Nebraska Choice of Law: a Synthesis

• Publication year: 2022

39 Creighton L. Rev. 1. NEBRASKA CHOICE OF LAW: A SYNTHESIS

Creighton Law Review

Vol. 39

PATRICK J. BORCHERS

INTRODUCTION

The "conflicts revolution" has been described by one prominent jurist as a "legal reform [that] miscarried."(fn1) Even before the revolution, the most famous American writer on torts, William Prosser, described the field as a "dismal swamp."(fn2) The revolution, however, has many defenders.(fn3) We can save for another day the grand question of whether the conflicts revolution has been a net societal benefit. The rather more modest scope of this essay is its impact in Nebraska.

The conflicts revolution substituted for the relatively hard-and-fast, result-blind rules of the common law a more nuanced "approach" to choice-of-law problems. For instance, the common-law rule for tort choice of law is the lex loci delicti (if one prefers Latin) or the law of the place of the wrong (if one prefers English). This rule and others like it were enshrined in the First Restatement of Conflicts reported by Harvard professor Joseph Beale and published by the American Law Institute in 1934.(fn4) Up through the early 1960s, U.S. courts therefore almost always applied the law of the state in which the plaintiff was injured even if nothing else of significance connected that state with the case and the injury state's rule completely denied recovery.(fn5)

Thought to represent a "mechanical" jurisprudence, the First Restatement was under academic attack from its birth by proponents of a more modern and "progressive" legal philosophy.(fn6) By the 1950s and 1960s, the attacks from prominent professors became more frequent and detailed.(fn7) Essentially their contention was that a system that was, in Cardozo's phrase, "blind to final causes"(fn8) could not do justice. Rather, the revolutionaries argued, a conflicts system should take account of the content and purposes of the rules in conflict. In Professor Currie's influential formulation, the competing "state interests" should be evaluated. Currie argued that some apparent conflicts were actually "false conflicts" because although the rules nominally conflicted, only one state really had an interest that would be furthered by application of its law.

The judicial levee holding back the revolutionary river broke in 1963 with the New York Court of Appeals' decision in Babcock v. Jackson.(fn9) Babcock was Currie's paradigmatic "false conflict."(fn10) The plaintiff Georgia Babcock, a New Yorker, was on a weekend auto excursion north to Ontario with her friends the Jacksons, also New Yorkers.(fn11) Allegedly, Mr. Jackson negligently drove the car off the road while they were in Ontario.(fn12) Miss Babcock was injured and sued Jackson in a New York state court. New York law allowed recovery on a showing of negligence; Ontario had a guest statute that denied recovery.(fn13) The place-of-the-injury rule pointed to application of Ontario's rule, but New York's high court ruled that its own tort rule would apply. Though the opinion offered several rationales, chief among them was that while New York had an "interest" in seeing Miss Babcock fairly compensated, Ontario had no interest in the application of its rule given that neither an Ontario driver nor an Ontario insurer was involved.(fn14) The court was quick to point out that the calculus would be different if the question were application of an Ontario rule that directly regulated conduct, such as a speed limit or rule of the road, but with a rule of loss distribution or allocation the court could discern no reason to apply the Canadian province's rule.(fn15)

The intervening four decades have seen about 40 of the 50 states, including Nebraska,(fn16) follow New York's lead and abandon the First Restatement. Many, again including Nebraska, have turned to the Second Restatement of Conflicts, published in 1971, which was an effort to synthesize the newer academic and judicial theories.(fn17) The Nebraska courts, therefore, have for the last couple of decades found themselves foot soldiers in the conflicts revolution.

Maybe, however, it's time for a few rules to re-emerge. As a practical matter, busy judges and practicing lawyers who face choice-of-law issues irregularly have neither the time nor the inclination to sift through the "mismash" of theories now in play.(fn18) Although the conflicts revolution, as implemented in Nebraska and elsewhere, has had the felicitous effect of rejecting some of the blunderbuss, over-broad rules of the First Restatement, it may be possible now to synthesize some narrower rules or near rules. My goal in this essay is to review the post-revolutionary Nebraska conflicts decisions in several fields and suggest synthesized rules to guide future decisions.

