Conflicts of Laws Outline

Professor Friedenthal – Spring 2002

Introduction & The Traditional Choice of Law Approach

Introduction

  1. Three Phases of Multistate Disputes:
  2. Jurisdiction—Where can the litigation be initiated? PJ, SMJ, Int’l
  3. Choice of Law—Which law will the court apply?
  4. Recognition and Enforcement of Judgments—Where can the resulting judgment be enforced?
  5. Full Faith and Credit Clause (FFC)
  6. The judgment will not be enforced if the 1st court did not have jurisdiction.
  1. Choice of Law:
  2. Start with the forum →
  3. Judges will apply the law of their own state whenever possible.
  4. In the majority of cases, forum will decide what law applies—it is the default position (unless some party shows why another law should apply.
  5. Often lawyers fail to introduce a conflict of law b/c it is too costly, unrecognized, etc.
  6. If there is a statute covering the subject matter of the state → it will be of crucial significance.
  1. The Source of Conflict Law is the C/L:
  2. First Restatement → the traditional view; this proved to be unsatisfactory.
  3. Second Restatement → this is dramatically different and has not gained recognition in all states.
  1. Comity: Defined as something between a mere courtesy and a legal duty, as derived from the tacit consent of nations based on mutual forbearance and enlightened self-interest. Comity is based on the three following axioms:
  2. The laws of each state have force w/in the territory, but not beyond.
  3. These laws bind all those who are found w/in the territory, whether permanently or temporarily.
  4. Out of comity, foreign laws may be applied so that rights acquired under them can retain their force, provided that they do not prejudice the state’s powers or rights.
  5. The first two axioms elevate territorialism into the main operating principle.
  6. The third axiom attempts to explain why the forum state will apply the law of another sovereign, but not when.
  7. These axioms were later reformulated by Story (p. 13), and then rejected by Beale in favor of the English doctrine of vested rights.

The Traditional American Approach

  1. The First Restatement (1934) – The Traditional Approach
  2. Began with the vested rights theory
  3. The lex loci delicti approach—apply the law of the place where the last act occurred.
  4. Very strong territorial approach
  5. The law looked to the place where the events occurred and rigidly applied that law.
  6. Potential Advantages
  7. Easy to apply (?) – All the court has to do is look to the place where the tort occurred; sometimes that is difficult to determine.
  8. The lex loci is the only geographic factor that is common to both parties of the suit (?) – but this is not true in Carroll.
  9. Neutral – It does not favor either Πs or Δs as a class, whereas applying the law of the forum would favor Πs and encourage forum shopping.
  10. Predictable – Suits will be resolved in the same way no matter where the litigation is brought.
  11. Disadvantages
  12. Unfair – The rigidity was impractical and unbearable
  13. Lose the values of flexibility and common sense; this results in arbitrariness and disparate treatment.
  14. For defamation and other intentional torts, it is possible for the tortious person to select the state in which to commit the tort based on potential liability; perhaps there is too much predictability.
  15. With flexibility, however, where you sue becomes much more important, this can lead to forum shopping and less predictability.
  16. NOTE: That the traditional approach is still followed in the majority of states in areas other than torts and contracts.

