Modern Approaches to Choice of Law

Question 1

Governmental Interest Analysis

1. General Rule
   
   1. Application?
   2. Issues
2. Effect of Type of Conflict
   
   1. False Conflict -
   2. Apparent Conflict -
      
      1. Example -
   3. True Conflict
      
      1. California Variation
   4. No Interest (Unprovided For)
      
      1. State Variations

Answer 1

Governmental Interest Analysis

1. Definition - try to ascertain the purpose of each state’s laws that are potentially applicable and determine whether applying that state’s laws would advance those governmental interests based on the facts of each case.
   
   1. Application - True application of GIA method is minimal but huge impact on choice of law in general.
   2. Issues - under GIA:
      
      1. states only interested in helping its own citizens
      2. states can’t have interest in causing its own citizens to lose.
2. Effect of Type of Conflict
   
   1. False Conflict - one state has interest, other state does not = apply law of only interested state
   2. Apparent Conflict - if court finds apparent conflict of interests/policies = moderate interpretation of one state’s policy/interest to avoid conflict.
      
      1. Example - loss allocationis less of an interest than conduct regulation.
   3. True Conflict - if court can’t devalue apparent conflict between legitimate interests of different states = law of the forum.
      
      1. California Variation - whichever state’s interests would be more impaired by applying the other state’s law should take precedence.
   4. No Interest (Unprovided For) - if no state has interest in its law’s application = law of forum.
      
      1. State Variations - some states still apply place of contracting or place of wrong as default under GIA.

Question 2

Choice Influencing Considerations

1. General Rule -

Answer 2

1. General Rule - Professor Leflar came up with 5 choice of law considerations for courts to use in conflicts cases:
   
   1. Predictability of Results
      
      1. Discourages forum shopping.
      2. Encourages good faith transactions.
      3. Preserves Parties’ justified expectations
   2. Maintenance of Interstate and International Order
      
      1. Encourages free social and economic commerce
   3. Simplification of Judicial Task
      
      1. Not always important to apply whole law of foreign state
      2. Not as important, but may still be in some situations
   4. Advancement of the Forum’s Governmental Interests
   5. Application of the Better Rule of Law
      
      1. Most controversial
      2. Natural preference for forum’s law
      3. Often use other devices to mask true intent to simply apply better rule assumption.

Question 3

The Second Restatement

1. Who Follows?
2. General Rule

Answer 3

1. Who Follows? - Majority of states (including Texas)
2. General Rule - two step approach:
   
   1. court chooses presumptively applicable law under appropriate jurisdiction-selecting rule; and
   2. then court tests this choice against general choice of law principles in RT2 §6

Question 4

Second Restatement - General Choice of Law Principles

Answer 4

1. Restatement 2d § 6 – General Choice of Law Principles
   
   1. A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law.
   2. When there is no such directive, the factors relevant to the choice of the applicable rule of law include:
      
      1. The needs of the interstate and international systems
      2. The relevant policies of the forum,
      3. The relevant policies of other interested states and the relative interests of those in the determination of the particular issue,
      4. The protection of justified expectations,
      5. The basic policies underlying the particular field of law,
      6. Certainty, predictability, and uniformity of result, and
      7. Ease in determination and application of the law to be applied.

Question 5

Second Restatement - Tort Cases

1. General Rule
   
   1. With Respect to That Issue
   2. Local Law of the State
   3. Most Significant Relationship
2. Default Rule in Personal Injury Cases

Answer 5

1. Restatement 2d §145 – torts are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in section 6.
   
   1. “With Respect to That Issue” – Creates the possibility that a single case can be governed by the choice of law of multiple states at once where the issues are varied.
   2. “Local Law of the State” – means no renvoi (i.e. considering choice of law rules of foreign state)
   3. “Most Significant Relationship” - Contacts to be taken into account include:
      
      1. The place where the injury occurred,
      2. The place where the conduct causing the injury occurred,
      3. The domicile, residence, nationality, place of incorporation and place of business of the parties, and
      4. The place where the relationship, if any, between the parties is centered.
2. Default Rule in Personal Injury Cases – Restatement 2d §146 – default is law of place of injury, UNLESS, with respect to the particular issue, some other state has a more significant relationship to the occurrence and the parties.

