Choice of Law

Question 1

When does a choice of law issue arise?

Answer 1

(1) The lawsuit involves factual connections with multiple states, and
(2) the multiple states have different laws leading to different results.

Question 2

What is the general rule for what state’s law will govern in a choice of law problem in state court?

Answer 2

The governing law will be the law selected by the forum state according to its choice of law rules, assuming no applicable constitutional or statutory restrictions.

Question 3

What is the general rule for what state’s law governs in a diversity case in federal court?

Answer 3

In a diversity case, the federal court will apply the choice of law approach of the state in which it sits. If the diversity case is transferred, the transferee federal court applies the choice of law approach of the transferor court.

Question 4

What are the two kinds of limitations on a court’s power to apply a given law?

Answer 4

(1) Constitutional

(2) Statutory

Question 5

What is the potential Constitutional limitation on a forum court’s choice of law?

Answer 5

The Constitution places very limited restrictions on a state court’s choice of law determinations. The due process clause dictates that a forum state may apply its own law only where it has sufficiently significant and substantial contact with the parties and transaction in question. The full faith and credit clause also occasionally dictates that the court give full faith and credit to a foreign state’s substantive law (in addition to their court judgments).

Question 6

On the bar exam, when dealing with due process or full faith and credit limitations on state choice of law, what should you conclude?

Answer 6

Generally speaking, if the forum state has any significant contacts with the parties or subject matter of the action whereby it has a legitimate interest in regulating the outcome of the litigation, it is not Constitutionally bound to apply the foreign state’s law. Only when the forum state has no contact at all with the parties or the subject matter of the dispute would it be required to apply a foreign state’s conflicting law by reason of either the Due Process Clause or the Full Faith and Credit Clause of the Constitution.

Question 7

What statutory restrictions might limit a state’s choice of law approach?

Answer 7

Some states have statutes directing a choice of law. If such a statute exists, the court should apply that.

Question 8

What are the three possible choice of law approaches a state might apply?

Answer 8

(1) the vested rights approach (the 1st Restatement approach)
(2) interest analysis
(3) the most significant relationship approach (the 2nd Restatement approach)

Question 9

What is the vested rights approach generally?

Answer 9

From the 1st Restatement. The operative law will be the that of the state in which the parties’ rights vested. Under this approach the court will apply the law of that state mandated by the applicable vesting rule for the relevant substantive area of law.

Question 10

What is the analytical process applied in the vested rights approach?

Answer 10

(1) Categorize the substantive area of law
(2) Apply the right vesting rule based on the area of law
(3) Localize the rule to be applied

Question 11

How does a forum state characterize an area of law for purposes of vested rights analysis?

Answer 11

(1) first determine whether it is substantive or procedural (the forum should apply its own procedural law!)
(2) then, use its own law to characterize the law at issue as, e.g., torts or contracts

Question 12

What is the interest analysis approach generally?

Answer 12

Under this approach the court will consider which states have a legitimate interest in the outcome of the forum. The forum court will apply its own law as long as it has legitimate interest. if the forum state has no legitimate interest, it will apply the law of another interested state.

Start with the assumption that the forum applies its own law and ask whether it has an interest in the litigation. If it doesn’t then it is a false conflict and the law of the interest forum applies. If the forum has a legitimate interest, then the forum state’s law is applied

Question 13

What is the analytical process for the interest analysis approach?

Answer 13

(1) Discuss which states have legitimate interests
(2) Characterize the type of conflict as either a false conflict (only one state has a legitimate interest) or a true conflict (2+ states have a legitimate interest)
(3) Choose the governing law accordingly. If only one state has a legitimate interest, apply that state’s law. If the forum state has a legitimate interest, apply the forum state’s law.
(4) Apply the governing law to determine the result.

Question 14

What is the most significant relationship approach?

Answer 14

Under this approach the court will apply the law of the state which is most significantly related to the outcome of the litigation. To determine this, the court will consider connecting facts (where) and policy principles (why).

Consider the connecting facts in a given case and whether the following policy principles should be considered: (1) The needs of interstate/international systems (2) Relevant policies and interests of the forum (3) The policies and interests of other jurisdictions (4) Are there justifiable expectations of the parties involved (5) the policies underlying the substantive area (6) uniformity of result

Question 15

What is the analytical process for the most significant relationship approach (2d Restatement)?

Answer 15

(1) Discuss connecting facts
(2) Discuss policy principles
(3) Choose governing law based on the most significant relationship
(4) Apply the governing law

Question 16

Is choice of law analysis applied on a claim by claim or issue by issue basis?

