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Historical Development of Choice-of-Law Doctrine
A. IN GENERAL. [§113]
Courts have used a variety of approaches to select the law to apply to an interstate dispute. However, three rather different approaches have historically dominated American court decisions in this field. They are: the "territorial" (or "vested rights") approach; the "most significant relationship" (or "center of gravity") approach; and the "governmental interest analysis" approach. These are discussed below, in the order in which they evolved in American legal history.
B. THE TERRITORIAL (OR VESTED RIGHTS) APPROACH. [§114]
In its earliest days, American choice-of-law theory borrowed heavily from continental systems. One theory followed the logic of a Dutchman, Huber, who argued that predictability and certainty are the main goals of choice of laws. Hence, the proper choice-of-law in a given situation turned on a particular event that was critical to the transaction. The law of that place ought to control the rights and liabilities flowing from the event or transaction.
Huber's ideas influenced Justice Story, the first American expert in this field, who wrote his Commentaries on the Conflict of Laws in 1834. The ideas of both men contributed to the thinking of Harvard Professor Joseph Henry Beale, who served as reporter for the First Restatement of Conflict of Laws, published in 1934.
The approach championed by Beale and the First Restatement was that a court, faced with a conflict of laws situation, should first characterize the cause of action (or the issue) needing to be resolved. That characterization would reveal what critical event in the transaction, occurring at some definite time and place, would determine the rights of the parties. It was his theory that only the law of that place ("territory") could determine, according to its laws, what rights and liabilities flowed from the transaction or event (that is, whatrights "vest" in the parties). This theory held that only the state in which this "last act" occurred had the authority to determine what, if any, liability was created thereby. For example: There are two "vested right" choice-of-law rules in contract. Issues concerning the formation of a valid contract, including capacity and itsterms, are generally governed by the "law of the place of making". That is, the law of the place in which thelast act necessary to create a binding contract occurs. Matters regarding the adequacy of performance, discharge or excuse for nonperformance, and damages resulting therefrom, are said to be governed by the law of the "place of performance." (See §133, below.)
However, the place of the critical event (and hence the rule chosen) varied according to the "characterization" of the cause of action or issue confronting the court. It is not always easy to determine whether the legal issue to be decided is one of making or performance. It is equally difficult to determine what specific "act" was the "last" one contemplated by the rule (and hence the place whose law will govern). In Milliken v. Pratt (See Case Squibs section), for example, the court decided that the "last act" necessary to bind a wife as surety for her husband's contractual indebtedness was not her signing of the contract (in Massachusetts, where she would not have been bound), but the delivery of goods in reliance on her surety (occurring in Maine, where such contracts bound wives).
The vested rights (or territorial) choice-of-law rule in tort is generally said to be the law of the place where the "last act necessary to create liability" occurred. This is sometimes bastardized as "the law of the place of the tort," although the difference between the two rules is rarely great. Therefore, in Alabama Great Southern Railway Co. v. Caroll (See Case Squibs section), the Court held that the applicable law was that of the place where the rail cars uncoupled and the railway worker was injured (Mississippi) and not Alabama, where plaintiff alleged that: 1) his fellow servants failed in their duty to inspect the coupling; and 2) his employer had a contractual duty under the Alabama Employer's Liability Act.
C. "ESCAPE DEVICES." [§115]
A good deal of rigidity was involved in the territorial approach to choice of law. The state in which the significant "event" occurred might have little or no relationship to the parties or their transaction, or its law might offend important legal policies of the forum. Nonetheless, the quest for certainty (the hallmark of the territorial system) required that the law of that state be applied.
In time, American jurists grew uncomfortable with the quest for certainty at the expense of justice, and began to develop techniques to avoid the application of these "hard and fast" territorial rules. These techniques were called "escape devices," because the court used them to escape the otherwise-applicable territorial choice-of-law rule. The devices themselves, and variations on them, are too numerous to mention here. Suffice it that most of them maintained the pretense of being faithful to the territorial choice-of-law system, while escaping its literal application. Several of the more frequently used "escapes" are listed below.
NOTE: Although these devices were developed during the territorial period, they are equally applicable (although less necessary) to later-developed choice approaches (i.e., most significant relationship and governmental interest analysis).
1. CLASSIFICATION. [§116]
One method of "escaping" the application of a foreign state's law, is to "classify" it (or features of it) asprocedural, therefore not part of the foreign substantive law rules that the forum court's choice of law rule has directed be adopted. Since the forum court is in control of the process of classifying foreign law, it may decide what in that law is "substantive" (rules to adopt) and what is "procedural" (rules to ignore).
