A neu Neumeier: the need for a more flexible framework for choice of law in the state of New York.

• Author: Salamon, Elie

"The only way to create a foundational document that could stand the test of time was to build in enough flexibility that later generations would be able to adapt it to their own needs and uses." (1)

INTRODUCTION

During the second half of the twentieth century, choice of law principles in the United States came under heavy criticism. (2) Choice of law disputes arise in cases that involve "facts connected to different jurisdictions," and require courts to determine which jurisdiction's law should apply. (3) Initially, the increasing complexities surrounding this field of law led the majority of jurisdictions in the United States to follow the "traditional" choice of law rule in tort actions (also commonly referred to as lex loci delicti) (4) embodied in the original Restatement of Conflict of Laws: "the substantive rights and liabilities arising out of a tortious occurrence are determinable by the law of the place of the tort." (5)

This theory posited "that a right to recover for a foreign tort owes its creation to the law of the jurisdiction where the injury occurred and depends for its existence and extent solely on such law." (6) However, the doctrine--once praised for its ease of application and predictability--soon became discredited for its rigidity and ignorance of other interested jurisdictions. (7) Thus, the traditional rule was abandoned by the majority of jurisdictions, in search of a rule that was less mechanical and allowed for greater flexibility in its application. (8)

New York "played a major role in the evolution of modern choice of law theories," and its jurisprudence and case law are still given considerable attention by conflicts theorists. (9) The New York Court of Appeals led the charge against the traditional approach, and became the first jurisdiction to openly abandon it as its rule. (10) However, while New York was once a respected leader in the field of conflict of laws, its influence in the field has decreased over the last several decades. (11) This is a direct result of the Court of Appeals' pronouncement to be the first jurisdiction to adopt a rigidly applied mechanical framework for a set of rules that would govern all future tort conflict situations, which has come to be known as the Neumeier rules. (12) Since the adoption of these rules, not a single jurisdiction has followed suit; the majority have instead elected to adopt alternative conflicts approaches, primarily that of the Second Restatement of Conflict of Laws. (13) These other jurisdictional approaches differ from the approach adopted in New York, primarily in their fluidity and ability to adapt to the particular circumstances involved on a case-by-case basis.

In June 2011, the Court of Appeals was presented with a question of first impression--a unique case that had never before reached its courtroom--involving questions of choice of law concerning "nondomiciliary defendants [who were] jointly and severally liable to nondomiciliary plaintiffs in a tort action arising out of a single incident within the State of New York." (14) The case, Edwards v. Erie Coach Lines Co., involved multiple defendants, domiciled in Ontario and Pennsylvania, who were in a car accident in the State of New York. (15) The majority's holding in the case, and the application of New York's choice of law rule, highlighted the deficiencies in the Neumeier rules: their rigid nature and inability, at times, to render a fair and equitable result.

Moreover, the court's decision in Edwards brings to the forefront the reason that New York has fallen behind in the conflicts field and is no longer the major and esteemed player it once was: its choice of law framework is inadequate to deal with the wide range of cases and circumstances that arise in the multistate and international system that exists today. While a set of mechanical rules can be useful, goals of uniformity and predictability should not be accentuated at the expense of bedrock principles such as fairness, justice, and equity. The court must develop a more workable approach to the Neumeier framework that embraces all of these important judicial goals and principles and has the ability to adapt to unique or rare circumstances. (16)

Part I of this paper will focus on the evolution of choice of law rules in the State of New York and the development and subsequent adoption of New York's current choice of law rule: the Neumeier framework. Part II will discuss the Court of Appeals' misapplication of important choice of law principles in Edwards, particularly its decision to use depecage--the application of two separate legal analyses for the different sets of defendants involved in the accident. Part III will critique the majority's logic in Edwards, which is incompatible with Court of Appeals jurisprudence. Part IV will then turn to alternative choice of law approaches used by other jurisdictions, virtually all of which would have rendered a fair and equitable result under the unique circumstances of the Edwards case. Finally, Part V will briefly examine the implication the decision will have on future liability settlements in the State of New York, in that it will likely discourage parties from resolving questions of liability prior to the final determination on questions of substantive law, thus prolonging the already lengthy legal process.

