Conflicts of Law Outline
I. CHOICE OF LAW
- A. INTRODUCTION
- 1. Choice of Law issues arise when the laws of more than one jurisdiction arguably apply to a dispute.
- 2. Terminology
- Forum: The state in which the lawsuit is filed.
- Forum Law: The law of the state where the lawsuit is filed.
- Foreign Law: The law of a jurisdiction other than the forum state.
- 3. Choice of Law in Federal Court: In a federal case, apply the choice of law rules of the state where the court sits.
- This is known as the Klaxon Rule.
- Exception: If the case was transferred from a federal court in another state, apply the choice of law rules of the original court.
- B. GENERAL APPROACHES TO CHOICE OF LAW
- 1. Traditional Approach (First Restatement)
- Focus: Where the legally significant event that created the right occurred.
- Process:
- Identify the legally significant event.
- Determine where that event occurred.
- Apply the law of that place.
- Example: A car accident occurs in State A. A lawsuit is filed in State B. The traditional approach would apply the law of State A because that is where the accident occurred.
- 2. Governmental Interest Analysis
- Focus: Which state has the greatest interest in applying its law to the dispute.
- Process:
- Identify the policies behind the competing state laws.
- Determine which states have a legitimate interest in applying their laws.
- If only one state has an interest, apply that state's law. This is a "false conflict."
- If more than one state has an interest, this is a "true conflict." The court will usually apply the law of the forum state.
- If no state has an interest, apply the law of the forum state.
- Types of Laws:
- Conduct-Regulating Laws: Laws designed to regulate conduct.
- Loss-Shifting Laws: Laws that determine who can or cannot be liable.
- 3. Most Significant Relationship Test (Second Restatement)
- Focus: Which state has the most significant relationship to the issue.
- Process:
- Consider seven guiding principles to determine the state with the most significant relationship.
- Consider the connecting factors related to the specific legal issue.
- Apply the law of the state with the most significant relationship.
- Guiding Principles:
- Promoting the relevant policies of the forum and other interested states.
- Protecting justified expectations.
- Advancing certainty, uniformity, predictability, and simplicity.
- Tie Breaker: If no state has a more significant relationship, courts apply forum law.
- C. SPECIAL ISSUES
- 1. Depecage: The application of different states' laws to different issues in the same case.
- 2. Renvoi: When the court applies the whole law of another state, including that state's choice of law rules.
- Accepting the Renvoi: Applying the other state's choice of law rules.
- Rejecting the Renvoi: Ignoring the other state's choice of law rules and applying the other state's substantive law directly.
- Generally Rejected: Except for issues involving property rights in land, courts generally reject renvoi.
- D. DEFENSES AGAINST APPLICATION OF FOREIGN LAW
- 1. Procedural vs. Substantive: Forum law always governs procedural issues.
- Substantive Laws: Regulate behavior outside of court.
- Procedural Laws: Regulate behavior inside court.
- 2. Public Policy Exception: Courts may refuse to apply foreign law that violates the forum's strong public policy.
- Narrow Defense: Applies only to egregious violations.
- Not Applicable to Defenses: Can only be used to reject a foreign cause of action, not a foreign defense.
- 3. Penal Law Exception: Courts will not enforce the penal laws of another state.
- Penal Laws: Laws that punish an offense against the public.
- Tax Laws: Not considered penal laws.
- E. CONSTITUTIONAL LIMITATIONS
- 1. Due Process: Choice of law must not be arbitrary or fundamentally unfair.
- Requirement: The state must have significant contacts with the dispute to apply its law.
- 2. Full Faith and Credit: A state must recognize and enforce the judgments of other states.
- Limitations:
- Must be a final judgment.
- Must be on the merits.
- Rendering court must have had proper jurisdiction.
- No Public Policy Exception: States cannot refuse to enforce other states' judgments based on public policy.
- Last in Time Rule: If there are conflicting judgments, the most recent judgment prevails.
- 3. Privileges and Immunities Clause: Prevents states from discriminating against citizens of other states.
II. SPECIFIC AREAS OF LAW
- A. TORTS
- 1. Traditional Approach: Apply the law of the place where the injury occurred.
- 2. Governmental Interest Analysis: Apply the law of the state with the most significant interest in the outcome.
- 3. Second Restatement: Apply the law of the state with the most significant relationship to the occurrence and the parties.
- Consider these contacts:
- Place of injury.
- Place where the conduct causing injury occurred.
- Domicile, residence, or place of business of the parties.
- Place where the relationship between the parties is centered.
- Presumption: The law of the place of injury will usually be applied, but can be overcome.
- Multiple States: If the injury occurs in multiple states, apply the law of the plaintiff's domicile if the injury also occurred there.
- B. CONTRACTS
- 1. Choice of Law Clause: If the contract contains a valid and enforceable choice of law clause, that clause will govern.
- Exception: Validity of a contract cannot be resolved solely by the choice of law provision.
- 2. Validity of a Contract:
- Second Restatement: Parties can choose the law governing validity if:
- The chosen state has a substantial relationship to the parties or the transaction; or
- There is some other reasonable basis for the choice.
- Public Policy Exception: Courts may ignore the choice of law provision if it would violate a fundamental policy of the state with the most significant relationship to the issue.
- 3. Traditional Approach: The law of the place of contracting governs issues of contract formation, interpretation, and validity.
- Place of Contracting: Where the last act necessary to make the contract binding occurred.
- Performance Issues: Governed by the law of the place of performance.
- 4. Second Restatement: Determine the state with the most significant relationship to the contract.