Answer 16

Claim by claim under the first restatement (vesting), but issues may be analyzed separately under the other two approaches.

Question 17

In the substantive area of torts, how is the first restatement vesting rule applied?

Answer 17

The governing law is the law where the injury occurred.

Question 18

In the substantive area of torts, how is the second restatement most significant relationship analysis applied?

Answer 18

For factual connection analysis, look to the place of injury, the place of the conduct causing the injury, the place where the parties are at home, and the place where the parties’ relationship is centered.

For policy analysis, look at the relevant policies of the forum state and of other connected states.

Question 19

In the substantive area of torts, how is the interest analysis approach applied?

Answer 19

the same across all substantive areas

Question 20

The governing law in torts is virtually always the law of the place of injury. One notable exception arises where?

Answer 20

Where the rule at issue is a loss distribution rule (as opposed to a conduct regulation rule) and the parties in the case share a common domicile. Examples of these rules include damage caps, vicarious liability, and immunity rules.

Question 21

When the law in question is a speed limit, what law is applied?

Answer 21

The law of the place of conduct regardless of the analytical approach used?

Question 22

Under interest analysis, how are interests in laws regarding damages interpreted?

Answer 22

The state of the plaintiff’s domicile has a legitimate interest in having its law applied

Question 23

Under the 2d Restatement’s most significant relationship approach, how are rules regarding contribution among joint tortfeasors analyzed?

Answer 23

The usual rule about most significant relationships applies, but if both tortfeasors are domiciled in the same state, this might be the most significantly related state, especially if there is a special relationship between them

Question 24

In a wrongful death, what is the place where the wrong occurred?

Answer 24

The place of injury leading to death, not the place of death

Question 25

What happens if the tort injury occurs in multiple states?

Answer 25

Majority rule the law of plaintiff’s domicile applies, assuming the injury also occurred there

Question 26

What workers’ compensation statute applies?

Answer 26

Generally a state applies its own workers comp statute, so the question is really whether they will take jurisdiction. Look to whether (1) the employment contract was made in the state (2) the injury occurred in the state (3) employee resides in the state, or (4) the employment relationship occurred in the state. If the parties stated what law would be applied, that will be binding if reasonable

Question 27

Can a worker recover in workers comp in more than one state?

Answer 27

Yes, but recovery in one state will be credited against recovery in another

Question 28

Can an employee bring a tort/wrongful death action against a defendant against whom she has already been awarded workers comp in another state?

Answer 28

No, if the workers comp statute grants the defendant immunity from tort liability. This is discretionary recognition.

Question 29

What is the threshold question in determining what law applies in a contracts case?

Answer 29

Whether the parties expressly agreed to a choice of law provision.

Question 30

If there is an express choice of law provision in the contract, what happens?

Answer 30

The choice of law will govern unless (1) it is contrary to public policy, (2) there is no reasonable basis for the choice or (3) true consent was not given

Question 31

In the substantive area of contracts, if there is no valid choice of law provision, what is the next analytical step?

Answer 31

Apply the correct choice of law approach

Question 32

In the substantive area of contracts, how are first restatement vesting rules applied?

Answer 32

If the case is about formation, apply the law of the place of execution. If the case is about performance, apply the law of the place of performance.

Question 33

In the substantive area of contracts, how are second restatement most significant relationship rules applied?

Answer 33

Factual connections: the place of contracting, the place of negotiation, the place of performance, and the place where the parties are at home

Policy analysis: Relevant polices of the forum state, relevant policies of the connecting states, reasonable expectations of the parties

Question 34

Under the 2d Restatement approach to contract choice of law issues, what law governs land contracts?

Answer 34

The law of the situs

Note: these are contracts creating or transferring an interest in land not contracts peripherally related to land

Question 35

Under the 2d Restatement approach to contract choice of law issues, what law governs personalty contracts?

Answer 35

Law of the place of delivery

Question 36

Under the 2d Restatement approach to contract choice of law issues, what law governs life insurance contracts?

Answer 36

law of the place of the insured’s domicile

Question 37

Under the 2d Restatement approach to contract choice of law issues, what law governs casualty insurance contracts?

Answer 37

law of the place of the insured risk

Question 38

Under the 2d Restatement approach to contract choice of law issues, what law governs loan contracts?

Answer 38

law of the place where repayment is required

Question 39

Under the 2d Restatement approach to contract choice of law issues, what law governs suretyship contracts?

Answer 39

law governing the principal obligation

Question 40

Under the 2d Restatement approach to contract choice of law issues, what law governs transportation contracts?

Answer 40

law of the place of departure

Question 41

Under the 1st restatement vesting approach, what law governs the existence of contractual capacity?

