Choice of Law

Question 1

What choice of law rules apply when a federal court sits in diversity?

Answer 1

When a federal court sits in diversity, the choice of law rules of the state in which the court sits applies. They are treated as substantive.

Question 2

What chioce of law rules apply in transferred diversity cases?

Answer 2

• If venue was proper in the transferor court, then the choice of law rules that the transferor court would have applied apply.
• If venue was not proper in the transferor court, the the choice of law rules of the transferee court apply.

Question 3

Constitutional Test for Choice of Law Rules

Answer 3

A state’s choice of law rules are constitutional unless they result in the application of the law of a state that has no significant contact with or legitimate interest in the litigation.

Question 4

The 3 Choice of Law Approaches

Answer 4

1. Vested Rights (First Restatement);
2. Interest Analysis;
3. Most Significant Relationship (Second Restatment).

Question 5

Vested Rights (First Restatement)

(Genral Rule)

Answer 5

Under the First Restatement approach, the court will apply the law of the state mandated by the applicable vesting rule. The vesting rule is selected according to the relevant substantive area of law.

Question 6

Interest Analysis

(General Rule)

Answer 6

Under the interest analysis approach, the court will consider which states have a legitimate interest in the outcome of the litigation. Generally, the forum court will apply its own law if it has a legitimate interest. If the forum court has no legitimate interest, it will apply the law of another interested state.

Question 7

Most Significant Relationship (Second Restatement)

Answer 7

Under the Second Restatement approach, the court will apply the law of the state that is most significantly related to the outcome of the litigation. To determine this, the court will consider connecting facts and policy principles.

Question 8

First Restatment Vesting Rule: Torts

Answer 8

Under the First Restatement approach, the vesting rule for torts cases is to apply the law of the state where the injury occurred.

Question 9

Second Restatement Considerations: Torts

Answer 9

Factual Connections:

• Place of injury;
• Place of the conduct that caused the injury;
• Place where the parties are at home;
• Place where the relationship between the parties, if any, is centered.

Policy Principles:

• Relevant policies of the forum state;
• Relevant policies of other connected states.

Question 10

Under the First Restatement and Second Restatment approaches, when will the place of injury generally not determine the governing law?

Answer 10

Under the First Restatement and Second Restatment approaches, the place of injury generally not determine the governing law when:

1. The rule at issue is a loss distribution rule; and
2. The parties share a common domicile.

The law of the domicile state will generally apply.

⇒ A loss distribution rule is a rule that distributes or limits losses rather than a rule that regulates conduct.

Question 11

When will a court enforce a contractual choice of law clause?

Answer 11

A court will enforce a contractual choice of law clause when the clause is valid and express.

Question 12

When will a court find a contractual choice of law clause to be invalid?

Answer 12

A court will find a contractual choice of law clause invalid when:

1. The law selected is not reasonably related to the contract; OR
2. The choice of law clause was added to the contract without mutual assent.

Question 13

First Restatement Vesting Rules: Contracts

Answer 13

The First Restatement applies two vesting rules to contracts:

1. If the case concerns formation of the contract, then the law of the place of contracting applies.
2. If the case concerns performance, then the law of the place of performance applies.

Question 14

Second Restatement Considerations: Contracts

Answer 14

Factual Connections:

• ​Place of contracting;
• Place of negotiations;
• Place of performance;
• Place where the parties are at home.

Policy Principles:

• Relevant policies of the forum state;
• Relevant policies of other connected states;
• Reasonable expectations of the parties.

Question 15

Choice of Law Rules: Property

Answer 15

All three approaches apply essentially the same approach:

1. If the property is immovable property, then the law of the situs applies.
2. If the property is moveable property and the case involves an inter vivos transfer, then the law of the situs at the time of transaction applies.
3. If the proeprty is moveable property and the case involves a matter relating to inheritance, apply the law of the decedent’s domicile at the date of death.

Question 16

Choice of Law Rule: Marriage

Answer 16

If a marriage is valid where it is performed, then it is recognized as valid everywhere, unless domiciliaries temporarily relocate to circumvent their own states marriage rules.

Question 17

Choice of Law Rule: Divorce

Answer 17

A state will apply its own divorce laws.

Question 18

Choice of Law Rule: Legitimacy

Answer 18

Two rules apply to legitimacy:

1. A child’s legitimacy at birth is governed by the law of the mother’s domicile;
2. Subsequent acts of legitimation are governed by the law of the father’s domicile.

Question 19

What are the defenses to choice of law?

Answer 19

1. Public policy. A state will not apply law against its own fundamental public policy.
2. Procedural rules. A state will always apply its own procedural rules.
   
   • NOTE: For choice of law purposes, statutes of limitations are procedural. Recall that statutes of limitations are substantive for Erie purposes.

Question 20

Borrowing Statute

Answer 20

Under a borrowing statute, if a court must choose whether to apply its own statute of limitations or another state’s statute of limitations, the court will select the shorter statute of limitations.

Question 21

Limitations the Condition a Substantive Right

Answer 21

If a court’s normal choice of law analysis causes it to apply a foreign statute that creates a substantive right, the court will apply the entire statute that creates the substantive right, including provisions that limit the right.