Comments on the Roundtable Discussion of Choice of Law - Russell J. Weintraub

• Publication year: 1997

Comments on the Roundtable Discussion of Choice of Lawby Russell J. Weintraub^*

I. Introduction

I congratulate the Walter F. George School of Law for bringing together a distinguished group of conflict-of-laws scholars to discuss some of the best known cases in the field. There is no better way to honor Brainerd Currie of whom the School is justifiably proud as a former student and faculty member. Although, as Professor Currie freely acknowledged,¹ he was not the first to argue that the territorial reach of a law should depend on the law's content and purpose, his series of carefully wrought articles endowed the concept such intellectual force that it could no longer be ignored. Within five years of the publication of the first article in the series, the New York Court of Appeals abandoned the place-of-wrong rule in torts.² The court chose law by a "[c]omparison of the relative 'contacts' and 'interests'"³ of the two jurisdictions involved and cited Professor Currie for his "criticism of the traditional rule."⁴

The comments of members of the Mercer Roundtable and the audience present useful insights into the choice-of-law process. My remarks focus on some of the many interesting issues raised by the participants. For convenience, this Article follows the order of the Roundtable discussion and uses as headings the same cases analyzed by the participants.

II. Walton v. Arabian American Oil Co.⁵

The issue on which the Roundtable discussion focused was the same issue raised by Brainerd Currie in his discussion of the case: if neither party contends that the law of the forum should be displaced with Saudi Arabian law, should the judge raise this issue on his own motion and dismiss the complaint when plaintiff does not prove the content of Saudi law?⁶ I agree with Professor Currie that a court should apply forum law unless one of the parties shows, with whatever modern procedures are available,⁷ that the law of another jurisdiction is different from that of the forum and that a proper choice-of-law analysis displaces forum law with foreign law.⁸ It is easier to justify this position when the forum's contacts with the parties and the transaction trigger the policies underlying forum law. Even in rare circumstances when the forum will not bear the long-range consequences of the choice of law, forum law should apply if no other law is shown to be different and relevant. Perhaps the best justification for this position is Chief Justice Vander-bilt's statement in Leary v. Gledhill⁹ that the parties "acquiesce in the application of the law of the forum."¹⁰

Several of the Roundtable members disagreed with this position, at least when the defendant objects to the application of forum law and the forum has no "interest" in the application of its law. Professor David Currie agrees with the position of Larry Kramer that "it's up to the plaintiff to point to some law that gives a right to relief¹¹ and states that New York cannot give a right because New York has insufficient contacts with the parties or the transaction to trigger New York's compensation policy. Dean Kay comments that if defendant raised the choice-of-law issue, there might be a "constitutional objection" to the application of forum law.¹²

Phillips Petroleum Co. v. Shutts¹³ is a good example of the waste of resources resulting from using the Constitution to block application of forum law without first requiring a party to demonstrate that the law of some other jurisdiction produces a different result. In a class action in Kansas, the Kansas courts applied Kansas law to determine the interest owed by Phillips on royalty payments that it withheld from owners of natural gas fields.¹⁴ The Supreme Court held it unconstitutional to apply Kansas law to the rights of royalty recipients in other states.¹⁵ Justice Stevens objected that there was no showing that the other states in which there were gas leases would have reached a different result, and therefore, "[t]here is simply no demonstration here that the Kansas Supreme Court's decision has impaired the legitimate interests of any other States . . . ."¹⁶ Justice Stevens was right. On remand, the Kansas courts decided that in the absence of clear precedent to the contrary in the other states, the judges there would probably be as fair and wise as the Kansas judges and require the same amount of interest on suspended royalties as ordered in the remanded case.¹⁷ This time the Supreme Court denied certiorari.¹⁸

In Walton, the laws of all the United States jurisdictions that had contacts with the parties were identical on the key issue of whether the Arabian American Oil Company (ARAMCO) was responsible for its employee's negligence.¹⁹ As the Restatement (Second) of Conflict of Laws states in one of its most sensible provisions, "[wjhen 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."²⁰ Under modern conflicts analysis, ARAMCO might argue that Saudi law should be applied so that ARAMCO can play on a level field with companies from outside the United States that do business in Saudi

