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Conflict of Laws

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Conflict of Laws

Course Info

Professor: Unknown Semester: Fall 2017

Topics Covered

  • Domicile: definition, determination, fallacy of the transplanted category
  • Vested rights and the First Restatement (Beale/lex loci)
  • Second Restatement: most significant relationship; § 6 factors; § 145 (tort); § 188 (contract)
  • Governmental interest analysis (Currie): false conflicts, true conflicts, unprovided-for cases
  • Comparative impairment (Baxter/California): whose interest more impaired by non-application?
  • Better law / policy-weighing approaches
  • New York approach: Neumeier rules; conduct-regulating vs. loss-allocating distinction
  • Escape devices: characterization, substance vs. procedure, public policy exception, renvoi, depecage
  • Constitutional limits: Full Faith and Credit (Art. IV § 1; 28 U.S.C. § 1738), Due Process (Hague)
  • Negative Commerce Clause and Privileges & Immunities as limits on state choice of law
  • Recognition of sister-state judgments: FF&C, preclusion, exceptions
  • Enforcement of judgments: land taboo, penal judgments, equitable decrees
  • Recognition of foreign country judgments: comity, public policy, UFCMJRA
  • Renvoi: whole-law vs. internal-law reference; Rest. 2d approach
  • Forum selection clauses; arbitration and FAA preemption
  • Party autonomy in choice of law (§ 187): when parties can and cannot opt out
  • Borrowing statutes; statute of limitations characterization
  • International conflicts: extraterritoriality, passive personality, protective and universal jurisdiction
  • Erie doctrine and conflict of laws in federal court; Klaxon rule

Detailed Outline

I. Constitutional Limits on Choice of Law

Due Process (14th Amendment):

  • Forum state’s application of its law must not be arbitrary or fundamentally unfair
  • Requires significant contact or significant aggregation of contacts creating state interests (Allstate v. Hague)
  • Home Insurance v. Dick: state cannot apply its law where only connection is that plaintiff resides there
  • Phillips Petroleum v. Shutts: no aggregate contacts between Kansas and non-Kansas plaintiffs — Due Process bars applying Kansas law
  • BMW of North America v. Gore: Alabama cannot punish BMW for conduct lawful where it occurred

Full Faith and Credit (Art. IV § 1; 28 U.S.C. § 1738):

  • For statutes: weak obligation — a state need not apply another state’s statute merely because it is valid there (Pacific Employers Ins.)
  • For judgments: strong obligation — valid final judgment of sister state must be recognized and enforced
  • FF&C does not require applying a sister state’s conflicting statute (Carroll v. Lanza), but forum state cannot deny recovery solely because cause of action arose outside its borders (Hughes v. Fetter)

Negative Commerce Clause:

  • Facially discriminatory laws: near per se invalid
  • Facially neutral laws with discriminatory effect: Pike balancing (burden on commerce vs. local benefit)
  • Extraterritorial price-regulation: Brown-Forman (invalidating NY affirmation law pegging prices to out-of-state transactions)

Privileges & Immunities Clause:

  • Intermediate scrutiny for discrimination against nonresidents on “fundamental” privileges
  • Substantial reason required + substantial relationship between discrimination and state objective

II. Characterization

Fallacy of the Transplanted Category (W.W. Cook):

  • A legal concept (e.g., “domicile”) cannot have exactly the same scope in all contexts
  • Always ask: what is the purpose of the classification in this context?

Of the Case:

  • Tort: place of wrong (Alabama Great Southern)
  • Property: immovable (situs); movable (situs or domicile for succession); intangible (reify — debt follows debtor, Harris v. Balk)
  • Domicile: succession/estates (White v. Tennant); marriage/divorce
  • Contract: place of contracting (Milliken v. Pratt); place of performance

Changing the Nature of the Case:

  • Tort → Contract: Levy v. Daniel’s U-Drive (Connecticut liability statute incorporated as term of rental contract → third-party beneficiary)
  • Tort → Domestic Relations: Haumschild (interspousal immunity characterized as domestic relations, governed by domicile)

Substance vs. Procedure:

