Conflicts of Law AudioLearn

AudioLearn Law Series Presents Conflicts of Law - A Course Outline Written by AudioLearn’s Content Team and Narrated by (your name) In this outline, we’ll review the following: WHAT IS "CONFLICTS OF LAW"?

Traditional Theories in Choice of Law A SURVEY OF ESCAPE DEVICES MODERN APPROACHES TO CHOICE OF LAW THE PLACE OF MOST SIGNIFICANT RELATIONSHIP PROBLEMS OLD AND NEW THE CONSTITUTION AND CHOICE OF LAW THE OBLIGATION TO PROVIDE A FORUM UNCONSTITUTIONAL DISCRIMINATION IN CHOICE OF LAW OTHER TYPES OF JURISDICTION EFFECT GIVEN FOREIGN JUDGMENTS SPECIAL PROBLEMS IN CHOICE OF LAW- FAMILY LAW FEDERAL SUBJECT MATTER JURISDICTION THE ERIE DOCTRINE FEDERAL COMMON LAW AND THE SCOPE OF LEGISLATIVE JURISDICTION

INTRODUCTION This course outlines the theory, black letter law and important cases for the subject "Conflicts of Law." This can be a rather dry subject, so our objective today is to help you get a thorough understanding of the topic without falling asleep! Conflicts of Law is a largely procedural subject, which means you will consider cases and examples that draw from a broad range of civil cases, such as torts, contracts, property, family law, constitutional law and even terrorism. The varied subjects help make Conflicts of Law more lively, because the procedural rules are informed by the facts of the cases. These cases are very fact sensitive, so when you think through problems on your exams, always look for ways to distinguish cases on the facts.

At the end of each section, I will recap the key takeaways and there will be a quiz to help you understand the topic fully.

Let's get started.

[Pause]

I. WHAT IS "CONFLICTS OF LAW"?

This outline examines the resolution of cases where the relevant parties’ conduct or transactions have connections to more than one state or sovereign. Topics include choice of law, personal jurisdiction, full faith and credit, and enforcement of foreign judgments. The question you will always be asked to answer is "what substantive law applies to a given dispute?"

A. There are three key areas that conflicts of law decides: 1) Which court is eligible to hear a dispute? This is known as jurisdiction.

2) Which law must the court apply? This is known as choice of law.

3) Should the court recognize foreign judgments? This is known as "enforcement of judgments."

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B. Historical Development of Conflict of Laws The development of the doctrines that govern conflicts of law began with the ancient Egyptians.

Their basic tenant was that the forum law always applies. Some states still follow this approach.

The Romans said that when the legal dispute involves more than one state or sovereign, you don't choose one law. Instead, the Romans said the applicable laws of both jurisdictions should be meshed into a new law.

(This is known as "jus gentium" -- which means "Law of Nations," for all you Latin buffs out there.)

During the 14th and 15th centuries, the Statutists developed a theory that looked at a particular statute to determine whether it was "real" or "personal." Real statutes operated only within the territory of the enacting state, whereas "personal" statutes followed all people who owed allegiance to the enacting state. This is a unilateral approach because it focuses on the applicable laws themselves to determine which applies.

1. Influence of Scholar Ulrich Huber and His Three Maxims There was much criticism of the Statutists approach, which was heavily revised by the Dutch during the 15th and 16th centuries. The Dutch applied laws generally only within the enacting state, but to all people who were there, whether temporarily or permanently. However, they also introduced the idea of comity, which called for application of foreign law when needed to preserve rights acquired in foreign states. Their motive for the concept of comity was to protect the forum state from retaliation when the tables were turned.

Ulrich Huber was the most important legal scholar from the era. Huber invented the concept of comity and was also the first person to use the phrase "conflict of laws." Huber wrote a ten-page essay that is the most significant document ever written in this area of law. Huber postulated three maxims: •

First, every nation possesses an exclusive sovereignty and jurisdiction within its own territory. The laws of every state affect, and bind directly all property, whether real or 3

personal, within its territory. The state, or sovereign, entity may regulate everyone within its boundaries.

•

Second, no state or nation can, by its laws, directly affect, or bind property out of its own territory, or bind persons not residents therein, whether they are natural born subjects or others. The second principle is that the sovereign cannot regulate anyone outside of their boundaries.

•

Third, whatever force and obligation the laws of one country have on another, it depends solely upon the laws, and municipal regulations of the latter country. This third principle explains why a sovereign entity should enforce another entity's law, and states that comity between states promotes peace and goodwill.

Common law rules continued to develop haphazardly in the 19

th

century, but the rules were

summarized by Justice Joseph Story, who borrowed Huber’s three maxims and proposed his own three basic principles. First, the laws of each state apply within its borders but not beyond; second, everyone permanently or temporarily within the limits of a state is subject to that state’s laws; and third, under the principle of comity, sovereigns recognize rights created by other governments that do not undermine the sovereign’s own power or rights.