In the famous case, Grant v. McAuliffe (See Case Squibs section), a California court confronted the question whether or not the right to recover for an automobile tort survived the death of the tortfeasor. The accident occurred in Arizona, but the parties to the accident and the suit were from California, the forum. The California court "classified" the issue of survivability as involving what claims could be brought against the decedent's estate, hence a procedural issue, governed by forum law, which allowed for survival.
In fact, the issue of survivability of tort actions is generally viewed as substantive; does the injured party have a "right" to sue the tortfeasor's estate as well as the tortfeasor? That "right," which is separate and distinct from the right to recover from the tortfeasor, was unknown at common law, and is conferred only by statute. It would have been just as sensible to treat the Arizona rule (which forbade survival) as a substantive law rule of the place of the tort, dictating the rights of the parties. However, the California forum, given its interest in applying its law, sought to "escape" Arizona's rule.
2. RE-CHARACTERIZATION AND ISSUE SPLITTING. [§117]
Sometimes the forum court will examine a particular cause of action, consider the choice of law ordinarily made, and discover that it would not produce the end that seems just in the case. Without revealing this original thought process, the court may alter its "characterization" of the cause of action (define it in a different way) in order to apply a different law to the case. In Levy v. Daniels' U-Drive Auto Renting Co., 108 Conn. 333, 143 A. 163, 61 A.L.R. 646 (1928), the court might have chosen Massachusetts law (the site of the accident) to determine whether a Connecticut automobile rental agency was liable to an auto guest injured by the rental car operator in that accident. Under Massachusetts law, there was no liability on the part of the rental agency, except for negligence in renting the car. The place of the tort would ordinarily be the territorial choice of law to determine liability in tort. Instead, the Connecticut court decided to "characterize" (or re-characterize) the issue as one of contract. Accordingly, vested rights doctrine would refer to the law of the place of contracting(Connecticut), where the agent would be liable to the third-party beneficiary of the lease contract for the subsequent tort. Thus, by using re-characterization as an "escape device" the situs of the applicable law is shifted from the place of the tort (Massachusetts) to the place of the contract (Connecticut).
A different type of re-characterization device was used in Haumschild v. Continental Casualty Co. (See Case Squibs section.) In that case, a Wisconsin husband injured his wife through his negligent driving in California. Under California law, husbands were immunized from spousal suits in tort. Under Wisconsin law, however, there was no such immunity. The Wisconsin court found that there were two substantive issues to be settled; one, the question of tort liability, to be governed by the law of the place of the tort (California). The second issue, spousal immunity, was to be determined by the domestic law of the spouse's domicile (Wisconsin). Hence, the court's characterization (or re-characterization) of the issue in the case resulted in splitting it into two substantive issues. Each issue was settled according to a different jurisdiction's substantive law; the jurisdiction most interested in resolving that particular issue. Thus, the application of California law (the place of the tort) was "escaped" through the process of issue-splitting.
3. RENVOI. [§118]
"Renvoi" is a French word that can be translated as "send back" or to "return unopened." Used as an "escape device" it means that the forum court has used its reference to foreign law with the express hope that the foreign law would refer to yet another body of law (usually the forum's).
This is possible insofar as it is rarely evident that the forum's reference to foreign law is a reference to itssubstantive (internal) law only and not to its choice-of-law rules (whole law). If the reference to foreign law by the forum is interpreted to be a reference to foreign internal law, the inquiry ends there, because internal law does not contain references to other bodies of law. The case is settled according to the substantive (internal) law of the foreign state.
Occasionally, however, the forum's reference to foreign law is interpreted as a reference to its "whole" law, including its conflict of laws rules. Normally, this occurs only in matters involving immovable property and certain domestic relations matters (discussed later). However, it is for the forum court to decide whether its choice-of-law rules refer to the conflict rules of a foreign state or whether they refer to its internal law. If it is the former, then a renvoi is possible. Usually, when a forum refers to foreign whole law (aside from the limited type of cases cited above) it is for the express purpose of creating a renvoi situation, and thus "escaping" the otherwise- applicable rule. (See Case Squibs section, University of Chicago v. Dater.)
4. PUBLIC POLICY. [§119]
Public policy is a factor in any choice of laws decision. However, it is rarely the sole reason for a choice of one law over another, particularly if the vested rights approach to choice is being used. When all other approaches to "escape" the choice of the otherwise-applicable rule appear unavailing, however, then "public policy" reasons might be asserted as a reason for another choice.