  • Forum law governs procedure (Rest. 1st § 584–585)
  • Standard: in conflicts context, procedural = matters of how litigation is conducted
  • Erie context: substantive = outcome-determinative (Guaranty Trust/York); conflicts context may differ (Sampson v. Channell)
  • Statute of limitations: generally procedural in conflicts (forum law applies); exception for specific statutes that extinguish the underlying right (The Harrisburg; Bournias)
  • Statute of repose: substantive; federal equitable tolling cannot alter (CalPERS v. ANZ)
  • Damages limits: Kilberg (NY characterized Massachusetts damages cap as remedial → applied NY’s higher limit)
  • Statute of Frauds: borderline — functions as evidence rule but best understood as substantive contract interpretation rule
  • Testimonial privilege: technically procedural but substantively promotes social goods outside courtroom
  • Conduct-regulating vs. loss-allocating (Babcock v. Jackson): conduct rules governed by place of conduct; loss-allocation governed by most interested state

III. Traditional Approach (First Restatement — Beale/Vested Rights)

Theoretical Foundation (Huber/Story/Beale):

  • Rights vest under the law of the state where the relevant event occurs
  • Forum applies foreign law not because it must, but out of comity to recognize vested rights
  • No renvoi: forum applies only foreign internal/domestic law (§§ 7–8)

Torts (lex loci delicti):

  • Apply law of place where last act necessary to complete the tort occurred (place of injury)
  • Alabama Great Southern: Mississippi law applies to injury in Mississippi even between Alabama domiciliaries

Contracts:

  • Validity: law of place of contracting (lex loci contractus) — where last act of formation occurred (Milliken v. Pratt)
    • Capacity (§ 334), form, mutual assent, consideration, fraud, illegality
  • Performance: law of place of performance (§ 358) — manner, sufficiency, excuse

Property:

  • Immovable: law of situs (In re Barrie’s Estate)
  • Movable succession: law of decedent’s domicile at death (§ 303; White v. Tennant)

Family Law:

  • Marriage validity: law of place of celebration (§ 121); exceptions for polygamy, incest, domiciliary void-statute
  • Legitimacy: law of parent’s domicile at birth (§ 138)

Procedure: Forum law governs all procedure (§ 585)

Escape Devices under First Restatement:

  1. Characterization: recharacterize issue as procedural, property, or contract to reach different result
  2. Public policy exception: refuse to apply foreign law that violates fundamental principle of justice (Loucks/Cardozo formulation: not merely different — “morally repugnant”)
  3. Renvoi: generally rejected (§§ 7–8); accepted for title to land and validity of divorce
  4. Substance vs. procedure: classify issue as procedural to apply forum law

IV. Governmental Interest Analysis (Currie)

Core Method:

  1. Identify the policy behind each state’s law
  2. Determine whether each state has an interest in applying its law to this case
    • A state is “interested” if its law was designed to protect the class of persons involved here
  3. Classify the conflict:
    • False conflict: only one state interested → apply that state’s law (Babcock, Alabama Great Southern, Milliken)
    • True conflict: both states interested → Currie: apply forum law
    • Unprovided-for case: neither state interested → apply forum law (or plaintiff-favoring law) (Erwin v. Thomas, Grant v. McAuliffe)
  4. True conflict resolution:
    • Orthodox Currie: apply forum law
    • Moderate/restrained: reconsider whether conflict is real; narrow statutory interpretation to avoid conflict (Bernkrant v. Fowler)
    • Better law: choose the more modern/enlightened rule
    • Comparative impairment: whose interest is more impaired by non-application?

Conduct-Regulating vs. Loss-Allocating (Babcock v. Jackson):

  • Conduct-regulating rules: govern where the conduct takes place
  • Loss-allocating rules: governed by state with greatest interest in the parties’ relationship
  • Guest statutes: loss-allocating → governed by domicile, not place of injury
  • Charitable immunity: loss-allocating → Schultz (NY 1985) → common domicile’s law (NJ charitable immunity) applies between NJ domiciliaries even when injury in NY

New York Neumeier Rules (Neumeier v. Kuehner):

  1. Common domicile case: apply law of common domicile
  2. Split domicile: conduct and injury in same state → apply that state’s law (D’s home = protects D; P’s home = protects P)
  3. Split domicile: conduct and injury in different states, neither party’s domicile → apply law of place of injury unless displacing it would advance relevant substantive law purposes without impairing multi-state system
  • Note: reverse-Babcock (Schultz) — Neumeier Rule 1 does not always yield false conflict; place of injury may have conduct-regulating interest even against common domiciliaries

Key Cases:

  • Babcock: two NY domiciliaries in Ontario; Ontario guest statute not applied (no Ontario interest)
  • Tooker: two NY domiciliaries in Michigan; Michigan guest statute not applied (same reasoning)
  • Neumeier: NY plaintiff, Ontario defendant; accident in Ontario; Ontario guest statute applied
  • Schultz: NJ domiciliaries; NY forum; charitable immunity from NJ and Ohio defendants applied
  • Lilienthal: Oregon spendthrift law applied over California law in true conflict (forum law)
  • Erwin v. Thomas: unprovided-for case; Oregon has no interest in protecting Washington woman with Oregon statute; Washington has no interest in protecting defendant from Oregon law

V. Comparative Impairment (Baxter/California)

Method (True Conflicts Only):

  1. Identify that it is a true conflict (both states interested)
  2. Assess how much each state’s policy would be impaired if its law is NOT applied
  3. Apply the law of the state whose interest would be more seriously impaired by non-application
  4. Key factor: scope of the law — was it designed to reach this type of case?

Note: Does not weigh the strength of interests against each other — asks only about relative impairment

Key Cases:

  • People v. One 1953 Ford Victoria: Texas’s interest in protecting innocent mortgagee more impaired; California’s drug forfeiture enforcement interest less impaired by non-application
  • Bernhard v. Harrah’s Club: California’s interest in protecting domiciliaries from drunk driving accidents more impaired; Nevada’s civil liability exemption for taverns not fundamentally impaired since criminal penalties already imposed

VI. Second Restatement (Most Significant Relationship)

§ 6 Choice of Law Principles:

  1. Needs of interstate and international systems
  2. Relevant policies of the forum
  3. Relevant policies of other interested states
  4. Protection of justified expectations
  5. Basic policies underlying the field of law
  6. Certainty, predictability, and uniformity of result
  7. Ease of determination and application of the applicable law

Torts (§ 145):

  • Rights and liabilities determined by law of state with most significant relationship to occurrence and parties
  • Contacts: (1) place of injury, (2) place of conduct causing injury, (3) domicile/residence/nationality/incorporation of parties, (4) place where relationship between parties is centered
  • Law of place of injury will usually apply (§ 146)
  • Depecage: apply different states’ laws to different issues (§ 145(1))

Contracts (§ 188):

  • Law of state with most significant relationship in absence of party choice
  • Contacts: (1) place of contracting, (2) place of negotiation, (3) place of performance, (4) location of subject matter, (5) domicile/residence/incorporation of parties
  • If place of negotiation and performance are the same → that law usually applies

Party Autonomy (§ 187):

  • Law chosen by parties will be applied if:
    • Issue could have been resolved by explicit provision in the agreement (§ 187(1)), OR
    • Chosen state has substantial relationship to parties/transaction OR reasonable basis for choice, AND application does not violate fundamental policy of a state with materially greater interest (§ 187(2))
  • No renvoi: reference to chosen state’s internal/local law only (§ 187(3))
  • Rule of validation: choose law that upholds the contract (§ 188; § 203 for usury)

Property:

  • Real property: situs law controls (§§ 222–243)
  • Personal property: most significant relationship (§ 244)

Depecage: Apply different states’ laws to different issues within the same case — permitted and encouraged

VII. Escape Devices

1. Characterization:

  • Recharacterize issue as “procedural” → forum law
  • Recharacterize tort as contract (Levy) or as domestic relations (Haumschild)
  • Grant v. McAuliffe: survival of cause of action characterized as procedural in conflicts context → California law applied

2. Public Policy Exception:

  • Refuse to apply foreign law that violates a fundamental principle of justice, prevalent conception of good morals, or deep-rooted tradition (Loucks/Cardozo)
  • Not invoked merely because foreign law differs from forum law
  • Available under all methodologies
  • Not available for sister-state judgments (Fauntleroy v. Lum)

3. Penal Laws Exception:

  • Forum will not enforce penal claims of another state (Rest. 1st § 611; Moore v. Mitchell)
  • Penalty = sum exacted as punishment, not compensation (Huntington v. Attrill two-part test)
    • Wrong to the public, not the individual
    • Sought for punishment/deterrence, not compensation

4. Tax Laws Exception:

  • Forum will generally not enforce another state’s revenue laws (suits to enforce laws, not judgments)
  • Exception: FF&C requires recognition of sister-state tax judgment (Milwaukee Cty. v. M.E. White)

