etc.

Modern Theories

Introduction to Modern Theories

Development through New York Case Law

Due to the inconsistencies and associated dissatisfaction of the First Restatement of Conflicts, New York began on a journey to develop a newer approach. However, they did so through the common law method, meaning their early decisions may seem odd until the court figured out what it was doing in search of a more just approach. The following cases illustrate this journey.

Most Significant Contacts

Auten v. Auten

The law that will be applied is the location where the most significant contacts are.

Had this case been resolved under the First Restatement approach, the law to be applied would be New York. However, the court said that there should be no distinction between the obligation and the performance. Instead, they should apply the law where the most contacts are located. In the present case, that place is England. The wife and children are from England, the husband was originally from England, the marriage was formed in England, payments were to be made in England. Literally everything is in England except for the signing of the contract and where the payments were to be made from.

Haag v. Barnes

This presents a situation where the court is balancing the contacts. In New York, the parties first engaged and it is the location of the mother and child. In Illinois, it is the location where the contract was formed, where the birth took place, where the parties obtained representation, and where the money was being paid from. All these factors tend to show that the most significant contacts were Illinois and thus the contract is valid and the lawsuit may not continue.

It is interesting to compare the above two cases which ultimately leads to questioning how the court determines which contacts are more substantial and have more weight than other contacts.

Most Significant Interest

Babock v. Jackson

Not only will the courts consider where the most significant contacts are, but also the state’s interest in governing over it’s citizens (when compared to the burden on the other state).

Had the First Restatement been applied, the place of the wrong was Ontario and Ontario law would apply. However, the court sees it more fit to see (1) where the most significant contracts were, and (2) which state has more interest in governing the litigation.

Clearly, the most significant contacts were in New York because all the parties were domiciled in New York and their travel into Ontario was incidental to a longer roadtrip set to complete back in New York. Second, New York also has more interest because the cause of action occurred between all parties who are New York residents. Had one of the parties been a resident of Ontario, that may have been a different story. Ontario has an interest in maintaining the safety of their highway, but New York has an interest in making sure the parties are held accountable. In this instance, the New York interests win.

This case is an example of a “false conflict.” That is, there are not two jurisdictions who have a conflict. Instead, only one state has an interest.

Tooker v. Lopez

In New York, the interest or purpose of the lack of a guest statute is so that the victim can be compensated. Michigan’s interest is to protect the drivers in Michigan.

Once again, this is a false conflict case because the driver was domiciled in New York so Michigan does not actually have an interest.

Had the above two cases utilized the “significant contacts” test, the outcome would likely be the same, applying New York law. The nice thing about the interest test is that it helps give good clarity about which jurisdiction is going to apply and why (for policy reasons).

Had both the cases above utilized the First Restatement, the law would have been Ontario or Michigan respectfully.

Neumeier v. Kuehner

  1. When the parties are both domiciled in the same state, use the rules of the domicile state. – False conflict, no split domicile
  2. If the parties are from different states, and the driver’s conduct occurred in the state of his domicile where there is no liability, no liability should be imposed from a different state. Some goes for the guest, if injured in their state where recovery is permitted, recovery should be allowed. – True conflict, split domicile
  3. If the parties are domiciled in different states, go with the law where the accident occurred unless if it displaces a relevant substantial purpose of the other State without impairing the smooth working of the multi-state system. – Split domicile

This case presents a distinction between Babock. Specifically, the parties are domiciled in different states. The accident occurred in Ontario, where the person seeking recovery was located. Thus, it makes sense that Ontario would have a much stronger interest in adjudicating this case because it directly affects its citizens.

However, the dissent argues that this distinction is unfair to parties, to allow recovery in one situation but not another seems discriminatory.

Conduct-regulating or Loss-allocating

Schultz v. Boy Scouts

The court looks at each party individually, first the Boy Scouts then Brothers.

For the Boy Scouts, it is easy for the court to adopt the first rule articulated in Neumeier because the parties were domiciled in New Jersey at the time of the incident. As such, the only interest New York has in applying New York law is that it was the place of the wrong. Because everything else is centered around New Jersey, New Jersey has the most interest in resolving the issue.

As for Brothers, the parties are from different domiciles but neither have a need for applying New York law (other than for biased recovery reasons). In that situation, the law of the wrong would usually apply unless there is a substantial interest in another state. Here, the substantial interest resides in New Jersey, being where the hiring occurred and where the majority of the parties involved are located.

Padula v. Lilarn Properties Corp.

When the law in question is conduct-regulating, go to where the tort occurred. However, if the law in question is loss-allocating (such as it was in Schultz) go to the place where the parties have a common domicile (Neumeier Rules).

The statute in question has both a conduct-regulating element and loss-allocating element. However, the statute is primarily conduct-regulating. As such, the law will be applied where the tort occurred. This is because that state has the greatest interest in regulating conduct within the state. The result in this case is that Massachusetts law applies.

Governmental Interest Analysis

Foundations

The First Restatement of Conflicts proved be leave several considerations out of contention. As such, new theories developed, interest analysis being one of the first. The analysis appears straightforward: Interpret the statutes to determine the policy interests of the conflicting states. This will determine whether there is a true conflict, apparent conflict, or no interest. If there is a true conflict or no other interest, it is best to apply the rule of the forum state. However, if there is an apparent conflict, it is best to apply the law of the state (being only one state) that has an interest.