In Kilberg v. Northeast Airlines Inc., 9 N.Y.2d 34, 172 N.E.2d 526 (1961), the New York Court of Appeals acknowledged the applicability of a Massachusetts wrongful death statute to the defendant airline's liability for a plane crash in that state, but the court refused to apply Massachusetts' recovery limit. The New York court suggested that the Massachusetts limitation was "anachronistic" and violated the strong public policy of New York against such limitations; a policy contained in its constitution. (The court also suggested that the recovery limit could be treated as a "measure of damages" rule (procedural), and hence the New York (forum) rule would apply.)
This so-called "public policy override" has been much criticized, because it allows the court to reject the lex locidelectus rule (the law of the place of the tort), otherwise applicable, by using the forum's "public policy" as a rationale. At the time of the Kilberg decision, this was hardly viewed as predictable or principled.
Despite its disapproval among more liberal courts and scholars, the vested rights approach to choice of laws (and associated "escapes") continues to be used by a minority of courts today, precisely because it appears objective and is easily applied.
D. THE TRANSITION TO NEW APPROACHES TO CHOOSE THE APPROPRIATE LAW. [§120]
Two cases are often cited as those that began the transition from vested rights to more modern approaches to choice of law. They are Auten v. Auten, 308 N.Y. 155, 124 N.E.2d 99 (1954) and Schmidt v. Driscoll Hotel, Inc., 249 Minn. 376, 82 N.W.2d 365 (1957).
In Schmidt, a Minnesota dram shop operator was held liable for an automobile injury (in Wisconsin) to the passenger of a tavern patron who had drunk too much in the defendant's tavern. Under Minnesota law (the place of service) the tavern owner would be held responsible, but under Wisconsin law (the place of the accident) he would not. The orthodox territorial choice-of-law rule in tort is to apply the lex loci delectus (the law of the place of the event, in this case, the tort) to determine the rights and liabilities of the parties. That would be Wisconsin. To "escape" this outcome, and still appear to remain faithful to vested rights principles, the Minnesota court fashioned a two-tort theory; suggesting that the tort of the tavern owner was serving too many drinks to the errant driver. That tort occurred in Minnesota. The other tort (the driver's negligence and injury to his guest) occurred in Wisconsin. Thus, the liability of the tavern owner (under Minnesota law) was triggered by any subsequent injury, whether that act was actionable where it occurred or not.
Only in its concluding remarks did the Schmidt court indicate that "equity and justice" (due to the abundance of contacts) also argued for the application of Minnesota law to this situation. (In addition to being the situs of the tavern and the place where the drinks were consumed, Minnesota was the domicile of both the driver and the injured party).
In Auten v. Auten, 308 N.Y. 155, 124 N.E.2d 99 (1954), an English divorcee sought to enforce a separation agreement against her former husband, who had fled to New York State, remarried, and settled there. The separation agreement, negotiated in New York, provided that neither party would sue in "any action relating to their separation." She brought an enforcement action in an English court, after the former husband failed to make payments pursuant to the agreement. The New York court might have applied its local law (which would have invalidated the separation agreement, due to the wife's breach in bringing the action in England), but it chose to apply English law instead. The usual rule was that, while the issue of the validity of the agreement ought to be controlled by New York law (the place of making), the issue before the court — the legal consequences of the wife's failure to honor the separation agreement's terms (a performance issue) — ought to be governed by English law, the place of her performance. Accordingly, the New York court remanded the case to be decided according to English law.
The court concluded that the effect of the wife's breach, if any, should be determined by the law having the most "significant contacts" with the parties and their transaction, and that was the law of England not New York. Whereas the first reason given for the court's decision is classic territorial choice-of-law analysis, the alternate rationale adopts the more-modern approach of Restatement Second of Conflicts.
E. MODERN APPROACHES TO CHOICE OF LAWS. [§121]
Due to these artful avoidances of the orthodox application of territorial (or vested rights) choice of laws, it became evident that the principal objectives of the vested rights system (certainty and predictability) were not being realized.