5. Renvoi:

  • Problem: forum’s choice-of-law rule points to State X, but X’s rule points back (remission) or to State Y (transmission)
  • Whole-law reference: apply X’s entire law including X’s choice-of-law rules → potential infinite loop
  • Internal-law reference: apply only X’s domestic/internal law → avoids problem
  • Rest. 2d: generally rejects renvoi (internal law); accepts for land and domicile (§§ 7–8)
  • Rest. 1st: generally rejects renvoi; accepts for title to land and validity of divorce
  • In re Schneider’s Estate: NY court accepted renvoi for Swiss real property (sat as if Swiss court)

6. Depecage:

  • Apply different states’ laws to different issues in same case
  • Accepted under Second Restatement and interest analysis; rejected under First Restatement

VIII. Recognition and Enforcement of Judgments

Sister-State Judgments (Full Faith and Credit):

  • FF&C requires recognition and enforcement if: (1) rendering court had jurisdiction, (2) final judgment, (3) on the merits
  • Fauntleroy v. Lum: FF&C requires Mississippi to recognize Missouri judgment even though it erroneously applied Missouri law to an illegal futures contract
  • No public policy exception (Fauntleroy); contrast with foreign country judgments
  • Preclusive effect = preclusive effect in the rendering state (including same-state claim preclusion rules)
  • Judgments for arrearages = final; modifiable prospective decrees = not final (Worthley v. Worthley)

Issue Preclusion / Jurisdictional Finality:

  • Jurisdictional questions fully and fairly litigated = conclusive (Durfee v. Duke)
  • Last-in-time rule: later judgment takes priority (Treinies v. Sunshine Mining)
  • Subject-matter jurisdiction: generally can be raised collaterally if policy against court acting without jurisdiction outweighs finality (Rest. Judgments § 451(2)); federal preemption and sovereign immunity exceptions

Exceptions to Recognition:

  • No jurisdiction in F1 (personal or subject matter)
  • Fraud in procurement (extrinsic fraud only; intrinsic fraud = no exception)
  • Penal or governmental claims (Huntington v. Attrill; but see Milwaukee Cty. for tax judgments)
  • Land taboo: situs state not required to honor another state’s judgment directly affecting title to land (Clarke v. Clarke; Fall v. Eastin)
  • Non-final (modifiable) decrees: not required to be recognized as final; forum may litigate modification
  • Equitable orders: enforcement measures do not travel with judgments the way preclusive effects do; cannot operate on strangers or interfere with another state’s exclusive province (Baker v. GM)

Foreign Country Judgments (Comity):

  • No constitutional obligation (no FF&C)
  • Common law: recognize if (1) fair trial, (2) impartial tribunal, (3) no fraud, (4) not contrary to public policy
  • UFCMJRA: adopted in many states; codifies comity principles with public policy exception
  • Milwaukee Cty. v. M.E. White (1935): FF&C requires recognition of sister-state tax judgment

Evading Enforcement:

  • Forum may apply own statute of limitations to bar suit on sister-state judgment (McElmoyle)
  • Denying jurisdiction: generally impermissible for transitory causes of action (Kenney v. Supreme Lodge)
  • Cannot discriminate against federal rights (Testa v. Katt)

IX. Party Autonomy and Forum Selection

Choice of Law Clauses (§ 187 Rest. 2d):

  • Enforced unless: (a) chosen state has no substantial relationship to parties/transaction AND no reasonable basis, OR (b) application violates fundamental policy of state with materially greater interest that would otherwise be the applicable law
  • Absence of choice: apply § 188 most significant relationship

Forum Selection Clauses:

  • Binding unless challenger shows enforcement would be unfair, unreasonable, or contrary to public policy (The Bremen v. Zapata)
  • Extends to arbitration clauses (Scherk) and boilerplate consumer contracts (Carnival Cruise)

Arbitration (FAA):

  • § 2: arbitration agreements valid and irrevocable except for contract defenses
  • § 4: courts compel arbitration (binding on state courts through Supremacy)
  • FAA preempts state class action waiver rules that single out arbitration clauses (AT&T Mobility v. Concepcion)
  • All federal claims presumptively arbitrable unless Congress expressly states otherwise (CompuCredit)
  • Antitrust, securities claims: arbitrable (Mitsubishi, Rodriguez de Quijas)
  • Government agencies can still enforce in court even when private parties are subject to arbitration

Key Doctrines

Key Cases

Exam Approach

Threshold: Is There a Conflict?