During the first half of the 20

th

century, Harvard Professor Joseph Beale dominated the study of

conflict of laws. Beale was influenced by German law. Beale adopted a theory of "vested rights" which was very territorial. Beale revised the concept of comity once again. For Beale, a right only vests when a cause of action arises. That right vests at a particular moment and at a particular place, and the laws in effect at that place and time should go with that cause of action wherever the lawsuit is brought.

The Restatement adopted Beale's analysis of vested rights in the context of contracts: A contract must be governed by the law of the state where it was "made" (i.e., "where the last act necessary to make it a binding agreement takes place.") [pause]

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II. TRADITIONAL THEORIES IN CHOICE OF LAW Now that we have a sense of how conflicts of law developed, let's turn to the Choice of Law. Choice of law is how we determine which law a court must apply to a dispute. The most common choice of law concern has traditionally been preventing "forum shopping," which is when litigants search for the forum that will be most beneficial to their case. It is also important for there to be predictability and clear rules, so that the parties know which rules apply to their disputes. The most common problem that arises in choice of law cases is that different jurisdictions have different rules. So, unless the rules are totally uniform, there will always be forum shopping.

A. The Choice of Law Analysis There are black letter rules that apply to different areas of law. Using the territoriality approach that Beale advocated, you must answer two important questions. The first question is how to characterize the lawsuit. This means determining whether the lawsuit is a tort, contract dispute, or property case. This is what we mean by characterization. The second question is identifying the vesting event, which requires ascertaining which event created the rights involved. An example of this would be a tort for personal injury, you would want to know exactly where the injury occurred. The court then applies the law of the state where the rights vest.

B. The First Restatement Professor Beale wrote the First Restatement. His chief aim was to bring uniformity to choice of law rules. The major drawback of the First Restatement is that it did not distinguish clearly between torts and contracts.

1. Rule of Torts: The law of the place of the wrong governs. The place of the wrong is where the "last event necessary" to make the defendant liable occurred. So how does this work in practice?

Here are some examples: •

Except in the case of harm from poison, when a person sustains bodily harm, the place of wrong is the place where the harmful force takes effect upon the body.

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•

When a person causes another voluntarily to take a deleterious substance which takes effect within the body, the place of the wrong is where the deleterious substance takes effect and not where it is administered.

•

When harm is caused to land or chattels, the place of wrong is the place where the force takes effect on the thing.

•

When a person sustains loss by fraud, the place of wrong is where the loss is sustained, not where fraudulent representations are made.

•

Where harm is done to the reputation of a person, the place of wrong is where the defamatory statement is communicated.

[pause] Case Study: Alabama Great Southern RR v. Carroll (Alabama, 1892). This is the most important early case on choice of law in American law. It deals with an unintentional tort. The plaintiff was an employee of the railroad. A train traveled from Birmingham to Meridian and one of the links broke in Mississippi, injuring the plaintiff. The link was defective while the train was still in Birmingham, Alabama. The plaintiff wanted the issue tried according to Alabama law because he could recover under Alabama's employer liability act, for which there is no equivalent in Mississippi.

The case was tried in Alabama and the plaintiff won. However, the judgment was reversed on appeal. The Court rejected the plaintiff's argument that he should recover since the negligence happened in Alabama. But the court said the negligence by the railroad did not produce an injury in the state, because it did not happen until the train was outside the state. The general rule is that there can be no recovery in one state for injuries to the person sustained in another, unless the infliction of the injuries is actionable under the law of the state in which they were received.

Tort Rule on Place of the Wrong: Torts will be governed by the law where the injury occurred even when the alleged negligence took place in another jurisdiction.

Where there is a series of events that leads to liability, the cause of action vests where the last event which results in liability takes place. In this case, the last event was in Mississippi.

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Note on Characterization: In our analysis, we talked about characterizing the case. Here, the plaintiff tried to make it a contracts case, since he entered into an employment contract with the railroad in Alabama, and then sued under the statute allowing employees to recover for injuries caused by their employers. The court said it was not a contracts case, and that the dispute sounded in tort. [pause] Continuing our survey of black letter law, let's shift gears and discuss Contracts.

2. Rule of Contracts: Choice of law will depend on whether the dispute is over formation, validity, or performance. If the dispute is over contract formation, then use the Restatement Rules to determine where the contract would be formed (if at all) and apply that state's law. If the dispute is over validity of the contract, apply that law of the state where the contract was formed.

If the dispute is over performance, apply the law of the state where the contract was to be performed. (a) Place of Contracting: The law of the forum is dependent on the "place of contracting." For validity problems, such as offer and acceptance, sufficiency of consideration or illegality of the contract, the court applies the law of the place where acceptance takes place. For performance problems, like sufficiency of performance, excuses for nonperformance, or damages, the court applies law of the state where the performance was to take place.