In fact, a number of conflicts scholars, including Walter Wheeler Cook, Ernest Lorenzen, and David Cavers, had already persuasively argued that the mechanical rigidity of the vested rights approach was often unjust, and provoked courts to adopt "escape devices" in the interest of fair results. They reasoned that a more-sensitive approach to choosing the law to govern a situation would produce more candor and more justice. In due course, they were joined by scholars that did not just criticize the territorial system, but suggested alternative systems of choice. Among them were: Willis Reese (reporter for Restatement Second) favoring a "most significant relationship" approach; Albert Ehrenzweig ("lex fori" (law of the forum) preference); Brainerd Currie's "governmental interest analysis"; Cavers' "principles of preference"; Robert Leflar's ("choice-influencing considerations"); and Arthur von Mehren and Donald Trautman and, in a separate work, Russell Weintraub, all favoring a "functional approach" to choice. Each scholar, in his own way, argued for a more interest-sensitive approach to choosing the law to govern a conflict situation.
The two systems which commanded the most attention and greatest acceptance so far are the "most significant relationship" approach of Willis Reese, which dominates the Second Restatement of Conflict of Laws, and the "governmental interest analysis" approach, championed by the late Professor Brainerd Currie, which has especially influenced judicial thinking in California.
F. "GOALS" OF THE NEW APPROACHES. [§122]
At least two authors, Reese (together with his mentor, Elliott Cheatham) and Leflar, have attempted to list the "goals" of their proposed choice-of-law systems. Both lists have a good deal in common, although the Reese list looked more toward a "center of gravity" approach (listed in order of importance), while the Leflar list (in no particular order) favored a governmental interest approach.
The lists are as follows:
Cheatham and Reese
1. The needs of the interstate and international systems;
2. A court should apply its own local law unless there is good reason for not doing so;
3. A court should seek to effectuate the purpose of its relevant local law rule in determining a question of choice of law;
4. Certainty, predictability, uniformity of result;
5. Protection of justified expectations;
6. Application of the law of the state of dominant interest;
7. Ease in determination of applicable law; convenience of the court;
8. The fundamental policy underlying the broad local law field involved;
9. Justice in the individual case. (Cheatham & Reese, 52 Colum. L. Rev. 959 (1952)).
A tenth principle was added by Professor Reese in a 1963 article: The court must follow the dictates of its own legislature, provided these dictates are constitutional.
Leflar:
A. Predictability of results;
B. Maintenance of interstate and international order;
C. Simplification of the judicial task;
D. Advancement of the forum's governmental interests; and
E. Application of the "better rule of law" (defined in terms of its modernity or importance, not which party wins!). (Leflar, McDougal & Felix, American Conflicts Law, 4th Ed., §95; p. 279.)
G. THE "MOST SIGNIFICANT RELATIONSHIP" (OR "CENTER OF GRAVITY") APPROACH TO CHOICE OF LAWS/TORT. [§123]
In general, Restatement Second, Conflict of Laws, approved by the American Law Institute in 1971, asserts that the law chosen to govern any transaction should be that which has the "most significant relationship" to the transaction and the parties to it. This general principle appears in §6 of Restatement Second. It has also been referred to as seeking the law of the place which is the "center of gravity" in the situation. The cases that most fully developed this approach to choice of laws are a group of New York cases that considered the liability of an automobile driver-host to his injured passenger- guest. The first, and probably easiest, is Babcock v. Jackson(See Case Squibs section).
In Babcock, a New York couple invited a friend (also a New Yorker) to accompany them on a short automobile trip from New York to Ontario, Canada, and back. During their trip, an accident occurred in Ontario in which the guest-passenger (Babcock) was injured. According to vested rights doctrine, the law of the place of the accident (Ontario) would have applied. However, the Babcock court reasoned, the parties had no substantial relationship with Ontario. It would be unfair to apply its law (denying recovery). The court weighed the "contacts" between the parties, their transaction, and the respective jurisdictions. It then decided that the place of the negligent act and the injury was fortuitous, whereas the domicile of the parties, the place where their relationship was centered, and the origin and anticipated conclusion of their trip (New York) had more significant "contacts" with them and their transaction. Hence, New York had the "most significant" contacts with respect to this legal relationship, and accordingly, its law (granting recovery) should govern.
The principles of the Babcock case are captured in Restatement Second, Section 145, which identifies the contacts generally considered in a tort case to locate its "center of gravity" for choice-of-laws purposes as:
1. The domicile, residence, etc., of the parties to the action;
2. The place where the harmful act or omission occurred;
3. The place where the injury occurred; and
4. The place where the relationship between the parties, if any, was centered.
In Babcock it is clear that the quantitative contacts with New York (domicile of both parties and place where their relationship was centered), were more numerous, as well as more qualitatively significant, than the place of the negligent act and injury (Ontario). Accordingly, New York was the "center of gravity."