1. THE EVOLUTION OF CHOICE OF LAW RULES IN NEW YORK

   Former New York Court of Appeals Chief Judge Charles S. Desmond once described the rule of lex loci delicti as both "unjust and anomalous" in a nation that is essentially borderless, as it often leads to situations where the place of the accident is a result of merely fortuitous circumstances. (17) In such cases, the place of the wrong does not have a compelling interest in the plaintiffs recovery, or in protecting the defendant, as compared to the interests of the places of domicile of the parties involved in the dispute. (18) The New York Court of Appeals led the insurgence against lex loci delicti, beginning with Babcock v. Jackson (19) in 1963, when it became the first court to explicitly abandon the traditional rule. (20) Eighteen jurisdictions would follow New York's lead in the next seven years, and by 2003, virtually every jurisdiction had abandoned the traditional rule. (21)

   At around the same time that the rule of lex loci delicti was eroding in torts cases, the rule of lex loci contractus (22)--dealing with contracts cases--was undergoing similar changes. (23) This shift, too, was led by the State of New York, and was most predominantly established by the Court of Appeals in Auten v. Auten. (24) This famous case jumpstarted the revolution in contracts conflicts cases, establishing a "center of gravity" approach that the majority of states would adopt--following New York's lead--over the course of the next forty years. (25) While nearly every jurisdiction followed in New York's footsteps in the abandonment of the old traditional approaches to conflicts cases, few continued to follow New York when selecting their new jurisdictional rule. (26)

   In Babcock v. Jackson, the Court of Appeals, in an opinion authored by former Chief Judge Stanley H. Fuld, adopted the center of gravity approach for conflicts cases involving loss-allocating rules, (27) an approach already used by the court in conflicts cases involving contracts. (28) This doctrine, also commonly referred to as the "grouping of contacts" doctrine, (29) was favored for its recognition of the competing jurisdictional interests in tort claims, as it achieved both justice and fairness, and ultimately the best practical result, (30) by giving "controlling effect to the law of the jurisdiction which ... ha[d] the greatest concern with the specific issue raised in the litigation." (31) Additionally, this approach, which over time developed into a kind of "interest analysis," differed from that of the traditional rule of lex loci delicti, since it focused primarily on the end-result, rather than on a mechanical framework of a workable and predictable rule. (32)

   Over nine years later, after deciding Babcock, the Court of Appeals abandoned the center of gravity approach due to its inconsistency and difficulty in its application. (33) Uncovering the various jurisdictional interests and the purposes of their respective guest statutes proved to be incredibly challenging and overly burdensome to the court. (34) The court sought a set of rules that would "assure a greater degree of predictability and uniformity," (35) and adopted former Chief Judge Fuld's three principles developed in his Tooker v. Lopez (36) concurrence--now commonly referred to as the "Neumeier rules"--to govern conflicts cases involving guest statutes. (37)

   This court-created set of rules is set out as follows: first, when both parties "are domiciled in the same state, and the car is there registered, the law of that state should control and determine the standard of care which the host owes to his guest." (38) Second, when the defendant's conduct occurred in the state of his domicile and that state does not cast him in liability for that conduct, the defendant shall not be held liable. (39) When the plaintiff is injured in the state of his own domicile, and its law permits recovery, the defendant who has come into that state, should not be permitted to interject the law of his state. (40) Where a plaintiff is injured in the state of their domicile, and the statutory purpose is to protect plaintiffs, the law of the plaintiffs domicile will govern. Where neither of these first two rules is applicable to the situation, then the third Neumeier "catch-all" rule will apply. (41)

   The third Neumeier rule is less rigid. The presumption is that the law of the state of the accident will apply, unless "it can be shown that displacing th[e] normally applicable rule will advance the relevant substantive law purposes without impairing the smooth working of the multi-state system or...