Here are some examples how of this rule is applied: •

Law Governing Creation of a Contract; i.e., the Capacity to Contract. The law of the place of contracting determines the capacity to enter into a contract.

•

Law Governing Performance of a Contract. Under the Restatement, the Place of Performance is the state where, either by specific provision or by interpretation of the language of the promise, the promise is to be performed.

•

Law Governing Performance. The duty for the performance of which a party to a contract is bound, will be discharged by compliance with the law of the place of performance of the promise with respect to: 7

(a) the manner of performance; (b) the time and locality of performance; (c) the person or persons by whom or to whom performance shall be made or rendered; (d) the sufficiency of performance; and (e) excuse for non-performance.

Case Study Milliken v. Pratt (Mass. 1878): The Plaintiff, Milliken, was a partner in a Maine business. Pratt, a Massachusetts resident, guaranteed payment of a debt belonging to Pratt's husband. Pratt executed the guarantee in Massachusetts and had it mailed to Milliken in Maine.

Milliken then sold goods to Pratt's husband on credit, but the husband did not pay. Pratt then refused to pay under the guarantee. Milliken sued in a Massachusetts court, where defendants lived. The court applied Massachusetts law, which at the time did not give a wife capacity to enter a surety contract, and found for defendants. Maine law at the time did allow a wife to enter into a surety contract. So, Milliken appealed.

Holding: The judgment was reversed. Generally, the validity of a contract is determined by the law of the state in which it is made, and, if it is valid there, it is deemed valid everywhere. It can then be enforced even in a state whose laws would not have permitted formation. The guarantee contract was made when Milliken accepted it in Maine by selling goods to the Defendant's husband on credit. The fact that the forum’s law would disallow the contract is irrelevant when the contract was formed in a foreign jurisdiction.

Contracts Rule on the Place of Contracting: Issues of formation of a contract are governed by the law of the state where the contract was made even if the state of residence of one of the parties would not have allowed the contract to be made in that state.

[pause]

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3. Rule of Property: The law of the place where the property is located governs. The property must be classified as movable or not movable; property that is immovable is governed by law where it exists; movable property is governed by law where it is located.

Note: it is extremely difficult to determine when the property is something like a stock certificate. One response to this problem is to develop legal fictions. For instance, the situs of stock certificate is the place of incorporation of the company.

Real, Immovable Property: It is assumed that the location where real property is located has the greatest interest in who holds title to the property and that only a court of that jurisdiction can issue an enforceable decree affecting title. Therefore, it is likely that a foreign judgment that does not respect the laws of the situs will be denied enforcement by the situs jurisdiction.

Personal, Movable Property: As to personal property, the courts are more interested in the intent of the testator in disposing of his or her property. It is presumed that the testator is most familiar with the laws of his or her domicile, that the will has been prepared accordingly, and that the jurisdiction of domicile has the greatest relationship to the testator and the estate with regard to such personal property.

Immovable Property: Case Study: In Re Barrie’s Estate (1949): Barrie died in Illinois, where his personal property was located. He had had made a will which disposed of his personal property and his real property, which was in Iowa. The Illinois court declared the will revoked because the word “void” was written across the face of the will. The beneficiary under the will took it to Iowa for probate, but those who would take the property by intestate succession disagreed. The intestate successors claim that the Illinois judgment deserves full faith and credit in Iowa, even as it applies to the disposition of real property in Iowa. Iowa law would not have revoked the will, but Iowa had a statute that stated that the validity of a will was to be determined by the law of the place where executed or of the testator’s domicile.

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Rule: The forum court does not have to recognize a foreign revocation of a will which disposes of real property in the forum state. Moreover, the law of the place where the property is located controls. In short, “[t]he revocation of a will is governed by the law of the state of situs of the land."

Holding: The Illinois judgment that the will was revoked will NOT be recognized as it applies to real property in Iowa; rather, Iowa law will determine the issue of revocation as it applies to Iowa real property.

Note on Situs: Why do courts give so much priority to the location of the property? The Restatement explains the practical reasons. First, land and things attached to the land are within the exclusive control of the state in which they are situated, and the officials of that state are the only ones who can lawfully deal with them physically. Second, immovables are of greatest concern to the state in which they are situated; it is therefore proper that the law of this state should be applied to them. And third, it provides both certainty of judgments and convenience for the parties.

Movable Property: Case Study: Cammel v. Sewell (1860): Cammel was an English insurer who insured lumber traveling from Russia to England in a Prussian vessel. The ship was damaged on the Norwegian coast and the shipmaster subsequently sold the lumber in Norway to Clausen. Clausen sold it to Sewell, the defendant, who was an English merchant. The plaintiff, who as the insurer paid full value to the firm to which the shipment was to be delivered, now seeks to force the defendant to turn the cargo over to him, on the ground that English law would not recognize the shipmaster’s sale. The trial court applied Norwegian law, which validated the sale and denied the plaintiff recovery.