The choice-of-laws problem in Dym v. Gordon, 16 N.Y.2d 120, 262 N.Y.S.2d 463, 209 N.E.2d 792 (1965) was more subtle. In Dym, two New York students (who did not know one another in New York) met while attending summer school at the University of Colorado in Boulder. Some time later, they embarked on an all-Colorado automobile trip, during which the negligent operation of the vehicle by the host-driver injured the guest-passenger. Under New York law, recovery was possible based on ordinary negligence, but, under Colorado law, recovery was granted only in cases involving "willful and wanton" behavior. The New York court reasoned that, although these students were New York domiciliaries, their relationship was centered, and the act and accident occurred, in Colorado. Hence, Colorado had the "most significant relationship" with the parties and the event, and its law should be applied. As an aside, the New York court observed that the Colorado policy of giving higher priority to claims of innocent third-party victims (it was a two-car accident), was an additional reason to apply Colorado law.
H. HARDER CASES, AND A BLURRING OF "CENTER OF GRAVITY" PRINCIPLES/TORT. [§124]
The outcomes in Babcock v. Jackson and Dym v. Gordon are fairly predictable, if one applies the four criteria of Restatement Second, Section 145, (see §123) to the "contacts" in the cases. Greater qualitative weight is given to more-significant contacts such as domicile and the center of a personal relationship, and less given to more-fortuitous circumstances, such as the place of an act or accident. Not all cases are so factually simple, however.
In Tooker v. Lopez, 24 N.Y.2d 569, 301 N.Y.S.2d 519, 249 N.E.2d 394 (1969), three Michigan State University coeds departed from their college dormitory in East Lansing on a trip to Detroit. In the course of the trip, Ms. Lopez lost control of her sports car and both she and one of her guests, Ms. Tooker, were killed in the resulting accident. Applying the standards of Restatement Second, Section 145, the act and accident occurred in Michigan and the coeds' relationship was centered there, since the two New Yorkers met at college. Thus, the volume of the contacts and their probable weight pointed toward Michigan law. In this case, however, the New York court weighed other contacts than those listed in Section 145; such as the place where the automobile was garaged, registered and insured (all New York). In doing so, they added "weight" to the New York contacts. This process resulted in tipping the balance in favor of New York, whose law was chosen. To cement their decision, the court observed that the policy behind New York's compulsory-insurance statute and its ordinary negligence rule favored recovery by an auto guest (Tooker) from her host (Lopez), at least when a New York driver/host injures a New York passenger/guest. This last rationale for the decision sounds more like a "public policy" approach to choice, however, than one based on most significant "contacts."
In a still later case, Neumeier v. Kuehner, 31 N.Y.2d 121, 335 N.Y.S.2d 64, 286 N.E.2d 454 (1972), the Court of Appeals finally sought to make some sense of the various choice rules they had fashioned for auto-guest cases. The result, the so-called "Neumeier rules," embraced all three choice methodologies: vested rights, center of gravity, and governmental interest analysis. The first rule, following Tooker, dictates that the center of gravity in an auto-guest case is the domicile of the two parties, if common, and if the automobile is registered there. The second rule favors the domiciliary party, whether plaintiff or defendant, if the accident occurs in theirdomicile and the local rule is favorable to them. Thus, if the plaintiff-guest is injured in his domicile and that law grants recovery, it applies; and, if the defendant-driver causes an accident in his domicile, but there is no liability, then that rule applies. Both choices seem to be based on a center of gravity notion. The third rule dictates that where the plaintiff and defendant have different domiciles, and the accident occurs in neither domicile, or the local rule is unfavorable to the domiciliary, then ordinarily the lex loci delectus (law of the tort) will be chosen, unless some other jurisdiction has a greater interest in the outcome of the case. Hence, the third Neumeier rule allows for a governmental interest "escape" from what is otherwise a vested rights rule. In Neumeier, an Ontario guest, killed in Ontario by his New York host, could not recover under Ontario law, absent proof of "gross negligence." Neumeier rule number two was applied in Cooney v. Osgood Machinery (81 N.Y. 2d 66, 1993) because the New York court felt that a defendant-employer who acted locally (in Missouri), and conformed his behavior to the local workers' compensation law, could not expect to be governed by the tort- contribution statute of the distantly-related sales agent's New York domicile.
