Lecture 20 Nov. 19, 2018

Constitutional Restrictions on Choice of Law

14th Amendment “nor shall any state deprive any person of life, liberty, or property, without due process of law”

Article IV, Section 1. Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof.

Pacific Employers Ins. Co. v. Industrial Acc. Comm’n (US 1939)

what kind of interest matters. Carroll v what kind of interest matters? Carroll v. Lanza (US 1955) Mo resident employed by Mo subcontractor injured in Ark. – taken back to Mo for treatment Ark law allowed for suit against general contractor – Mo law didn’t Ark ct allowed to apply Ark law

[Ark.’s] interests are large and considerable, and are to be weighed not only in the light of the facts of this case, but by the kind of situation presented. For we write not only for this case and this day alone, but for this type of case. The State where the tort occurs certainly has a concern in the problems following in the wake of the injury. The problems of medical care and of possible dependents are among these, as Pacific Employers Insurance Co. v. Industrial Accident Commission, supra, emphasizes. A State that legislates concerning them is exercising traditional powers of sovereignty. Arkansas therefore has a legitimate interest in opening her courts to suits of this nature even though, in this case, Carroll's injury may have cast no burden on her or on her institutions.

internal affairs of a corporation/fraternal benefit society…?

something less than constitutionalizing a particular choice-of-law approach?

Roosevelt – must be forum neutral it cannot matter that a contact is the forum’s rather than another jurisdiction’s

which choice-of-law approaches are unconstitutional for Roosevelt which choice-of-law approaches are unconstitutional for Roosevelt? which are constitutional?

Allstate Ins. Co. v. Hague (US 1981)

Footnote 10: “This Court has taken a similar approach in deciding choice of law cases under both the Due Process Clause and the Full Faith and Credit Clause. In each instance, the Court has examined the relevant contacts and resulting interests of the State whose law was applied. Although at one time the Court required a more exacting standard under the Full Faith and Credit Clause than under the Due Process Clause for evaluating the constitutionality of choice of law decisions, see Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532, 294 U. S. 549-550 (1935) (interest of State whose law was applied was no less than interest of State whose law was rejected), the Court has since abandoned the weighing of interests requirement.”

The lesson from Dick and Yates, which found insufficient forum contacts to apply forum law, and from Alaska Packers, Cardillo, and Clay II, which found adequate contacts to sustain the choice of forum law, is that for a State's substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.

Stevens, concurring… “two separate questions must be answered Stevens, concurring… “two separate questions must be answered. First, does the Full Faith and Credit Clause require Minnesota, the forum State, to apply Wisconsin law? Second, does the Due Process Clause of the Fourteenth Amendment prevent Minnesota from applying its own law? The first inquiry implicates the federal interest in ensuring that Minnesota respect the sovereignty of the State of Wisconsin; the second implicates the litigants' interest in a fair adjudication of their rights.”

relevant contacts…?

member of Minn workforce Allstate present and doing business in Minn commuted to work there Allstate present and doing business in Minn post-event move of plaintiff to Minn

Powell’s dissent: - member of Minn workforce Powell’s dissent: - member of Minn workforce commuted to work there - Allstate present and doing business in Minn - post-event move of plaintiff to Minn

can one contact be used only to answer the problem of unfair surprise and another used only to answer the problem of state interests

unfair surprise - member of Minn workforce unfair surprise - member of Minn workforce commuted to work there - Allstate present and doing business in Minn - post-event move of plaintiff to Minn

Minn interests - member of Minn workforce Minn interests - member of Minn workforce commuted to work there - Allstate present and doing business in Minn - post-event move of plaintiff to Minn

Stevens: Does Wisc have an interest Stevens: Does Wisc have an interest? “[I]t was obvious to the parties at the time of contracting that it might give rise to the application of the law of States other than Wisconsin. Therefore, while Wisconsin may have an interest in ensuring that contracts formed in Wisconsin in reliance upon Wisconsin law are interpreted in accordance with that law, that interest is not implicated in this case.”

how often will the application of forum law violate the Constitution?

Phillips Petroleum Co. v Shutts (US 1985)

PJ over (unnamed) plaintiffs?

State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.

common fund?

plaintiff consent to KS law?

We also give little credence to the idea that Kansas law should apply to all claims because the plaintiffs, by failing to opt out, evinced their desire to be bound by Kansas law. Even if one could say that the plaintiffs "consented" to the application of Kansas law by not opting out, plaintiff's desire for forum law is rarely, if ever controlling. In most cases, the plaintiff shows his obvious wish for forum law by filing there.

P (CA) and D(CA) enter into a gambling contract in CA with performance in CA. P sues D for breach in NV. Can they agree to NV law?

what if Kansas law was more generous to the D?

Sun Oil v Wortman (US 1988)

“Although in certain circumstances standard conflicts law considers a statute of limitations to bar the right, and not just the remedy, petitioner concedes, that (apart from the fact that Kansas does not so regard the out-of-state statutes of limitations at issue here) Texas, Oklahoma, and Louisiana view their own statutes as procedural for choice-of-law purposes…”

Ferens v John Deere (US 1990) P (Pa) sues D (Del/Ill) for Pa injury in federal court in Miss Case then transferred to Pa Miss stat lims used

what is the constitutional obligation of a state court when interpreting sister state law?

to certify class action the KS ct presumed that all other jurisdictions’ laws are the same as KS constitutional?