Holding: Judgment affirmed. When personal property is disposed of in a manner binding according to the law of the country where the property is located, that disposition is binding everywhere. Clausen was an innocent purchaser who, under Norwegian law, was vested with 10

good title. He then properly conveyed this title to the defendant. Defendant's title can't be divested merely because the goods were brought into England.

Rule: The law of the jurisdiction where chattels are located when transferred govern the validity of the transfer.

4. Rule of Domicile: A person's domicile is the place where he has at least some actual physical presence and an intent to make that place his principal home.

Meaning of Domicile: Domicile is the place with which a person has a settled connection for certain legal purposes, either because his home is there, or because that place is assigned to him by the law. A person only has one legal dwelling, but the person can have multiple residences (where one physically lives).

There are three Kinds of Domicile: •

Domicile of Origin is where a person is born.

•

Domicile of Choice is the domicile a person picks for himself.

•

Domicile of Law is the domicile attributed to a person irrespective of his own intention.

Here's an example. Let's say you build your house on a state line. Your domicile is where the bulk of your house is (if equal, then it is where the front door is).

How A Domicile of Choice Vests: There are two requirements for acquiring a domicile. The first is physical presence at the chosen geographic place. The second is the unconditional intent to remain there. A person cannot be “just passing through” or present for some temporary reason.

The intention must be to remain in the location.

Domicile of Choice: Case Study: WHITE V. TENNANT (1888): Decedent White was living on a farm in West Virginia, which he sold. He moved his household goods and livestock to a farm in Pennsylvania but did not sleep there because the house was damp and his wife was ill.

Instead, they went to a relative’s home nearby, which happened to be West Virginia. While there, 11

White died intestate. The law of the domicile controls intestate succession of personal property.

Under West Virginia law, the widow took all the estate. But under Pennsylvania law, White’s brothers and sisters took one-half. The plaintiff in this case was White's brother. He sued the administrator of the estate. Plaintiff wanted to set aside the settlement and distribution of the decedent’s personal estate under West Virginia law, claiming Pennsylvania's law should apply.

The trial court dismissed his complaint, and he appealed.

Holding: Judgment reversed. Decedent left his former home without any intention of returning and moved his family and property to his new home with the intention of making it his residence for an indefinite time and thus acquired a domicile in Pennsylvania; therefore, Pennsylvania law controls.

Rule: Pennsylvania became the decedent’s domicile the instant he arrived there. If domicile exists, mere temporary absence will NOT destroy it.

[pause] KEY TAKEAWAYS FROM SECTIONS I AND II. •

There are three key areas that conflicts of law decides: Jurisdiction, decides which court is eligible to hear a dispute; Choice of law, is which law the court must apply; and enforcement of judgments, which is whether the court will recognize foreign judgments.

•

Huber's three maxims are: One: Every nation possesses an exclusive sovereignty and jurisdiction within its own territory. Two: No state or nation can, by its laws, regulate anyone outside of their boundaries. Three: Whatever force and obligation the laws of one country have on another, it depends solely upon the laws, and municipal regulations of the other country, which explains why a sovereign entity should enforce another entity's law.

•

Beale's idea of territoriality greatly influenced American law. He proposed that a right will vest at a particular moment and at a particular place, and the laws in effect at that place and time should go with that cause of action wherever the lawsuit is brought.

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•

Under Beale's theories, there are two key questions to ask when analyzing a case. The first question is how to characterize the lawsuit. The second question is what is the "vesting event."

•

The basic analysis you should use when faced with exam questions, is to begin by identifying the forum and interested jurisdictions. First, ask what's the proper forum?

Second, identify which are the interested jurisdictions. Third, decide what would be the different results based on jurisdiction law, and based on characterization. Fourth, ask what law to choose to govern the case.

•

The first Restatement established general principles for choice of law that apply in various kinds of cases. Torts will be governed by the law where the injury occurred even when the alleged negligence took place in another jurisdiction. Contracts will depend on whether the dispute is over formation, validity, or performance. If the dispute is over contract formation, then use the Restatement Rules to determine where the contract would be formed and apply that state's law. If the dispute is over validity of the contract, apply that law of the state where the contract was formed. If the dispute is over performance, apply the law of the state where the contract was to be performed.

•

The law of the place where the property is located governs the property, whether it is real estate or personal property.

•

A person's domicile is the place where he has at least some actual physical presence and an intent to make that place his principal home.

QUIZ 1. What is the holding of Cammel v. Sewell?

The law of the jurisdiction where chattels are located when transferred govern the validity of the transfer.

2. True or False: A person only has one legal dwelling, but the person can have multiple residences.

True.

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3. What are the three kinds of domicile?

Domicile of Origin is where a person is born. Domicile of Choice is the domicile a person picks for himself. Domicile of Law is the domicile attributed to a person irrespective of his own intention.