I. GOVERNMENTAL INTEREST ANALYSIS/TORT. [§125]
The primary exponent of "governmental interest analysis" as an approach to choice-of-laws was the late Professor Brainerd Currie of the University of Chicago. His ideas were embraced by late Chief Justice Traynor of the California Supreme Court, who applied them in a series of court decisions and a law review article; Is This Conflict Really Necessary? (37 Tex. L. Rev. 657, 1959). The Currie approach assumed (quite rightly) that somepublic policy lies behind every statute or judicial interpretation. The first step for any court, then, was to determine what policy lay behind apparently-conflicting laws. The second step was to determine whether that policy, once identified, was meant to apply to the situation before the court. Currie reasoned that if the state's policy was not meant to apply to the situation at hand, then the law of another, interested jurisdiction could be applied without creating a conflict. Hence, the principal objective of Currie's "governmental interest analysis" approach to choice of laws was to avoid conflicts. He hoped to achieve this by finding that only one state of the two (or more) whose laws conflicted was interested (as a matter of policy) in applying its law to the case. The court then applied the law of the only interested state.
In Reich v. Purcell (See Case Squibs section), for example, the California court found that California was not an interested jurisdiction, even though the plaintiff (formerly an Ohio native) had become a California domiciliary subsequent to the Missouri automobile accident at issue in the case. California also had no interest in protecting the California defendant from liability in the case, since California law set no limit on damages. Likewise, Missouri, the site of the accident, did not intend its limit on damages to apply, since it was meant to govern localbeneficiaries, or protect local defendants and their insurers. Since none of the parties were Missouri natives, and the insurance was not issued there, the California court rationalized that Missouri was not "interested" in having its law (and policy) apply. Accordingly, only Ohio, the residence of the parties killed in the accident, and the place where their estates were being probated, had interest in the outcome of the case. Ohio's laws (and policies) were applied.
When, under Currie's approach, only one state was interested in having its laws applied, the situation was labelled a "false conflict," and the law of the only truly-interested state was chosen. Where, however, more than one state had an interest in applying its laws (and policies), then there was a "true conflict," and some "principled" basis must be found by which to determine which of the "interested" jurisdictions should prevail. Currie's first suggestion was that the laws of the respective jurisdictions should be given a "more moderate and restrained interpretation," in order to reduce (or eliminate) the issue in conflict, and apply the law of the more-substantially-interested state. Currie also tended to call this a "false conflict," but it is better viewed as a real conflict, although an "easy" one to settle. In cases of "true" (hard) conflict situations, Currie favored the law of the forum (lex fori), on the theory that the court owes greatest allegiance to the law (and policy) of the sovereign it serves. The courts of New York and California, both frequently cited for their use of governmental interest analysis as a choice methodology, have differed in their application of it.
1. THE NEW YORK EXPERIENCE. [§126]
New York courts have lately turned to a governmental interest analysis approach to choice of law, particularly when a center of gravity approach would seem to produce results not to their liking. See, e.g., Kell v. Henderson, 26 A.D.2d 595, 270 N.Y.S.2d 552 (3d Dep't 1966), reversed on other grounds. Thus, inRosenthal v. Warren, 475 F.2d 428 (2d Cir. 1973), the court thought that both Massachusetts law and New York law were intended to apply to an alleged medical malpractice suit precipitated by the death of a New Yorker who traveled to Massachusetts to undergo an operation by a local surgeon. The Massachusetts rule would have limited damages in these circumstances (protecting the local surgeon, the hospital and their insurers). Conversely, the widow, the estate, and the forum were in New York, which recognized no such limitation. Selecting New York law over that of Massachusetts, the court simply stated that New York's interest in full recovery was greater than Massachusetts', since New York's policy was incorporated in its constitution; whereas damage limitations were antiquated and represented a minority rule in the United States. Moreover, they asserted that Massachusetts' malpractice insurance rates (one-quarter of New York's) did not rely heavily on the statute's terms, since recovery was not limited for malpractice injuries not resulting in death.
In a more modern New York case, O'Connor v. Lee Hy Paving Corp., 579 F.2d 194 (2d Cir. 1978), the court applied New York law to find a local (Virginia) paving contractor liable for the death of a New York construction supervisor at a Virginia job site, although the "contacts" clearly pointed to the choice of Virginia law. The court's theory was that the New York law should be applied whenever there was a "fair basis for doing so."
It is hard to imagine why the Virginia law, limiting damages to workers' compensation, would not be more interested in a local contractor and accident, especially when the New York native had voluntarily exposed himself to the risk. Perhaps it is just because New York had jurisdiction, and it would not be unconstitutional to apply its law.