“To constitute a violation of the Full Faith and Credit Clause or the Due Process Clause, it is not enough that a state court misconstrue the law of another State. Rather, our cases make plain that the misconstruction must contradict law of the other State that is clearly established and that has been brought to the court's attention.”

Rosen v. PRIMUS Automotive Financial Services (Minn. D. Ct. , 4th Jud Rosen v. PRIMUS Automotive Financial Services (Minn. D. Ct., 4th Jud. Dist., May 4, 1999). - nation-wide class action in Minnesota state court concerning a identical provision in the U.C.C.s of fifty different states should be interpreted - only seven states’ courts had decided the matter - Minnesota courts arriving at one interpretation - the courts of six other states arriving at a different interpretation - the Rosen court certified a class including actions under Minnesota’s U.C.C. and the U.C.C.s of the forty-three states whose courts had yet to decide the matter

what is the constitutional obligation of a federal court when interpreting state law?

assume a federal court in New York has misconstrued NY law assume a federal court in New York has misconstrued NY law? when would the US SCt take such a case to decide whether federal court’s Erie obligation has been violated?

P sues D under Pa law in a NY state court P sues D under Pa law in federal court in Pa P sues D under Pa law in a federal court in NY

P(NY) enters into a contract with D(Ca) in Ca with performance in Ca the contract is litigated in NY state court under NY choice of law rules Ca law applies what are the NY court’s obligations when interpreting Ca law?

Louknitsky v. Louknitsky - California state court determining spousal rights in marital property of couple, now domiciled in Ca., while they were in China - presumed Chinese law was the same as California’s community property system

obligation to provide a forum

who cares about full faith and credit if you can simply refuse to take jurisdiction of a case under sister state law?

Hughes v Fetter (US 1951)

“We are called upon to decide the narrow question whether Wisconsin, over the objection raised, can close the doors of its courts to the cause of action created by the Illinois wrongful death act. Prior decisions have established that the Illinois statute is a ‘public act’ within the provision of Art. IV, § 1 that ‘Full Faith and Credit shall be given in each State to the public Acts . . . of every other State.’ It is also settled that Wisconsin cannot escape this constitutional obligation to enforce the rights and duties validly created under the laws of other states by the simple device of removing jurisdiction from courts otherwise competent. “

Public Policy Exception?

“We hold that Wisconsin's policy must give way “We hold that Wisconsin's policy must give way. That state has no real feeling of antagonism against wrongful death suits in general. To the contrary, a forum is regularly provided for cases of this nature, the exclusionary rule extending only so far as to bar actions for death not caused locally. “

Forum’s Shorter Statute of Limitations?

Wells v. Simonds Abrasive (US 1953) PA state court may apply its procedural limitations period to Alabama action even though Ala. substantive limitations period is longer

Forum Non Conveniens?

“The Wisconsin policy, moreover, cannot be considered as an application of the forum non conveniens doctrine, whatever effect that doctrine might be given if its use resulted in denying enforcement to public acts of other states. Even if we assume that Wisconsin could refuse, by reason of particular circumstances, to hear foreign controversies to which nonresidents were parties, the present case is not one lacking a close relationship with the state. For not only were appellant, the decedent, and the individual defendant all residents of Wisconsin, but also appellant was appointed administrator, and the corporate defendant was created under Wisconsin laws.”

“We also think it relevant, although not crucial here, that Wisconsin may well be the only jurisdiction in which service could be had as an original matter on the insurance company defendant. And while in the present case jurisdiction over the individual defendant apparently could be had in Illinois by substituted service, in other cases, Wisconsin's exclusionary statute might amount to a deprivation of all opportunity to enforce valid death claims created by another state.”

necessity jurisdiction

so what is wrong with what Wisconsin did?

a company needs people who can speak English so they refuse to hire anyone of Mexican ancestry

Testa v. Katt, 330 U.S. 386 (1947) state courts may not discriminate against federal causes of action

assume Wisconsin court had applied Wisconsin law and then dismissed for failure to state a claim because the accident was not in Wisconsin

The present case is not one where Wisconsin, having entertained appellant's lawsuit, chose to apply its own, instead of Illinois', statute to measure the substantive rights involved. This distinguishes the present case from those where we have said that, "[p]rima facie, every state is entitled to enforce in its own courts its own statutes, lawfully enacted." 

Can Wisconsin say that it is OK to kill Wisconsiners outside of Wisconsin?

Broderick v Rosner NY law allows piercing the corporate veil concerning NY banks to get to shareholders NJ doesn’t like this and wants to protect NJ shareholders Sets up impossible procedural hurdle: Only way in which one could pierce corporate veil for banks in a NJ court is to have all parties present (all officers stockholders debtors and creditors) Suit in NJ against New Jersey shareholders of NY bank SCt holds NJ law violates FF&C

is public policy exception, as applied to sister state law, a violation of full faith and credit?

is are any choice-of-law approaches a violation of full faith and credit under Kramer’s reading?