Choice of Law Theory and the Metaphysics of the Stand-Alone Trigger

AuthorLea Brilmayer; Raechel Anglin
Pages02

Lea Brilmayer. Howard Holtzmann Professor of International Law, Yale Law School.

Raechel Anglin. Associate, Bingham McCutchen LLP. She would like to thank Judge Charles R. Wilson for his support. She would also like to thank Kathleen and Theron Anglin, Mary Pyrdum, and Andrew Hudson for their constant encouragement.

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I Introduction

Choice of law is an essential concern in any case involving occurrences in more than one jurisdiction, and American courts are increasingly hearing cases involving choice of law concerns. Before a judge can decide how to apply the law to the facts of a case, the judge must decide which law to apply. Since the laws of different jurisdictions are often directly in conflict, choice of law often determines whether the plaintiff or the defendant wins the case. Choice of law is a critical component of American jurisprudence, intensely practical yet theoretically complex.

We identify one pervasive error in the way that courts ordinarily conceptualize choice of law. This error is the common assumption that judges can determine the correct choice of law by identifying one particular, theoretically exceptional contact that, even when standing alone, dominates the choice of law process and dictates the result.

Consider, as illustration, the following hypothetical problem. A North Carolina clothing manufacturer and a New York retailer negotiate a contract in the course of meetings at the seller’s home office in North Carolina. The contract legally comes into being when the buyer accepts the offer at the seller’s office in North Carolina and is expressly made subject to North Carolina law. North Carolina is the place where the plaintiff alleges the breach took place. Which law applies, and why?

The conventional wisdom is that this question requires a choice between different connecting factors (“contacts”). Courts have typically framed the choice of law question as follows: Should the applicable law be the law of the place of contracting, the law chosen by the parties, the law of the place of performance, or the law of the state where the buyer (or seller) resides? Traditional theory, embodied in the “vested rights” approach of the first Restatement of Conflict of Laws, framed the answer in terms of particular territorial occurrences (e.g., where the contract was formed); in contrast, modern theory, illustrated by governmental interest analysis, focuses on the parties’ domiciles. Both approaches, however, implicitly assume that there is a single, inherently significant contact—what we call the “trigger”—that, standing alone, is sufficient to support applying the chosen state’s law. In both theories, the reasoning revolves around the chosen factor’s supposedly special jurisprudential character: Under traditional theory, the “last act” gives rise to a “vested right,” while under modern theory, one party’s domicile gives a state an “interest” in having its laws applied.

Entirely overlooked is the overall pattern of contacts between the dispute and the states involved. The “single factor” way of understanding the hypothetical posed above disregards the fact that five factors point toward North Carolina (the domicile of thePage 1128 seller, the location of the negotiations, the location of the acceptance, the choice of law reflected in the contract, and the location of the breach) while only one factor (the domicile of the buyer) points toward New York. The dispute’s “center of gravity” as a whole is assigned no importance at all; multifactor methods are hardly even considered.1

Despite the conventional wisdom, we doubt that there are many cases in which choice of law can be reduced to a single, intrinsically dispositive contact.2 The answer to choice of law problems cannot be found by theorizing about which connecting factors are inherently the most important because the applicable law is a function of the overall fact pattern a particular case presents and not of any particular contact standing alone. The sterile character of much contemporary choice of law debate is a direct result of the fact that conventional choice of law approaches are searching for something that does not exist—a single, inherently determinative contact that, standing alone, is sufficient to justify the application of local law.

Our argument begins with a review of the traditional first Restatement territorial vested rights approach and surveys the reasons why it was eventually found unsatisfactory.3 We argue that the standard account of how traditional thinking was discredited overlooks the theory’s single most important defect: The first Restatement was unable to handle cases in which the designated trigger was the only contact supporting application of the chosen law.4 This defect is a direct consequence of the first Restatement’s single-factor structure, which treats choice of law as basically a question about the choice among connecting factors.5 Modern interest-based theories, however, turn out to make similar single-factor assumptions and are therefore similarly vulnerable.6

A third system, the Restatement (Second) of Conflicts, mixes conceptual elements taken from both of these theories. It is possible to interpret the Restatement (Second) as a “multifactor” theory, thus avoiding the pitfalls of both vested rights and interest-based theories, but so far most academics have not done this.7 We conclude by recommending furtherPage 1129 examination of alternative multifactor approaches to choice of law, such as weighing or balancing.8

II Traditional Approaches to Choice of Law: The Conventional Account

The last one hundred years have seen tremendous change in the assumptions underlying choice of law. For about the first third of the twentieth century, the traditional vested rights theory was the dominant approach. Several decades of legal realist inspired critique followed this period, before the gradual adoption of modern approaches. Legal historians refer to the transition from traditional to modern theories as the “choice of law revolution.”9

The conventional explanation for the choice of law revolution attributes the transition exclusively to the defects in the traditional vested rights approach. This explanation overlooks, however, one striking feature of the transition that led to the abandonment of traditional choice of law theory: Most cases rejecting traditional methods involved scenarios where the supposedly applicable law was supported by a single, stand-alone contact. It is not so much that judges came to appreciate that the first Restatement’s designated connecting factors were the wrong ones; rather, judges simply became increasingly unwilling to apply the law of a state with only a single contact with the dispute.

A The First Restatement of Conflict of Laws

The first Restatement is the earliest choice of law approach that American courts still apply.10 The object of its vested rights approach was to designate when and where the cause of action came into being.11 Vesting coincided with the occurrence of the “last act” necessary to create the cause of action—for example, the location of the car crash in a tort suit. The location of this final occurrence thus determined the applicable law.

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Professor Joseph Beale of Harvard Law School, the chief author of the first Restatement, was motivated by a grand ambition typical of an earlier generation of scholars—the scientific systematization of an entire field of law.12 He sought to bring all existing conflicts case law under a single theoretical umbrella. His vision of the meaning and importance of territoriality was central to the development of the traditional approach. For Beale, states did not enforce other states’ laws directly, but rather recognized the rights created under other states’ laws.13 The substantive legal rights that courts are charged with enforcing, Beale argued, vested at a particular time and place.14 Choice of law required the identification and application of the law under which the rights vested because without rights having vested under a particular law, no substantive legal rights existed, and there was nothing for other states to enforce.15

Beale explained the matter in his treatise, published one year after the first Restatement:

The law annexes to the event a certain consequence, namely, the creation of a legal right. . . . When a right has been created by law, this right itself becomes a fact . . . . [T]he existing right should everywhere be recognized; since to do so is merely to recognize the existence...

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