4. What is the holding of White v. Tennant?

Pennsylvania became the decedent’s domicile the instant he arrived there. If domicile exists, mere temporary absence will not destroy it.

5. What are the three areas that conflict of law decides?

First, every nation possesses an exclusive sovereignty and jurisdiction within its own territory. Second, no state or nation can, by its laws, regulate anyone outside of their boundaries. And three, whatever force and obligation the laws of one country have on another, it depends solely upon the laws and municipal regulations of the latter country. [pause]

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III.

A SURVEY OF ESCAPE DEVICES

Despite the attempts to unify the approach to conflicts of law, lawyers and litigants still try to maneuver toward the jurisdiction with the best law for their case. At the same time, courts have also intervened to mitigate some harsh or unfair results that can occur. We call these "escape devices." In a few moments, we will explore how the difference between procedural and substantive matters can be used to forum shop. Substantive matters are outcome determinative.

They can also be used as escape routes. How would this work? Once it is determined that a matter is substantive, the court then characterizes it as involving “torts,” “contracts,” or “real property.” Based on this determination, the court then decides which state’s law to apply.

A. Characterization The first escape device has to do with characterization. The process of characterization, whereby a court determines the true nature of the case (such as whether it is a tort or contract case) can be broken down into two areas: 1. Words and Terms (which is really a subset of “procedure”). The forum state will always apply its own definitions of words and terms. For example: the words “Minor,” “Domicile,” and “Residence” would all be given the definition they have in the reviewing court.

2. Traditional characterization, such as the traditional distinction between “substance” and “procedure," can be manipulated. For example, with respect to procedure, even when applying foreign law, the court would apply its own procedure. That means foreign law would only apply to the substance of the case. How would this work?

Imagine things like qualification of witnesses, or the time period in which to demur or file a responsive pleading, or which remedies are available in the forum. All of those could turn on procedural factors.

B. Substantive v. Procedural Considerations: Rule: When foreign law is applicable, it governs the substantive law, but the procedure is governed by the laws of the forum. In some instances, 15

there are justifications for forum to use its own rules. For example, when using the forum's procedural rules won't affect the outcome, or when the rules have more to do with how the court functions than with deciding a particular case. The Restatement of Conflicts of Laws gives guidance on when the procedural/substantive distinction applies.

1. Restatement 584. Determination of Whether Question Is One of Procedure. The court at the forum determines according to its own Conflict of Laws whether a given question is one of substance or procedure.

2. Restatement 585. What Law Governs Procedure. All matters of procedure are governed by the law of the forum.

3. Proceedings in Court: •

Under Restatement of Torts 588, the law of the forum determines who may and who must sue and be sued.

•

Under 591, the law of the forum determines at what moment action is begun.

•

Under 594, the law of the forum determines whether an issue of fact shall be tried by the court or by a jury.

•

Under 595, the law of the forum governs the proof in court of a fact as alleged, and which presumptions and inferences will be drawn from evidence.

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Under 596, the law of the forum governs competency and credibility of witnesses.

•

Under 597, the law of the forum governs the admissibility of a piece of evidence.

4. Execution of Judgment. The law of the forum determines matters pertaining to the execution of a judgment, and what property of a judgment defendant within the state is exempt from execution and on what property is within the state’s execution.

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5. Survivability of Actions: To illustrate these principles in practice, review the facts in Grant v. McCauliffe, which has to do with survivability of actions. In that case, three plaintiffs were in a vehicle owned and driven by another plaintiff when they were in an accident with the deceased defendant. The accident occurred just a few miles to the east of Arizona. The defendant is the administrator of the driver’s estate. All plaintiffs were residents of California at the time of the accident and they filed a lawsuit in California. In California, plaintiffs were permitted to sue a decedent's estate. In Arizona, they were not. The issue was whether the lawsuit could be maintained in California. The Supreme Court of California reversed the decision of the trial court and decided that the cause of action would in fact survive the death of the tortfeasor and would be maintainable against his estate.

Rule: The survival of a cause of action is a matter of procedure, not substance, and may be applied to a suit arising out of an injury sustained in another jurisdiction.

Rationale: Survival is not an essential part of the cause of action itself, but it does relate to the procedures available for enforcement of the legal claim for damages.

The issue is about the administration of estates, which is a local proceeding.

Survival statutes do not create a new cause of action. These statutes are analogous to the statutes of limitation. The law of the forum, that is California statutory law, is used here since all the parties were residents of the state and the estate of the deceased tortfeasor is being administered in the state. Consequently, the plaintiffs' right to prosecute their causes of action is governed by the laws of California relating to the administration of estates.

6. Conflicts in Statute of Limitations: Statutes of limitations have typically been considered, in the substance/procedure dichotomy, to be procedural. However, most state legislatures apply a “borrowing” statute under which the shorter of the forum or 17

the foreign state’s limitation period applies. However, some of these statutes do not apply when the plaintiff is a resident of the forum.