Torts

  1. Alabama Great Southern RR Co. v. Carroll (Ala. 1892): Rule: The cause of action arises under the laws of the state where the last act occurred. In this case, both Π (employee) and Δ (employer) were residents of Alabama, and Δ was incorporated there. Π was injured in Mississippi, while the train was traveling from Alabama to Mississippi. The cause of the injury (breach of duty of care) was a faulty inspection that occurred in Alabama. Since the injury, which vested Π’s right to sue, occurred in Mississippi, however, Mississippi law must be applied. At that time, Mississippi had the fellow servant rule—a rule disallowing an injured employee from recovering for the negligence of another fellow employee—therefore Π could not recover. If Alabama law was used, then Π would have won, since Alabama had workman’s comp laws.
  2. Why not use the place of the “bad act” instead of the place of injury? Because w/o an injury there is no tort.
  3. The court read the Alabama law to apply only to injuries that occur in Alabama. But, why should a MS law, enacted to protect MS corporations, protect an AL business?
  4. The law could be changed to protect Π where he is injured elsewhere.
  5. Make the law into a contract type of situation; expressly state that workman’s comp goes into effect regardless of where the injury occurs.
  6. What if MS allowed recovery and AL did not? Technically you should get the same result—MS law applies.
  7. The result here seems unfair, so if we don’t want the place of injury to determine what law applies, then what should be the deciding factor? Some alternatives →
  8. Domicile
  9. Interests of the states; this is a tough question, but if you look to the policy behind the law, then Π should have won—the AL law was enacted to protect AL workers.
  10. Where the “bad conduct” occurred; this could cause problems with manipulation
  11. The most humane law? MN applies the “better law”
  12. Forum law
  13. How should the 2 goals of conflicts law be balanced?
  14. Fair rule as to what law applies; considerations of justice should play a role in formulating the rules by which the choice of law is made, but not in deciding whether or not to follow those rules. Select the law fairly, not guarantee that the law selected is fair.
  15. Doing justice, i.e. assuring that the law that applies is fair. Rather than selecting the law fairly, assure that the law applied attains material or substantive justice.
  1. Territoriality and Vested Rights: The First Restatement
  2. § 1 – No state can make a law, which by its own force is operative in another state.
  3. § 377 – The place of the wrong is in the state where the last event necessary to make an actor liable for an alleged tort takes place.
  4. § 378 – The law of the place of the wrong determines whether a person has sustained a legal injury.
  5. § 384 – If a cause of action in tort is recognized in the place of the wrong, a cause of action will be recognized in other states. If no cause of action is created in the place of the wrong, no recovery in tort can be had in any other state.
  6. § 386 – The law of the place of the wrong determines whether a master is liable in tort to a servant for a wrong caused by a fellow servant.
  1. Localizing the Tort:
  2. Π in Carroll tried to argue that the place of the wrong was the place where the negligent conduct occurred.
  3. The First Restatement, however, adopts a place of impact approach, therefore Π lost.
  4. Defamation cases—Where is the place of impact?
  5. According to the Restatement, the place of the wrong is the place where the defamatory statement is communicated.
  6. What about the place where the statements are sent from?
  1. Fitts v. Minnesota Min. & Mfg. Co. (Ala 1991): Rule: Alabama will adhere to the traditional law approach, since it is not clear that the modern approach is less confusing or more certain. In this case, Π brought suit in AL, seeking to recover damages for wrongful death for a plane crash that occurred in Fla., killing 5 AL citizens. Π made a motion for the law of AL to apply to the case, asking the court to adopt the modern most significant relationship conflicts approach. While the law of negligence is virtually the same in both AL and FL, Π want AL damages law to apply—AL looks to children’s capacity in determining damages, while FL does not. Δ, of course, argues that FL law should apply. The AL is not convinced that the lex loci delicti approach should be abandoned, especially where the modern approach has not proven to be more efficient. As a result, FL law applies since FL is the place of the last act.
  2. Predictability and stare decisis are important to the AL court, therefore they will not adopt the modern conflicts rules.
  3. If Π filed suit in FL, a state that has adopted the modern approach, then AL law would have been applied since that is the place with the most significant relationship to the parties and the dispute.
  4. The estate is in AL
  5. The beneficiaries are in AL
  6. Therefore the harm is in AL
  7. What do you do if AL would apply FL law an FL would apply AL law? This is a conundrum!
  8. Should AL apply only the substantive law of FL? This is what the court does in Fitts.
  9. Or should AL apply the “whole law” of FL including the conflicts law (renvoi)? Renvoi is not normally applied in tort cases. EXCEPTIONS →
  10. Public Policy: If we look to the law of the other state and it makes us wretch then we do not apply it. This is a big out and courts will often resist this argument from attorneys. If the place of injury is completely arbitrary then courts may consider it.
  11. Procedural Law, although then the debate arises over what is substantive and what is procedural.
Contracts
  1. Millikan v. Pratt (Mass. 1878): Rule: The validity of a contract is to be determined by the law of the state in which the contract was made; if it is valid there then it is valid everywhere and will sustain action in the courts of a state whose laws do not permit such a contract. In this case, Π-ME sold goods on credit to a customer in MA. Since the customer did not have good credit, his wife-Δ signed the contract guarantying payment. When Δ failed to pay, Π brought suit in MA to collect (at this time it would have been difficult to get jurisdiction in ME). Δ’s defense is that married women could not contract in MA (at the time the contract was made), although they were allowed to contract in ME. The court must therefore determine where the contract was made in order to figure out what law applies. Although Δ signed and transmitted the contract in MA, Π completed the contract in ME by shipping the goods, therefore the contract was “made” in ME and ME law applies (this is a unilateral contract and the court applies the mailbox rule). Δ then argues that ME law should not apply b/c it is against public policy—MA should protect their married women. But this argument does not prevail since the law in MA has since changed. Π wins.
  2. Why is this a contract matter and not a question of the personal law of status? Foreign courts would apply the law of status and then the law of Δ’s domicile would control. The court determines that since interstate contracts are becoming more frequent and the status of married women is changing, using contract law is a more just approach.
  3. Suppose ME prohibited the contract, but MA would allow it →
  4. Under the rigid rules, the law of ME would still apply since the place of contracting is the same.
  5. Then Π would argue that application of the ME law was against public policy since the courts should not allow MA women to perpetrate fraud. This probably would not have worked.
  6. Another Contract Rule: The law of the place where the performanceis [to be] carried out governs the performance.
  1. Linn v. Employers Reinsurance Corp. (Penn. 1958): Rule: When a principal authorizes an agent to accept an offer made by a third party, the place of contracting is the place where the agent accepts the offer. In this case, Π-PA is a broker who set up a deal for Δ-NY. As a result, Π got 5% commission for the length of the contract. After paying Π for 27 years, Δ decides enough is enough and stops paying. Π brings suit and Δ claims that the original contract is invalid b/c of the statute of frauds. While an oral agreement of this nature is not valid in NY, it would be valid in PA, therefore the court must determine where the contract was made. The trial court found that the call, which completed the contract, was made from NY and therefore applied NY law, but this court finds that there was no evidence to that effect and therefore remands for a determination of where the phone call was placed.
  2. In the case of acceptance by mail or telegraph, the act of acceptance is held to be effective where the acceptance was posted or received by a neutral third party.
  3. By analogy, an acceptance by telephone is effective, and a contract is created at the place where the acceptor speaks. Under this rule, if Δ’s agent was in NY when he accepted Π’s offer → NY law would apply and the contract would be invalid.
  4. NOTE: That is both of the above situations, the risk of non-reception is born by the offeror.
  5. Δ takes on the B/P in showing that the call was made by Δ’s agent in NY (and therefore the acceptor spoke in NY).
  6. On remand, the jury found that the call was not placed from NY, therefore the default forum law applied and Π won.
  7. There are two ways to control the law that applies to contracts → Forum selection clauses and choice of law clauses