Another recent New York case, Schultz v. Boy Scouts of America, Inc. (See Case Squibs section) suggests that New York is beginning to analyze competing legal rules and policies with less partiality to its own. InSchultz, the New York court applied its tort rule to find child molestation (which occurred both in New York and in New Jersey), but stated that the principal issue in the case was not tort liability, but charitable immunity. Immunity was given to the Boy Scouts and the Franciscan Order (sponsors of the scout troop) under New Jersey law, where both organizations operated. New Jersey was also the domicile of the two molested boys and their molester (a troop leader). The New York court also rejected the application of Texas law (where Boy Scouts subsequently reincorporated) and Ohio law (where the Franciscans were incorporated), on the theory that the government with the greatest interest in applying its law and policy was not the place of the incorporation, but where the two charities acted and the victims domiciled (New Jersey). In so deciding, the New York court relied to a degree on the Neumeier rules.
2. THE CALIFORNIA APPROACH. [§127]
California is the American jurisdiction best known for governmental interest analysis as a choice-of-law methodology. Its development there is attributable to two individuals, Professor Brainerd Currie, and Justice Roger J. Traynor. Currie first articulated the governmental interest analysis approach to choice of laws in his article, The Constitution and Choice of Law: Governmental Interests and the Judicial Function (26 U. Chi. L. Rev. 9, 1958), and he continued to develop his basic idea throughout his scholarly career. Traynor, as a Justice and later Chief Justice of the California Supreme Court, applied policy considerations like Currie's in a variety of California cases.
In its most refined form, the California approach to governmental interest (or "public policy") analysis involved four distinct steps:
a. Identify the policy that lies behind the conflicting statutes (or judicial holdings) of the respective, apparently-interested jurisdictions. Presumably, some policy objective lies behind every statute or judicial decision. Currie believed that they should not be applied blindly, but used only when public policy intended it.
For example, a statute limiting the host-driver's liability to his passenger-guest for an automobile accident promotes Good Samaritanism, limits the potential for fraud, and helps contain automobile insurance premiums; all at the expense of the injured passenger (a "policy" choice). Common law negligence rules applied to the same situation promote full recovery for injured guests, but at some expense to other parties and to policy considerations.
A short statute of limitation prevents stale claims from being pursued, while a longer statute promotes recovery for injured parties.
The list could go on, but these examples indicate the public policy choices behind any legal rule.
b. Does the policy that each state seeks to promote apply in this situation?
Some policies are meant to have broad application, whereas others are directed at local actions and actors. Thus, a law (policy) concerning spousal immunity from suit probably was meant to apply only to spouses domiciled in the state that adopted it, and not to non-domiciliary spouses who just happen to have an accident there. Likewise, the policy behind a statute of limitations may be meant to condition legal "rights" whereverthey are pursued, or it may simply stipulate a period of time during which the local court is authorized to entertain the action. In the former case, the statute would apply regardless of where the action is brought; in the latter, it is a procedural rule applied only in the forum.
(1) Identify "false" conflicts. If, after analyzing the competing policies of the apparently-interested state, it is found that only one state has a policy meant to apply to the situation, then there is no genuine conflict of laws. The conflict is said to be "false", and the law of the only interested jurisdiction is applied. (See Case Squibs section, Reich v. Purcell.)
(2) Resolve "true" conflicts. If, after analysis, two or more states appear to be interested in having their law (and policy) applied to the case, then a "true" conflict exists, and a choice must be made between the competing laws. This is done in one of the following two ways:
c. Choose the law that would be most impaired if not applied. This so-called "comparative impairment" approach to choosing between competing laws is best evidenced by Bernhard v. Harrah's Club, 16 Cal.3d 313, 429 Cal.Rptr. 215, 546 P.2d 719, cert. denied 132 U.S. 859 (1976), from which the nomenclature derives. Although the case was decided after Traynor's retirement in 1970, the "policy weighing" or "balancing" approach owes much to his thinking and decisions, as well as to several scholars who differed with Currie on this point. (Currie felt that balancing "policies" was a legislative, not judicial, function and that forum law should be chosen in all "true conflicts" situations).
"Comparative impairment" dictates that, when a court is faced with a "true" conflict, it should determine which of the competing laws (and policies) would be "most impaired" if not chosen and applied. Often that is the more modern rule, or the majority rule, or the one that is the more vigorously enforced of the two. The forum court should apply the law that would be more impaired if not chosen. Often that is the forum rule.