7. Statute of Frauds: For years, the exact wording of the statute of frauds was key in deciding statute of frauds cases. If the statute was of the typical “no action shall be brought” wording, the statute was deemed procedural. On the other hand, if it was of the “no contract shall be valid” variety, it was considered substantive.

8. Respondeat Superior and Vicarious Liability: Vicarious liability is determined according to the law of the state where the injury occurred. In the case of automobile accidents, when someone gives the tortfeasor the permission to use a car, the person who owns the car is usually liable under the law of the state where the tort happened.

However, sometimes a court characterizes the wrong as occurring in the state where the auto owner gave his permission to the tortfeasor to use the car, then applying the law of that state to the case.

9. Modern Developments: The trend is to uphold contracts, typically by applying the law of the state having the most significant relationship with the transaction.

Re-characterizing to Avoid Harsh Results: LEVY V. DANIELS’ U-DRIVE AUTO RENTING CO: Daniels’ U-Drive Auto Renting. a Connecticut auto leasing company, rented an auto to Sack, in which Levy, a passenger, was injured in Massachusetts. A Connecticut statute subjected defendants to liability for any injuries arising out of the use and operation of its leased vehicles. Massachusetts had no such statute, and under the tort choice of law rule the place of injury governs all issues. Thus, under Massachusetts law, the plaintiff, who was Levy, could NOT maintain an action against the defendant, even though the statute was designed to regulate leasing companies. The trial court granted defendants demurrer. Levy appealed.

•

Holding: If this case was based on tortious conduct only, the demurrer was proper because under the common law of Massachusetts, Levy would have to prove that the defendant rented Sack a defective vehicle and failed to disclose the defect. However, the only negligence in the case was Sack’s driving, so the defendant would not be liable to Levy here. The Connecticut statute gives an injured party the right to sue a defendant for 18

injuries wherever they occur, as a consequence of the rental contract. Thus, it is a contractual claim. (This is an example of characterization as an escape device, since the case was characterized as a contract claim). Liability arising from a contract depends on the law of the place of contracting, which was Connecticut (as a third-party beneficiary, Levy could enforce that contract even though the injury occurred in Massachusetts).

Note: This case demonstrates how courts using the traditional approach to choice of law sought to avoid harsh results by re-characterization – that is, the court uses recharacterization here to classify the suit as a contract suit (rather than a tort suit) for the plaintiff to recover.

B. Renvoi: In conflict of laws, renvoi (from the French, meaning "send back" or "to return unopened") is a subset of the choice of law rules and it may be applied whenever a forum court is directed to consider the law of another state. In other words, once the forum decides to apply foreign law, it needs to determine how much of the foreign law to apply. It can apply the foreign state’s “internal law,” which is the law the foreign state would apply if it were confronted with the same factual issue. On the other hand, it can apply the foreign state’s “whole law,” which would be the entire law from the state, including its conflicts law.

1. Terminology: When the forum state declines to apply the choice of law rules of the state to which it refers, it “rejects” the renvoi. When it applies the foreign choice of law rules, it is said to “accept” the renvoi. When renvoi is accepted and the foreign state’s choice of law rules refer the case back to the forum state’s law, there is a “remission.” If it refers the case to a third state’s law, there is a “transmission.”

2. Renvoi Example: Adam, a New York resident, collides with Brian, a California resident, in Kansas. Suppose Kansas law provides that general injuries are presumed, and that in auto accident cases, the law of a defendant's state applies. Suppose further that California law does not presume general damages. Adam then sues Brian in California for his injuries and the California court decides that Adam’s cause of action vested in Kansas.

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The California court can apply Kansas' internal law and hold that general injuries are presumed. But the court could also apply the whole law of Kansas and hold that Kansas law specifies that California law is to apply. If that is the case, Adam would have to prove general damages. This is the renvoi problem in a nutshell.

3. Most jurisdictions reject the renvoi. In the example above, this would mean that the California court would apply Kansas' internal law. The practical problem with the renvoi process is that it requires the forum to inform itself not only about foreign substantive law, it also means the forum must brush up on foreign conflicts rules and even the foreign court's rules about renvoi. The ultimate practical problem with renvoi then is that it could create a vicious circle: If renvoi was accepted in all states, each state would direct the case back to the other state's whole law. This means the two courts would engage in an endless cycle of references back and forth.

•

Exceptions to Application of Renvoi: The doctrine does not apply when a case involves title to land, or validity of a divorce decree.

Case Study IN RE SCHNEIDER’S ESTATE (1950): The decedent (Schneider) was born in Switzerland, lived in the U.S. and was domiciled in New York at the time of his death. He attempted to dispose of real estate he owned by will, the property being located in Switzerland.