Immovables

  1. Lex Rei Sitae: The Restatement requires the application of the “whole law” of the place where the immovable is situated, for almost all issues and virtually w/o exception.
  2. Whether a thing is moveable or immoveable is determined according to the law of the situs of the thing (§ 208).
  3. Immoveables usually include land and buildings attached thereto.
  4. This is one of the few areas of law where renvoi almost universally applies. Courts look to the “whole law” of the state where the immoveable is situated and apply the law that that state would apply.
  5. Why are there virtually no exceptions to this rule?
  6. The situs state has exclusive de jure and de facto power over land situated w/in its borders.
  7. Certainty and clarity of title are universally shared objectives of the law of property and cannot be accomplished if land in one state is subject to diverse and potentially conflicting laws.
  8. Assure the integrity of the recording system
  9. Assure uniformity of result
  10. The situs state has the strongest interest in regulating land situated w/in its borders.
  11. The situs rule is easy to apply and hard to manipulate b/c usually there is no question as to whether a thing is an immoveable or where it is situated.
  12. While a state has no jurisdiction to directly affect land situated outside its borders, it may do so indirectly by ordering parties to pay money or execute the necessary conveyances.

Moveables

  1. Moveables: The law governing moveables depends on the relevant transaction.
  2. Inter vivos – For inter vivos transactions, the law of the situs applies. Thus the formal and substantive validity of a conveyance of an interest in chattel are governed by the law of the state where the chattel is at the time of the conveyance.
  3. Intestate & testate – For transactions that occur on death, the law of the domicile of the decedent at the time of death applies.
  4. If a decedent has moveable property all over the country, it is much easier to apply only the law of one state.
  5. Real property will still be governed by the law of the situs, therefore if a decedent has real property in more than one state, probate should occur in the state of domicile, but a supplemental probate will have to opened in every other state where the decedent had real property.
  6. Every person has only one domicile. You retain the domicile of your parents until you (1) move to a new place with (2) the intention to stay.

The Structure, Operation, and Escape Mechanisms of the Traditional Approach

  1. Conflicts Rules and The Process of Employing Them:
  2. A typical traditional rule consists of three ingredients →
  3. The legal category (e.g. torts, contracts, etc.)
  4. The applicable law
  5. The connecting factor, which “connects” the legal category or problem with the state that supplies the applicable law.
  6. The process of employing these rules consists of three steps →
  7. Characterization – determine which rule is applicable to a problem by fitting it into a legal category. This is often difficult.
  8. Contract
  9. Tort
  10. Property
  11. Moveable
  12. Immoveable
  13. Localize the connecting factor – determine where the tort, contract, etc. occurred.
  14. Ascertain the content of the law of the state in which the connecting factor was located to determine how much of that law is applicable to the case and if there were any defenses available.
  15. NOTE: That each of the above steps offer different opportunities for escape or manipulation.

Characterization

  1. Alabama Great Southern RR Co. v. Carrol (Ala. 1892): (See facts above). As an alternate theory for recovery, Π argued that his relationship w/ Δ was governed by a contract entered into in AL.