THE GRADUAL CHANGE

In many states, the break from a traditional conflicts regime was clear and came in a clearly identifiable case.(fn19) The Nebraska Supreme Court, however, began citing the Second Restatement as early as 1967 when that work was still in its tentative form.(fn20) These early citations to the Second Restatement did not, however, involve choice-of-law theory directly. Rather, the provisions cited were on more collateral matters such as defining the term "domicile,"(fn21) liability of partners for partnership debts,(fn22) and the enforceability of a sister-state judgment.(fn23)

The Nebraska high court's first citation to the Second Restatement's choice-of-law provisions occurred in the odd little case of Crossley v. Pacific Employers Ins. Co.(fn24) Crossley, a Nebraskan, sued his automobile insurer in a Nebraska state court. While in Colorado, he was riding in a car driven by his stepson, which collided with another car driven by a Colorado resident.(fn25) Plaintiff Crossley had in effect $10,000 of uninsured motorist coverage through his insurer.(fn26) He sought to recover damages from his insurer for his pain and suffering because, he maintained, the car driven by the Colorado resident was "uninsured" within the meaning of his policy.(fn27)

The rub was that the other car was insured; the other driver had in effect a policy that complied with Colorado law, though the limits would have been too low in Nebraska.(fn28) The plaintiff, however, contended that the other car was effectively "uninsured" because under Colorado's "no fault" law he was not entitled to recover anything because his injuries were not serious enough. The Nebraska Supreme Court held, sensibly enough, that the plaintiff should lose.(fn29) No rational construction of the word "uninsured" could cover an auto that is insured as required in the state in which it is registered, insured, and being driven.(fn30) That observation alone was sufficient to dispose of the case.

The reference to the Second Restatement's choice-of-law provisions appeared in a brief alternative rationale offered by the court. The court noted that even if the other car were "uninsured" within the meaning of plaintiff's policy, his right to recover damages would have to be judged under the tort law of Colorado, which - as we have seen - gave him nothing.(fn31) The court cited section 146 of the Second Restatement for the proposition that "in an action for personal injury, the local law of the state where the injury occurred governs the rights and liabilities of the parties, unless, with respect to the particular is-sue, some other state has a more significant relationship."(fn32) Reasoning that Colorado had the "dominant interest," the court concluded plaintiff's right to recover, if any, must be judged by that state's laws.(fn33)

Crossley was at most an ambiguous signal regarding Nebraska's conflicts theory. First, the reference to choice of law was probably dictum given that no amount of stretching of the policy would allow it to reach this claim. Second, to the extent that the decision said anything about choice-of-law principles, those principles were consistent with the place-of-the-injury rule that was well entrenched before Crossley.

A seed, however, had been planted. A year later, in Shull v. Dain, Kalman & Quail, Inc.,(fn34) the Nebraska Supreme Court faced a contract that had connections with both Nebraska and Minnesota. The interest rate charged by the contract was legal in Minnesota but one percent in excess of the maximum allowed under Nebraska law.(fn35) The First Restatement rule regarding the validity of a contract pointed to the law of the state of the making of the contract.(fn36) The court repeated this general formulation, but then proceeded directly to the Second Restatement's "most significant relationship" test.(fn37) Sliding further away from a traditional conflicts approach, the Nebraska high court then applied section 203 of the Second Restatement, which was essentially a "rule of validation" of contracts against a defense of usury.(fn38) As long as a contract has a "substantial relationship" with a state that would allow the rate, and the rate is not "greatly in excess" of the rate allowed in the state with the most significant relationship, the contract is valid under Section 203. Because the rate was valid under the law of Minnesota, a state with an undeniably "substantial" relationship to the contract given that it was the locus of the creditor's principal office, and because the rate was at most one percent in excess of Nebraska's allowed rate, the Nebraska Supreme Court refused to sustain the...