Swiss law would not allow real estate to be disposed of by will, but gave the heirs a fractional interest. The New York court is administering the personal property of the decedent, which was derived from the sale of the real property located in Switzerland. The court says that it will apply the law of the situs, which is Switzerland, of the property.

Holding: The whole law of Switzerland is applicable. If the forum court applies Swiss law's conflict of laws rule, it bounces back to New York, where the decedent was domiciled. Disputes over property are governed by the conflicts rules of the situs; where a person of joint nationality

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is domiciled in the other state of nationality, Switzerland would look to the substantive law of that state. As a result, New York law applies to the decedent’s real property in Switzerland.

Rule: The whole law of the situs should be applied.

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C. Intersection of Public Policy, Penal Laws, and Tax Claims with Choice of Law Public Policy considerations are always a part of choice of law claims. For public policy to cause a court to intervene, though, a case needs to present a dramatic departure of the court’s idea of justice or fairness. This principle was recognized by section 612 of the First Restatement, which precludes suits upon a cause of action created in another state if the enforcement the law would be contrary to the public policy of the forum. As we see in other areas of law, to determine public policy, the forum should consider legislative debates, the Constitution and public opinion.

1. Application of Public Policy Exception: Penal and tax laws of another jurisdiction will not be enforced, because they are intimate notions of another state’s identity.

2. Penal Laws award a penalty to the state, public officer, or member of the public suing in the community interest to address a public wrong. The purpose of the law must be vindication of the public justice, rather than awarding damages to a person who is aggrieved. A penal law could be either a criminal statute or a civil punishment statute.

3. Taxation laws are another exception. Traditionally, a state will not enforce the revenue laws of another. This rule may be slipping, however. Unlike an attempt to enforce a penal law, a tax claim may not truly interfere with the prerogatives of a foreign state because the foreign state is the one who wants to sue: it wants the forum

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state to use its law. Also, interstate complications are more likely to result from the exclusion of tax claims than from their acceptance.

Let's look at a few cases to see how the public policy consideration impacts choice of law.

Case Study: Loucks v. Standard Oil (1918): Loucks was killed when a negligent driver employed by Standard Oil ran him down. The accident took place in Massachusetts, but he was a resident of New York, and his administrator brought a suit for wrongful death in New York. The suit was based on the Massachusetts wrongful death statute, which provided a minimum recovery of $500 and a maximum recovery of $10,000, with the amount of damages awarded to be based on the degree of fault. Standard Oil moved to dismiss the complaint on the grounds that the Massachusetts statute was penal in nature and therefore unenforceable in New York.

Holding: One state’s penal laws are not enforceable in any other state. Whether a statute is penal depends on the type of liability it creates. Where the penalty is awarded to the state or a member of the public is suing in the interest of the whole community to right a public wrong, the statute and recovery is penal, and thus unenforceable. While this statute is penal in the sense that damages are awarded on the basis of the defendant’s conduct rather than the plaintiff’s measure of damages, the right to recover is private and therefore the statute is not penal in the international sense. The reason for this is because the case is about redressing the harm caused to the plaintiff. The public policy of New York is not violated by the enforcement of the right, as New York recognizes the right of survivors to recover for wrongful death. The fact that the Massachusetts Statute is different in the way it is enforced does not make the Massachusetts Statute wrong. The forum may refuse to enforce a right based on a foreign statute only where enforcement would violate an express strong public policy of the forum. That is not the case here and since the Statute is not penal in the international sense, there is no bar to its being enforced in New York.

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Rule: A right of action created by the law of a neighboring state is enforceable in any other state unless the law is penal in the international sense or enforcement of the right would violate the strong public policy of the forum.

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Let's look at another case example.

Case Study: Holzer v. Deutsche Reichsbahn-Gesellschaft (N.Y. 1938): The plaintiff in this case, Holzer, was discharged from his job during Weimar, Germany, because he was a Jew. He sued for breach of contract because his German employer because his employment contract entitled him to money if he was discharged. But German law required the employer to discharge the plaintiff. The employer raised the defense that it was legally required to fire Holzer. The New York court still applied the German law to let the employer out of its obligation. When the law of the state of the contract provides a defense to a breach of contract action, that law must be followed by the forum state.

Holding: In this case, the German law went beyond permitting the breach to mandating the breach. Therefore, as a matter of law, the contract could not have been breached. Its rationale is that since the employer was forced by law to discharge the plaintiff, this did not conflict with New York's laws and policy. The New York court at the time did not hone in on the obvious antiJewish aspects of the law. There would very likely be a different result if this case was tried today.

Case Study: Mertz v. Mertz (NY 1936): In this case, a wife brought a negligence suit against husband to recover damages for personal injuries which she sustained in a car accident in Connecticut. Under New York law, a husband was not liable to his wife for personal injuries caused by his negligence, but under Connecticut law, he was liable. So, the question for the forum was whether a wife, residing in New York, could enforce liability for a wrong committed outside of the state. According to the rule established in the Loucks case, the forum could not just use its own notion of unfairness to ignore the other state's law. The public policy necessary to 23

deny enforcement of a sister state’s statute must be found in the forum’s constitution, statutes, or judicial records and not only in the forum court’s own notion of expediency and justice.