  1. Identify all states with connections to the dispute
  2. State each state’s relevant rule
  3. Same rule? → No conflict; apply that rule; done
  4. Different rules? → True/false/unprovided-for conflict analysis

Step-by-Step Framework

Step 1 — Classify the Conflict:

  • False conflict: only one state interested → apply that state’s law
  • True conflict: both states interested → use forum’s methodology to resolve
  • Unprovided-for case: neither state interested → typically forum law or most plaintiff-favorable law

Step 2 — Identify Forum’s Methodology:

  • Most states use one of: First Restatement, Second Restatement, interest analysis (Currie), comparative impairment, better law, or hybrid
  • New York: Neumeier rules (with conduct-regulating vs. loss-allocating distinction)
  • California: comparative impairment for true conflicts

Step 3 — Apply Methodology:

First Restatement (lex loci):

  • Torts: law of place of injury
  • Contracts validity: law of place of contracting; performance: law of place of performance
  • Property: situs
  • Marriage: place of celebration

Second Restatement (§ 6 + § 145/§ 188):

  • Torts: identify contacts (injury, conduct, domicile, relationship); weigh under § 6
  • Contracts: identify contacts (contracting, negotiation, performance, subject matter, domicile); weigh under § 6
  • Default toward place of injury (torts) or where negotiation and performance coincide (contracts)
  • Party autonomy: § 187 — enforce choice unless no substantial relationship + no reasonable basis, or violates fundamental policy of state with greater interest

Interest Analysis (Currie):

  1. Identify policies behind each state’s law
  2. Determine each state’s interest
  3. False conflict → interested state’s law; True conflict → forum law (or comparative impairment)
  4. Unprovided-for → forum law

Comparative Impairment (Baxter):

  1. Confirm true conflict
  2. Assess impairment to each state’s policy if its law not applied
  3. Apply law of state whose interest more seriously impaired by non-application

Neumeier Rules (New York):

  1. Common domicile → law of common domicile
  2. Split domicile; injury in one party’s domicile → law of place of injury
  3. Split domicile; injury in neither party’s domicile → law of place of injury unless escape valve justifies another law

Step 4 — Check Escape Devices:

  • Characterization: substance vs. procedure? Tort vs. contract vs. property?
  • Public policy: is foreign law so repugnant as to violate fundamental principles of justice?
  • Renvoi: whole-law vs. internal-law reference?
  • Depecage: different issues governed by different states’ laws?

Step 5 — Constitutional Check:

  • Due Process (Hague): significant contact or aggregation of contacts required
  • FF&C for statutes: weaker; forum need not apply sister state’s statute
  • FF&C for judgments: strong; must recognize valid final sister-state judgment; no public policy exception

Step 6 — Judgments:

  • Sister-state: FF&C; no public policy exception; preclusive effect = rendering state’s preclusive effect
  • Foreign country: comity; public policy exception available
  • Exceptions: no jurisdiction, extrinsic fraud, penal judgments, land taboo, non-final decrees

Issue-Specific Checklists

Torts:

ApproachRule
First RSLex loci delicti: place of injury
Second RSMost significant relationship (§ 145)
Interest AnalysisFalse/true/unprovided-for; Neumeier rules
Conduct-regulatingLaw of state where conduct occurs
Loss-allocatingLaw of domicile state (Babcock)
Guest statuteNeumeier rules by party domicile

Contracts:

  1. Is there a choice-of-law clause? → Enforce under § 187 unless no substantial relationship/no reasonable basis OR violates fundamental policy of more-interested state
  2. No clause → forum’s methodology → First RS (place of contracting) or Second RS (§ 188 contacts)
  3. Validity vs. performance issues (different contacts may matter)

Property:

  • Real property: situs almost always controls (constitutional dimension for judgments)
  • Personal property — succession: domicile of decedent (movables); situs (immovables)

Family Law:

  • Marriage: valid where celebrated is valid everywhere — unless violates strong public policy of domicile (polygamy, incest, underage)
  • Divorce: domicile-based; bilateral → FF&C; ex parte → collateral attack on domicile grounds by non-appearing spouse
  • Custody: UCCJEA — home state jurisdiction

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