In Bernhard, California had a statute holding "dram shop" owners liable for the torts of their inebriated patrons. The California court interpreted that policy to apply not just to California tavern owners, but to those operating proximate to California's borders as well. Nevada, where Harrah's Club operated, had no similar civil liability statute, although it had a criminal statute under which dramshop owners might be prosecuted. The California court found that the California policy, at least as applied to an accident in California involving Californians, would be more impaired if not applied to Harrah's Club, which had solicited California business. The court reasoned that the criminal statute indicated that Nevada had no absolute policy objection to liability on the part of the dramshop owner. Accordingly, the more impaired law (that of California) was applied in this case. (But cf. Cable v. Sahara Tahoe Corp., 93 Cal.App. 384, 155 Cal.Rptr. 770 (1979)).
A more recent case, Offshore Rental Co. Inc. v. Continental Oil Co., 22 Cal.3d 157, 148 Cal.Rptr. 867, 583 P.2d 721 (1978), reached a different outcome. The suit tested the right of a California corporation to recover (under a dated California statute) for injuries to a "key" employee that occurred in Louisiana. Louisiana law did not recognize "key employee" liability. Because the Louisiana accident, caused by a local firm, was clearly meant to be governed by Louisiana law (which also reflected the majority rule), the older, seldom-used California law was found to be less impaired if not applied. Accordingly, the "more impaired" Louisiana law was chosen.
d. In cases of equal impairment, choose the forum law. Occasionally, the competing laws (and policies) of the respective states will be equally strong. Both would be substantially impaired if not chosen and applied to the situation. In such circumstances, most scholars and courts agree that the law chosen should be that of the forum. The reason is that the forum court ultimately owes allegiance to the government that created it, and to the laws, precedents, and policies of its legislature and judiciary. That might be labeled the "best" choice of laws in cases of equal impairment, and it is the one that courts usually choose.
It should be evident from the foregoing that any "interest weighing" approach to choice-of-laws focuses dominantly on the forum's policy interests; those of other interested states; and the parties' expectations, probably in that order.
J. DEPECAGE. [§128]
The term "depecage" is used to describe the combining, by the forum court, of its own laws and those of another state, or other states, according to the methodologies described above, to achieve certain outcomes. Depecage has at least three meanings in conflict of laws. Some scholars use it to describe every situation in which the laws of two or more states are chosen to resolve a single legal dispute. This would include, however, all situations in which a forum court applied its own procedure while choosing the substantive law of another state. By that standard, every case involving a choice of foreign law would be a depecage.
Another school of thought holds that any time the substantive law of two or more jurisdictions is applied to a single cause of action, that is a depecage. Others call this process "issue splitting," such as occurred inHaumschild v. Continental Casualty Co. (See Case Squibs section.) In Haumschild, liability for negligent driving was determined by the law where the accident occurred (California), but spousal immunity was established by the law where the tortfeasor and his injured spouse were domiciled (Minnesota).
The final definition of depecage, and the most restrictive, is the combining of the laws of two or more states, whether procedural or substantive, to produce a result not possible under the laws of any of the connected jurisdictions. Such a hybrid is generally used to create a liability that would not otherwise exist. See, e.g.,Lillegraven v. Tengs, 375 P.2d 139 (Alaska Sup.Ct. 1962), in which an Alaska statute of limitations was applied to permit a suit, time-barred where it "arose" (British Columbia), and British Columbian law was used to hold an automobile owner liable for the negligence of the driver/tortfeasor, when the forum's law (Alaska) would not. Under either body of law, the suit could not succeed, but due to the depecage, it was successful.
K. SYSTEM COORDINATION. [§129]
Previously mentioned was the command of the U.S. Constitution (Article IV, §1) that "each State" shall give full faith and credit to the judicial proceedings of "every other State." No equal command has been given with respect to sister state laws, except, perhaps, with respect to "transitory" sister state causes of action under certain circumstances.
Hence, in most cases it is assumed that, if a court has jurisdiction of the parties and subject matter, it may apply its own law, relatively free of constitutional restraints. Rarely will the U.S. Supreme Court find that the choice of the forum's law would violate the due process clause, much less the full faith and credit clause in these circumstances.
There are rare occasions, of course, in which the forum, with good jurisdiction, cannot constitutionally apply its own substantive law. See, e.g., Phillips Petroleum Co. v. Shutts (See Case Squibs section). This is because, at some distant point, a court's preference for its own laws will be perceived as overreaching, an intrusion on the rights of parties created under other legal systems and, indeed, on those systems themselves.
NOTE: Having established the three dominant choice-of-law methodologies in Chapter XI we will now proceed to discuss them in Contracts and other fields of law.
