Wed. Mar. 26

Constitutional Restrictions on Choice of Law

Home Ins. Co. v Dick (US 1930)

article 5545 of the Texas Revised Civil Statutes

• “No person, firm, corporation, association or combination of whatsoever kind shall enter into any stipulation, contract, or agreement, by reason whereof the time in which to sue thereon is limited to a shorter period than two years. And no stipulation, contract, or agreement for any such shorter limitation in which to sue shall ever be valid in this State.”

• Dick urges that article 5545 of the Texas law is a declaration of its public policy; and that a state may properly refuse to recognize foreign rights which violate its declared policy. Doubtless, a state may prohibit the enjoyment by persons within its borders of rights acquired elsewhere which violate its laws or public policy; and, under some circumstances, it may refuse to aid in the enforcement of such rights. But the Mexican corporation never was in Texas; and neither it nor the garnishees invoked the aid of the Texas courts or the Texas laws. The Mexican corporation was not before the court. The garnishees were brought in by compulsory process. Neither has asked favors. They ask only to be let alone.

• The statute is not simply one of limitation. It does not merely fix the time in which the aid of the Texas courts may be invoked. Nor does it govern only the remedies available in the Texas courts. It deals with the powers and capacities of persons and corporations. It expressly prohibits the making of certain contracts.

NY one year statute of limitations is bound up with NY contract action

Can a Texas court entertaining such an action apply its two year procedural limitations period?

SCt has not answered this question

Parties to a NY contract include a provision demanding in-hand service for any suit under the contract – this is valid under NY law

Can a Texas court entertaining such an action use its own service rule?

Yes

14th Amendment

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

Full Faith and Credit

• 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.

Bradford Elect. Light Co. v Clapper(US 1932)- Clapper – citizen of VT – worked for Bradford (VT corp with principal place of business in VT)- Clapper sent to NH to take care of some fuses - electrocuted- administrator chooses to sue in NH- NH allows election of common law or workers comp- VT requires you to waive out of workers comp in beginning of employment relationship- NH ct applied NH law- SCt reversed

Pacific Employers Ins. Co. v. Industrial Acc. Comm’n

(US 1939)

• “Although Massachusetts has an interest in safeguarding the compensation of Massachusetts employees while temporarily abroad in the course of their employment, and may adopt that policy for itself, that could hardly be thought to support an application of the full faith and credit clause which would override the constitutional authority of another state to legislate for the bodily safety and economic protection of employees injured within it. Few matters could be deemed more appropriately the concern of the state in which the injury occurs, or more completely within its power.”

• But the Court was careful to point out that there was nothing in the New Hampshire statute, the decisions of its courts, or in the circumstances of the case to suggest that reliance on the provisions of the Vermont statute, as a defense to the New Hampshire suit, was obnoxious to the policy of New Hampshire….Here, California legislation not only conflicts with that of Massachusetts providing compensation for the Massachusetts employee if injured within the state of California, but it expressly provides, for the guidance of its own commission and courts, that "[n]o contract, rule or regulation shall exempt the employer from liability for the compensation fixed by this act." The Supreme Court of California has declared in its opinion in this case that it is the policy of the state, as expressed in its Constitution and Compensation Act, to apply its own provisions for compensation, to the exclusion of all others, and that "It would be obnoxious to that policy to deny persons who have been injured in this state the right to apply for compensation when to do so might require physicians and hospitals to go to another state to collect charges for medical care and treatment given to such persons."

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.

• Prior to the advent of interest analysis in the state courts as the "dominant mode of analysis in modern choice of law theory," the prevailing choice of law methodology focused on the jurisdiction where a particular event occurred. See, e.g., Restatement of Conflict of Laws (1934). For example, in cases characterized as contract cases, the law of the place of contracting controlled the determination of such issues as capacity, fraud, consideration, duty, performance, and the like. Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 U. S. 143 (1934), can, perhaps, best be explained as an example of that period. …That case, however, has scant relevance for today. It implied a choice of law analysis which, for all intents and purposes, gave an isolated event -- the writing of the bond in Tennessee -- controlling constitutional significance, even though there might have been contacts with another State (there Mississippi) which would make application of its law neither unfair nor unexpected.

• member of Minn workforce– commuted to work there

• Allstate present and doing business in Minn• Post-event move of plaintiff to Minn

Phillips Petroleum Co. v Shutts(US 1985)

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.

We think that this is something of a "bootstrap" argument. The Kansas class action statute, like those of most other jurisdictions, requires that there be "common issues of law or fact." But while a State may, for the reasons we have previously stated, assume jurisdiction over the claims of plaintiffs whose principal contacts are with other States, it may not use this assumption of jurisdiction as an added weight in the scale when considering the permissible constitutional limits on choice of substantive law. It may not take a transaction with little or no relationship to the forum and apply the law of the forum in order to satisfy the procedural requirement that there be a "common question of law."

Sun Oil v Wortman (US 1988)

“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.”

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

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