Question 6

Second Restatement - Contract Cases

1. Law Governing K in Absence of Choice by Parties
   
   1. Significant Contacts
   2. Default Rule
   3. Contracts for Services
2. Law of State Chosen by Parties
   
   1. General Rule
   2. Limitations
3. Forum Chosen by Parties
   
   1. Considerations
   2. Texas Rule

Answer 6

1. Law Governing Contract in Absence of Effective Choice by Parties – Restatement 2d §188 – contract issues are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in Section 6.
   
   1. Significant Contacts - In the absence of effective choice of law by the parties, the contacts to be taken into account include:
      
      1. The place of contracting,
      2. The place of negotiation of the contract,
      3. The place of performance,
      4. The location of the subject matter of the contract, and
      5. The domicile, residence, nationality, place of incorporation and place of business of the parties.
   2. Default Rule – Restatement 2d §188(3) – if the place of negotiating the contract and the place of performance are the same state, the local law of this state will usually apply.
   3. Contracts for Services - Restatement 2d § 196 – a contract for rendition of services is determined by law of state where services are to be performed or the majority of which are to be performed unless some other state has more significant relationship to the transaction and parties.
2. Law of State Chosen by Parties
   
   1. General Rule - Restatement 2d §186 – contract issues are determined by the law chosen by the parties in the contract, otherwise the rules in Section 188 apply.
   2. Limitations
      
      1. Questions of Interpretation - law of state chosen by parties controls if issue is one that could have been resolved by agreement.
      2. Questions of Validity - law of state chosen by parties controls even if issue couldnt not have been resolved by agreement unless:
         
         1. chosen state no substantial relationship to contract and no other real basis for choice; or
         2. chosen law is contrary to fundamental policy of state with materially greater interest whose law would otherwise apply in absence of choice of law clause.
3. Forum Chosen by Parties - Restatement 2d §80 – The parties’ agreement as to the place of the action will be given effect unless it is unfair or unreasonable.
   
   1. Considerations -
      
      1. sophistication of the parties
      2. intentional attempt to deprive other party of opportunity to litigate disputes.
      3. same law would apply in either available forum (e.g., federal law)
   2. Texas Rule - a forum selection clause is enforceable unless:
      
      1. Unreasonable or unjust
      2. Product of fraud or overreaching
      3. Enforcement would contravene strong public policy of the forum; or
      4. The selected forum would be seriously inconvenient

Question 7

Depecage

1. Definition
2. Examples
3. Issue

Answer 7

1. Definition - the application of the laws of different states to different issues in a case.
2. Examples
   
   1. Section 145 of the Restatement 2d encourages depecage (“state with most significant relationship with respect to a particular issue”)
   2. Substantive law of State X vs. Procedural law of the forum.
3. Issue - bifurcation of choice of law based on particular issues in the same case creates the potential for an outcome that could not be reached if the case were brought wholly under the laws of either state.

Question 8

Renvoi

1. Definition
2. Relationship to Modern Choice of Law Principles
   
   1. Governmental Interest Analysis
   2. Restatement 2d

Answer 8

1. Definition - applying whole law of the purported state (including choice of law rules).
2. Relationship to Modern Choice of Law Principles
   
   1. Governmental Interest Analysis - doesn’t take into account the whole law of foreign jurisdiction. Only focuses on governmental interests.
   2. Restatement 2d - generally does not encourage renvoi.
      
      1. Torts Exception - Restatement 2d §145 cmt. i. - “When certain contacts involving a tort are located in two or more states with identical local law rules on the issue in question, the case will be treated for choice-of-law purposes as if these contacts were grouped in a single state.”
         
         1. only for tort cases
         2. only where two or more states have same law rules on issue in question.