Arabia. First, however, it should behoove ARAMCO to demonstrate that Saudi law would not permit recovery. ARAMCO's access to experts on Saudi law should make it easy for ARAMCO to present proof that under that law "responsibility for human action is individual and . . . there can be no vicarious liability."²¹ The mystery is why ARAMCO did not do so, relying instead on the long process that finally resulted in dismissing plaintiff's claim on the merits for his inability to prove the content of Saudi law.²²

It is not unfair to apply New York law if that law reaches the same result as the laws of Delaware, where the company was incorporated, and Arkansas, where plaintiff was domiciled. Reich v. Purcell²³ was a suit by recently-arrived California residents against a long-time California resident for the wrongful death of family members in an automobile collision in Missouri. Missouri had a twenty-five thousand dollar cap on recovery, but California did not limit recovery and neither did Ohio, the former residence of plaintiffs. At the time of the collision, plaintiffs "were on their way to California, where [they] were contemplating settling."²⁴ Justice Roger Traynor refused to take plaintiffs' move to California into account in his interest calculus because this might lead to "forum shopping."²⁵ Perhaps "domicile shopping" might be a better term in this context. He rejected Missouri law on the ground that Missouri did not have "any substantial interest... in extending the benefits of its limitation of damages to travelers from states having no similar limitation."²⁶ He could then have stated that further analysis was not necessary because California and Ohio law were identical,²⁷ but instead he applied the law of Ohio where plaintiffs resided at the time of the collision.²⁸ Was the application of Ohio law unfair to defendant, who had no contact with that state? Traynor's short and cogent answer was, "[a] defendant cannot reasonably complain when compensatory damages are assessed in accordance with the law of his domicile and plaintiffs receive no more than they would have had they been injured at home."²⁹

The worst thing a court can do is to raise the choice-of-law issue on its own motion and then decide it without adequate briefing and argument. James v. Powell³⁰ is a good example of what to avoid. Plaintiff had recovered a libel judgment against Congressman Adam Clayton Powell. Powell and his wife owned land in Puerto Rico, which the wife transferred to relatives. Plaintiff then sued Powell and his wife for harm caused by this fraudulent conveyance and recovered compensatory and punitive damages. All parties were content to have the case decided under forum law, but the New York Court of Appeals would not allow the parties to overlook "[t]he rule . . . that the validity of a conveyance of a property interest is governed by the law of the place where the property is located."³¹ The court then speculated that Puerto Rican law might not permit attachment of the land or, if attachment were possible, that law might allow plaintiff to ignore the fraudulent conveyance and proceed against the property.³² So far so good. These facets of Puerto Rican law simply determine whether plaintiff has in fact been harmed, what Brainerd Currie would refer to as a "datum."³³ It might be preferable for Puerto Rico to apply New York law to determine whether the New York debtor's real estate is exempt from execution by his New York judgment creditor,³⁴ but what Puerto Rico does is controlling on this issue.

Next, however, the court's logic jumps the tracks. If plaintiff did have a right initially to proceed against the land and that right was frustrated, "her remedy, if any, must arise under the law of Puerto Rico."³⁵ No, given the fact of harm, there is as much reason why New York law should determine the remedy as in Babcock v. Jackson,³⁶ in which the court held that New York law afforded a cause of action by a guest passenger against a host driver although the law of the place of injury would not.³⁷ In James, the court did find that "New York has the 'strongest interest' in the protection of its judgment creditors and, accordingly, New York law should govern as to whether the judgment debtor's conduct. . . warranted] an award of punitive damages."³⁸ The same could be said of compensatory damages. Then, having instructed the parties on choice of law, the court remanded for application of Puerto Rican law to compensatory damages.³⁹ Thus, the court raised the choice-of-law issue on its own motion, proceeded to decide it, and made a hash of it.

I agree with David Currie that "in an adversary system"⁴⁰ the court should not raise the choice-of-law issue on its own motion. A civil law...