In other words:

  1. The initial premise is that the forum law governs and the person choosing otherwise has the burden of proof that another jurisdiction should apply.
  2. Determine the domestic policies of the forum law (what is the law meant to accomplish)
  3. Does the forum have an interest in having its law applied?
  4. Repeat steps 2 and 3 for other potentially interested states.
Application in True Conflicts

When both states have an interest in applying the local laws, apply the law of the forum.

Lilienthal v. Kaufman

When one state has a prevailing interest, the law of that state will apply. However, if both states have equally strong interests, then the law of the forum should be the governing rule.

Application in Apparent Conflicts

When only one state has an interest in applying the local laws, we apply the law of the state that has an interest.

Bernkrant v. Fowler

When only one state has an interest, the law of that state will govern.

It appears that there is a conflict, but there really isn’t. California has minimal interest in this case. Although California has an interest in protecting estates from fraud (hence requiring the statute of frauds), this is inapplicable because the creditor could have moved anywhere during his life. Thus, when the contract was made in Nevada, the plaintiff would have to be aware that they could be subject to anywhere the creditor moved. This is a burden the court is unwilling to place on the plaintiff. Instead, because every other aspect of the contract was formed in Nevada, Nevada’s interest in upholding the validity of contracts (also a California interest) is the only interest that matters.

Unprovided-for Cases

When neither state has an interest in applying the local laws, the law of the forum will apply.

Hurtado v. Superior Court

When the other state has no interest, the law of the forum will apply.

Mexico’s cap on damages is not to limit the recovery of plaintiffs but to protect resident defendants from excessive damages. Because the defendants here are in California, Mexico has no interest. Thus, California law, being the forum, will apply.

Despite the simple answer, the court goes into the analysis further. There is a distinction between creating a cause of action and limiting the damages associated with that cause of action. Additionally, California has an interest in deterring drivers from driving negligently. Because the defendants acted negligently in California, the policy directly creates an interest in applying the forum laws.

Comparative Impairment

Comparative impairment is a slight modification to the end of the governmental interest analysis approach. As a reminder, the governmental interest analysis follows:

  1. Determine the interests of the states and determine whether there is an apparent, true, or false conflict.
  2. If the conflict is true, reevaluate the interests to see if it leads to a false conflict.
  3. [Comparative Impairment Modification] Determine which interest would be most severely harmed if the law of the other state was applied.

Step three used to be “if the conflict persists apply the forum law.” Note that the modification is not a weighing of the interests, but instead weighing the harm caused by using one interest over an other. Essentially, the modification hopes to be result based, rather than policy based.

Bernhard v. Harrah’s Club

Follow the standard interest analysis except the modification comes when evaluating any other potential interests (step 2 above is replaced by step 3).

Under the first restatement, this case would be resolved under California law (place where the injury occurred).

With interest analysis, this case would be resolved under California law (true conflict and the tie breaker is the forum state).

Here, the court is using comparative impairment. Using the analysis, this case would be resolved under California law (application of Nevada law would harm California policies more than the harm caused if California applied its law).

California is one of the only states that uses comparative impairment and there are some significant disadvantages. First, all of the Nevada policy interests are negated, giving the plaintiff an additional opportunity for recovery.

Kearney v. Salomon Smith Barney, Inc.

Interest: California has an interest in protecting consumers privacy while Georgia has an interest in protecting companies’ who rely on the protections of Georgia law.

Comparative impairment: California would be much more harmed applying Georgia’s laws because it would undermine the policy interest of protecting consumers because the law was current and enforced routinely. Conversely, Georgia is not undermined because application of California law is still within compliance of Georgia law.

The “Better Rule”

This rule is more of a methodology (here are what the courts are doing). Essentially, it’s an honest evaluation of what the courts are considering. There are five factors being utilized:

  • Predictability of —uniformity of what laws are going to apply.
  • Maintenance of Interstate and International Order—minimum interference of claims with foreign states.
  • Simplification of the Judicial Task—how complicated would it be for the court to apply the law.
  • Advancement of the Forum’s Governmental Interests—even though the law could apply, does the other state have a legitimate interest in applying their law.
  • Application of the Better Rule of Law
Milkovich v. Saari

Interests: Minnesota is hoping to compensate the injured party while Ontario is hoping to protect the driver and insurance from liability.

  • Predictability of Results—in an unintentional tort context, there is no need for predictability because there is no expectation of forum.
  • Maintenance of Interstate and International Order—each state has a connection to the case, so it could be covered under Minnesota law.
  • Simplification of the Judicial Task—either applying simple negligence or gross negligence is easy to apply.
  • Advancement of the Forum’s Governmental Interests—Minnesota does have a legitimate concern, stop collusion by parties of coming into Minnesota and getting into an accident to sue insurance companies.
  • Application of the Better Rule of Law—Minnesota has a much better rule of law. It is better to have liability so the person can recover than not.

The dissent argues the court should not be deciding which law is “better.”

First restatement: Where the accident occurred (Minnesota)

Interest Analysis: Loss-allocating with a common domicile (Ontario)

Governmental Interest Analysis: False conflict – apply the law where the interest is located (Ontario)

Comparative impairment: Which state would suffer the most harm? (Points to Ontario)

Groupings of Contacts: Where are the most contacts? (Ontario)

Better law: Five factors (point to Ontario)

Disclaimer

The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.