Answer 41

The law of the place of contracting

Question 42

Under the 2nd restatement significant relationships approach, what law governs the existence of contractual capacity?

Answer 42

the law of the place where the party whose capacity is in question is domiciled

Question 43

What is the rule of validation?

Answer 43

The state’s law that serves to uphold the contract and thereby give effect to the justified expectations of the parties applies (adopted by 2d Restatement)

Question 44

In the substantive area of property, if the property in question is real property, under the first and second restatement approach, what state law is applied?

Answer 44

The law of the situs

Question 45

In the substantive area of property, if the property in question is personalty, under the first and second restatement approaches, what state law is applied?

Answer 45

In an inter vivos transaction, apply the law of the situs at the transaction time
If the case involves a matter relating to inheritance, apply the law of the decedent’s domicile at the date of death

Question 46

What is the choice of law rule for marriage validity?

Answer 46

Generally: A marriage valid where performed is valid everywhere.
Exception: When domiciliaries of one state temporarily relocate to another state for the purpose of performing a marriage violating a prohibitory rule in their home state, the state of domicile will not recognize the marriage.

Question 47

What is a prohibitory rule regarding marriage?

Answer 47

A prohibitory rule is one expressing a strong public policy regarding marriage (as opposed to a directory rule, which is administrative in nature).

Question 48

What law governs annulments?

Answer 48

An annulment is governed by the law of the place where the marriage was performed (though a new trend applies the law of the state with the most significant relationship to the marriage).

Question 49

What law governs choice of law questions regarding the grounds for divorce?

Answer 49

The law of the plaintiff’s domicile (the forum state applies its own divorce laws because the state has an interest in applying its own law where one party is a domiciliary)

Question 50

What governs the enforceability of premarital agreements?

Answer 50

Either the law of the state where executed or state with most significant relationship to the parties/transaction.

Question 51

What law governs the legitimacy of a child?

Answer 51

The law of the mother’s domicile at the time of birth, but the validity of subsequent acts of legitimation are governed by the law of the father’s domicile. A recent trend upholds validity if sufficient under the law of the child’s domicile.

Question 52

What law applies to property incidents of status?

Answer 52

First Restatement – governed by the law governed by the disposition of the property in question
2nd Restatement – looks to the law of the state creating the status to decide property incidents unless contrary to strong public policy of the forum

Question 53

What law applies to govern adoptions?

Answer 53

A court applies its own law to govern adoptions. Property incidents of adoption are the same as those based on the child’s status.

Question 54

What governs choice of law questions regarding matters of internal corporate affairs?

Answer 54

The law of the place of incorporation

Question 55

What arguments against application of a foreign law must be considered?

Answer 55

(1) the law to be applied is procedural
(2) the law is against the forum’s public policy
(3) the law is a penal or tax law

Question 56

What is the defense of public policy?

Answer 56

A forum court will not apply a law that tis against its own fundamental public policy. This appears in both restatements but is most applicable to the vested rights/1st Restatement approach. Interest analysis does not incorporate this defense.

Question 57

How do states handle substantive vs. procedural questions?

Answer 57

The law of the forum is employed to determine whether a law is substantive or procedural. Regardless of choice of law analysis, the forum court will apply its own procedural law.

Question 58

What rules are procedural?

Answer 58

Civil practice rules generally, burdens of proof, rebuttable presumptions, statutes of limitation generally, direct action statutes, ability to bring counterclaims, privileges

Question 59

What rules are substantive?

Answer 59

Outcome determinative civil practice rules, irrefutable presumptions, statutes of limitations conditioning a substantive right or limiting a contractual right, borrowing statutes, the statute of frauds, the parol evidence rule, contribution among joint tortfeasors, survival of actions, adverse possession, and damages

Question 60

What is the choice of law rule regarding limitations conditioning a substantive right?

Answer 60

If the normal choice of law analysis leads to the application of a foreign statute that creates a substantive right, then apply the entire statute (e.g., when applying a foreign wrongful death statute, apply that statute’s statute of limitations because of how connected it is to the right to recover)

Question 61

What are borrowing statutes?

Answer 61

They direct a court to look at both the forum limitations period and the foreign limitations period and apply the shorter one.

Question 62

When is it a valid defense that the foreign state’s law was a tax or penal law?

Answer 62

First restatement: can be a valid defense

2nd restatement: only a defense if it is penal laws

Question 63

What is depeçage?

Answer 63

A concept where different issues within one case may be governed by different states’ laws. The first restatement approach directs the forum to apply only the law of a single state to all issues, but more modern approaches allow the laws of different states to govern the resolution of the case..