- Consider these contacts:
- Place of contracting, negotiation, and performance.
- Location of the subject matter of the contract.
- Domicile, residence, place of incorporation, or place of business of the parties.
- Presumption: If the location of negotiation and performance are the same, the law of that state applies.
- C. PROPERTY
- 1. Types of Property
- Real Property (Immovables): Land and interests in land.
- Personal Property (Movables): All property other than land.
- Tangible: Property that can be touched (e.g., cars, furniture).
- Intangible: Property that cannot be touched (e.g., stocks, patents).
- 2. Real Property: All three approaches generally apply the law of the situs (where the property is located).
- Second Restatement: Still considers seven guiding principles, with a strong presumption in favor of the law of the situs.
- Land Incidental to a Contract: If the land is merely incidental to the contract, apply the contracts approach.
- 3. Personal Property:
- Tangible Property:
- UCC: Apply the UCC, which allows parties to choose the applicable law.
- No UCC: First and Second Restatement apply the law of the situs at the time of the transaction.
- Intangible Property:
- First Restatement: Law of the state where the property was created.
- Second Restatement: Considers the seven guiding factors.
- 4. Succession of Property at Death:
- Immovable Property: Law of the situs.
- Movable Property: Law of the decedent's domicile at the time of death.
- Choice of Law Clause: Many states will enforce a choice of law clause in a will or trust.
- Validity: If a will or trust is valid under the law where it was made, courts generally enforce it.
- D. CORPORATIONS
- 1. Internal Affairs: Governed by the law of the state of incorporation.
- 2. External Relations: Governed by the choice of law rules of the area of law involved.
- Second Restatement Contacts: Place of incorporation and principal place of business.
- E. FAMILY LAW
- 1. Marriage
- Traditional Approach: Valid where celebrated, unless it violates a strong public policy of the domicile of either party.
- First Restatement: Distinguishes between validity and incidents of marriage.
- Validity: Governed by the law of the place of celebration.
- Incidents: Determined by the law of the place where they are sought to be exercised.
- Second Restatement: Valid where celebrated, unless it violates the public policy of the state with the most significant relationship to the parties at the time of marriage.
- 2. Marital Property
- Immovable Property: Law of the situs.
- Movable Property: Law of the state where the couple was domiciled at the time of acquisition.
- 3. Divorce
- Jurisdiction Requirement: At least one spouse must be domiciled in the state granting the divorce.
- Bilateral Divorce: Personal jurisdiction over both spouses.
- Entitled to full faith and credit.
- Ex Parte Divorce: Personal jurisdiction over only one spouse.
- Entitled to full faith and credit for the divorce decree itself.
- Other orders (property, alimony, etc.) are valid only if the court had personal jurisdiction over both spouses.
- Estoppel: An interested party may challenge the validity of a divorce, except for parties, privies, those remarrying in reliance, or strangers with no standing.
- 4. Child Custody and Support
- UCCJEA: Governs jurisdiction and enforcement of child custody and support orders.
- Exclusive Jurisdiction: One state has exclusive jurisdiction to make initial custody decisions.
- Modification: Only possible if the original state no longer has jurisdiction or the new state meets the requirements for exclusive jurisdiction.
- 5. Foreign Country Judgments
- Not Subject to Full Faith and Credit: Enforced under comity.
- Comity: Recognition based on mutual respect among nations.
- Uniform Foreign Money Judgment Recognition Act:
- Enforces foreign money judgments in the same way as sister state judgments.
- Does not cover non-money judgments, but they may be enforced under comity.
III. IMPORTANT CONCEPTS TO KNOW FOR THE UBE
- Domicile
- Definition: The place where a person has their true, fixed, and permanent home, and to which they intend to return whenever absent.
- Importance: Determines which state's laws apply to certain issues, such as divorce and probate.
- Types:
- Domicile by Choice: Acquired by physical presence in a state and the intent to remain indefinitely.
- Proof of Intent: Owning real estate, voting, paying taxes, banking, vehicle registration.
- Domicile by Operation of Law: Applies to those lacking legal capacity (minors, incompetents).
- Minors: Domicile of custodial parent(s).
- Incompetents: Retain domicile from before incompetency.
- Corporations: Domiciled in the state of incorporation.
- Continuity: Presumed to continue until a new one is acquired.
- Change: Requires physical presence in a new place and intent to make it home.
- Substance vs. Procedure
- General Rule: Forum law governs procedural rules, foreign law governs substantive rules.
- Statute of Limitations: Generally procedural.
- Exception: If part of the right, not just the remedy, it's substantive.
- Rules of Evidence: Generally procedural.
- Exception: If outcome determinative, it's substantive.
- Burden of Proof: Generally procedural.
- Presumptions:
- Rebuttable: Procedural.
- Conclusive: Substantive.
- Parol Evidence Rule: Substantive.
- Statute of Frauds: Substantive.
- Damages:
- First Restatement: Procedural.
- Second Restatement: Governed by the law of the state with the most significant relationship.
- Full Faith and Credit
- Definition: Constitutional requirement that states must enforce the final judgments of other states.
- Requirements for Enforcement:
- Final judgment.
- On the merits.
- Rendering court had proper jurisdiction.
- Defenses:
- Lack of jurisdiction in rendering court.
- Judgment procured by fraud.
- Judgment not final.
- Judgment not on the merits.
- Comity
- Definition: The principle of recognizing and enforcing the laws and judicial decisions of other countries, based on mutual respect.
Application: Used to enforce judgments from foreign countries that are not subject to the Full Faith and Credit Clause.