Conflicts - MEE Flashcards
Constitutional (due process) Test for Choice of Law Rules
A forum state may apply its OWN law to a particular case only if:
The case has a significant contact or significant aggregation of contacts with the state such that a choice of its law is neither arbitrary nor fundamentally unfair.
The 3 Choice of Law Approaches
(1) Vested Rights (First Restatement) (AKA Traditional);
(2) (Governmental) Interest Analysis;
(3) Most Significant Relationship (Second Restatment).
Vested Rights (First Restatement) (Traditional)
(Genral Rule)
Court looks to the jurisdiction where the parties’ rights are “vested.”
Vested = where the act or relationship that gives rise to the cause of action occurred or was created. (i.e., location where the last liable event took place).
If the issue is procedural, then the forum court will apply its own procedural rules.
If the issue is substantive, then the court must identify the substantive area of the law involved.
Interest Analysis
(General Rule)
Presumed that the forum state will apply its own law. [But the parties may request that another state’s law be applied].
Do the state’s have an interest in the case?
- Loss shifting law: interested when applying the law would benefit a state domiciliary
- Conduct regulating law: interested when wrongful conduct occurs within the territory or state domiciliary is injured
If one interested -> false conflict -> apply law of interested state
If both interested -> true conflict -> forum state
Most Significant Relationship (Second Restatement)
Apply the law of the state with the most
significant relationship to the issue in question.
Consider three guiding principles:
(1) Promoting relevant policies
(2) Systemic interests (certainty, uniformity, predictability, and simplicity - CUPS)
(3) Protecting justified interests (contracts)
What choice of law rules apply when a federal court sits in diversity?
When a federal court sits in diversity, apply the choice of law rules of the state in which the court sits.
They are treated as substantive.
What choice of law rules apply in transferred diversity cases?
The first state’s choice-of-law rules will be applied
First Restatement Rule: Torts
Apply the law of the state where the injury occurred.
Under the First Restatement and Second Restatment approaches, when will the place of injury generally not determine the governing law?
Under the First Restatement and Second Restatment approaches, the place of injury generally not determine the governing law when:
- The rule at issue is a loss distribution rule; and
- The parties share a common domicile.
The law of the domicile state will generally apply.
⇒ A loss distribution rule is a rule that distributes or limits losses rather than a rule that regulates conduct.
Conflict introductory statement
When a cause of action involves contacts with more than one state, the forum court must determine which state’s law is to be applied to decide the issues in the case
First Restatement Vesting Rules: Contracts
The First Restatement applies two vesting rules to contracts:
If the case concerns formation of the contract (validity, defenses, interpretation), then the law of the place of contracting applies.
If the case concerns performance, then the law of the place of performance applies
Second Restatement Considerations: Contracts
Factual Connections:
- Location of contracting; negotiations; performance;
- Place where the contract’s subject matter is located; and
- Place where the parties are at home.
Presumption, when the location of negotiation and performance are the same, the forum court will apply the law of that state
Land Contracts and Real Property
Situs
Personal property contracts
Law of the state where
the place of delivery is located.
Secured Transactions
(Transactions covered by the UCC)
Law governing the perfection, nonperfection, and priority of security interests in tangible and intangible collateral is generally the law of the state in which the DEBTOR is located.
Vested Rights approach: personal property transactions not covered by UCC
Apply the law of the state in which the property was located AT THE TIME OF THE TRANSACTION.
This rule controls even when the property at issue may have been taken to another state without the permission of the owner.
(Second Restatement) Most Significant Relationship Rule: Torts
Consider:
(1) Place of injury;
(2) Place of the conduct that caused the injury;
(3) Place where the parties are at home;
(4) Place where the relationship between the parties, if any, is centered.
When will a court enforce a contractual choice of law clause?
(contracts)
When the clause is valid and express.
UNLESS:
- It is contrary to public policy;
- There is no reasonable basis for the parties’ choice; or
- There was fraud or mistake and true consent was not given.
The law of which state determines the choice of law rules that apply
The forum state. The state where the lawsuit was brought.
Most-significant-relationship approach: personal property transactions not covered by UCC
Apply the law of the state in which the property was located AT THE TIME OF THE TRANSACTION.
However, if it is determined that another state has a more significant relationship to the transaction, then that state’s law will apply
Choice of law for Inheritance
Personal Property - law of the decedent’s domicile at the time of death
Real Property - law of the situs
Ex: Z died a domiciliary of State A. At his death, he owned a house in State A. H also owned a farm in State B and had a savings account at a bank in State B. Z left a will leaving his entire estate to “University.”
State A law will determine the validity of Z’s will regarding Z’s house (real property) and his savings account (personal property), even though the account is located in State B. State A law will also govern the transfer of these two items.
State B law will determine the validity of Z’s will in regard to Z’s farm in State B. State B law will also govern the transfer of Z’s farm.
Choice of Law Rule: Marriage
Marriages are valid where they took place and are recognized in all other states.
HOWEVER, If a marriage violates a particularly strong public policy of the domicile of either party, it will be invalid. (Such policies can include bigamy and incest.)
Choice of Law Rule: Divorce and Premarital Agreements
Grounds for divorce are controlled by the law of the
PLAINTIFF’S domicile in a divorce matter.
In determining the enforceability of a premarital agreement:
- Most states apply the law of the state with the most significant relationship to the matter at hand.
- Some states apply the law of the state in which the premarital agreement was executed
What are the defenses to choice of law?
(arguing against application of law from another state)
- Public policy. A state will not apply law against its own fundamental public policy.
- Procedural rules. A state will always apply its own procedural rules.
- Criminal laws
NOTE: For choice of law purposes, statutes of limitations are procedural. Recall that statutes of limitations are substantive for Erie purposes.