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Issue: The issue for the forum was whether “public policy” could be used as a basis for denying enforcement of a sister state’s statute, where such “public policy’ is not enunciated in the forum’s constitution, statutes, or judicial records.

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Holding: “Public policy” may not be used as a basis for denying enforcement of a sister state’s statute, where such “public policy” is not enunciated in the forum’s constitution, statutes or judicial records. While the term “public policy” is ill-defined when used in the context of denying enforcement of a sister state’s statute, it does include some meaningful definition. “Public policy” is properly used when represented by the forum’s constitution, statutes, or judicial records. While Connecticut has abandoned the common law concept of one spouse’s incapacity to sue the other for personal injury, New York has not. The law of the forum will determine the jurisdiction of the courts, the capacity of the parties to sue or be sued, and the remedies and procedures to be invoked. New York’s public policy is to incapacitate one spouse from suing the other without regard for the underlying merit of the cause of action. Connecticut cannot impose on New York its own policy to the contrary.

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Note: If you are thinking that this case is somewhat at odds with the rationale of Loucks, you are thinking like Judge Cardozo, who wrote the Loucks opinion. Cardozo found that dissimilar statutes pointed toward the same objective were not a conflict of policy. The majority opinion in this case, under its own definition, would find a conflict of policy only where conflicts between the statutes existed.

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We have one final area to discuss before we can move on from Choice of Law: pleading and proving foreign law.

D. Pleading and Proving Foreign Law: A party that wants to use law from a foreign country must prove that the law applies. The forum will not take judicial notice of foreign law. This 24

process is now governed by Federal Rule of Civil Procedure 44.1, which says a party who intends to raise an issue about a foreign country's law must give notice by a pleading or other writing. In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination must be treated as a ruling on a question of law. For those of you in Arkansas, remember that the state's rule is the same as Federal Rule 44.1.

Previously, foreign law was governed by common law principles established in Walton v.

Arabian American Oil Co., where a plaintiff who was injured in Saudi Arabia failed to plead or prove Arabian law. His case was dismissed. The court held that foreign law was a fact that needed to be proved to the jury. This is no longer the law of the land. The party who wants to use foreign law must prove that it applies, and its application is a legal issue for the court.

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IV. MODERN APPROACHES TO CHOICE OF LAW Now that you have a sense of the black letter law and the history of conflicts of law, let's turn the page to the modern legal system. Since choice of law is quite a complicated and subjective area, legislatures have waded into the debate to offer statutory solutions. That's one way the choice of law has been reformed in the modern day. Another approach is to give the parties autonomy over the decisions of which law to choose. Some jurisdictions have developed doctrines that help parties agree on the applicable law. Some jurisdictions have adopted laws authorizing the forum to "borrow" the statute of limitations from another state. Another way to modernize choice of law is for the courts to apply a governmental interest analysis. We will take each of these developments in turn.

A. Statutory Approaches to the Problem One possible solution to the choice of law quagmire is legislation. The Federal Tort Claims Act, foreign wills and U-C-C are all legislative attempts to bring order to the application of law.

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1. Federal Tort Claims Act: As interpreted by the Supreme Court, this statute requires the application of the whole law of the state where the Defendant breaches his duty of care. "Defendant” for this purpose refers to the government employee or agency that caused the injury.

2. Foreign Wills: Several states have enacted statues by which the forum will recognize a will executed in a foreign state if the will complies with the foreign state’s requirements. Therefore, even if the will fails to meet a requirement for wills in the forum state, if it complies with the foreign state’s law, it will be upheld.

3. Uniform Commercial Code (U-C-C): The UCC is recognized in 49 states. Under the UCC, parties may choose which law they want to be governed by, so long as the state has some connection with the transaction. If the parties have not chosen which law they want, the forum state’s UCC applies to transactions bearing an appropriate relation to the forum state. Notably, even under the UCC, a court must first characterize the issues in a case to decide which choice of law provisions apply.

4. Another modern development in choice of law is Borrowing Statutes. These laws direct the forum to dismiss claims under foreign statutes of limitations in appropriate circumstances. Specifically, borrowing statutes borrow the statute of limitations of the state where the defendant resides or where the cause of action arose. These statutes are designed to stop plaintiffs from forum shopping. Almost two-thirds of American states have borrowing statutes.

B. Party Autonomy and the Rule of Validation Some jurisdictions give effect to the parties’ intent, express or implied, as to choice of law. These courts examine the intent of the parties at the time of contracting. If it is necessary to uphold a contract, these courts will apply whichever state’s laws will achieve that result. In contracting cases, the rationale is the presumption that the parties to the contract intended that there be an 26