Agenda for 11th Class• Personal Jurisdiction in Dick, Allstate, and Shutts• Constitutional Constraints (continued)– Austin– Ely

• Sara Persons’s Presentation– Forum Selection Clauses: The De Facto Choice-of-Law Clauses

• Choice of Law in Federal Court– Klaxon– Van Dusen

• Federal Legislation about Choice of Law– Gottesman article

Personal Jurisdiction – Allstate & Dick• Allstate v Hague

– Defendant does not seem to have challenged personal jurisdiction– No lower court opinions published– MN Supreme Court. “We are of the opinion that there is no real question of

jurisdiction of the Minnesota court. Where plaintiff is a resident of the state and decedent's estate is probated in Minnesota, defendant does business in this state and was properly served with process, the Minnesota court has jurisdiction of the case.”

– US Supreme Court. “Allstate was at all times present and doing business in Minnesota…. Here, of course, jurisdiction in the Minnesota courts is unquestioned…”

• Dick v Home Insurance (First hypothetical discussed in last class)– US Supreme Court in Allstate v Hague notes. “Dick sought to obtain quasi–in–rem

jurisdiction by garnishing the reinsurance obligation of the New York reinsurer. The reinsurer had never transacted business in Texas, but it ‘was cited by publication, in accordance with a Texas statute; attorneys were appointed for it by the trial court; and they filed on its behalf an answer which denied liability.’ There would be no jurisdiction in the Texas courts to entertain such a lawsuit today. “

Personal Jurisdiction – 2 other hypos• Watson v Employers Liability(2nd hypo)

– No discussion of issue– District court and Court of Appeals dismissed on other grounds, so did not

address jurisdiction issue– Supreme Court reversed on choice-of-law grounds, so did not address

jurisdiction issue– Parties free to litigate on remand

• But no opinion on remand • Clay v Sun Insurance (3rd hypo)

– Seems to have been no discussion of jurisdiction

Personal Jurisdiction -- Shutts• Due process standards for class action plaintiffs are not the same as for

defendants– Defendant must hire counsel and travel to forum to defend self– Defendant subjected to discovery– Defendant might have to pay damages– Plaintiffs stand only to lose claims that could bring individually or in

other class action– Plaintiffs represented by class counsel– Plaintiffs protected by class action rules about conflicts of interest

• So due process does not require that plaintiffs have minimum contacts with the forum (much less purposeful availment)

• Due process requires only minimum procedural fairness– Notice, opt out, adequate representation

Austin (1975)• NH imposed commuter tax equal to lesser of 4% or income tax rate of

commuter’s home state– Effectively no equivalent tax on NH residents

• Maine residents get Maine income tax credit for commuter tax paid to NH• USSC

– Commuter tax violates Privilege’s & Immunities Clause, b/c falls exclusively on non-residents

– Not saved by fact that, b/c of Maine tax credit, Maine residents pay, in aggregate, no additional tax• Just invites retaliation• Statutes evaluated in isolation

– Blackmun• No individual standing, b/c no increase in aggregate taxes

Ely• Austin shows that it is unconstitutional to treat non-residents differently than

residents, even if just subjecting them to burdens their home state would impose– NH tax not saved by the fact that NH not imposing higher tax on Maine

resident (4%) than Maine imposes on its own residents (>4%)• Under this standard, modern choice of law methods are unconstitutional, b/c

frequently disadvantage non-residents by imposing their own law on them.• DK example

– Suppose Nevada law caps pain and suffering damage at $100,000, while California law does not.

– Suit 1. Cal plaintiff v Nevada defendant, accident in Cal. No cap on damages– Currie. True conflict. Cal law applies– Comparative impairment & Restatement 2nd. Probably Cal. law,

because Cal is forum, location of accident, and plaintiff’s residence– Suit 2. Nevada plaintiff v Nevada defendant. Cap on damages

– Common domicile case– Nevada plaintiff is disadvantaged in Suit 2 by having own law imposed on it,

when similarly situated California plaintiff would not

Laycock Example• Suppose Mary from Maryland and Del from Delaware take turns driving.• One night Mary drives, they get into an accident, and Del is hurt.• Another night Del drives, they get into an accident, and Mary is hurt.• Delaware has a guest statute and Maryland does not.• Mary sues Del in Delaware. Del counterclaims• Mary v Del. True conflict. Delaware guest statute applies• Del v Mary:

– Currie. Unprovided for case. Delaware’s guest statute applies. • Laycock oddly asserts that Currie would not apply guest statute

– Other modern analyses. Delaware’s guest statute does not apply, because guest statute to protect Delaware defendants. Nevertheless, Delaware allows tort suits for car accidents and has an interest in compensating Delaware residents. So Delaware tort law, without guest statute, applies. (Kramer).

Ely Q’s I• How general is the problem that Ely is concerned about?

– Can you think of a hypothetical involving contracts that shows discrimination similar to that in the auto accident cases that Prof. Klerman put in square brackets to illustrate Ely’s argument?

– Can you think of a hypothetical involving statutes of limitations that shows discrimination similar to that in the auto accident cases that Prof. Klerman put in square brackets to illustrate Ely’s argument?

• Ely argues that Allstate v Hague is inconsistent with Austin, because the outcome would have been different if the plaintiff’s residence had been different. Is that correct?

• Ely argues for a return to the rules of the First Restatement, except in common domicile cases, where he agrees that it makes more sense to apply the law of the state of common domicile. Can you think of a hypothetical under Ely’s proposed choice of law regime which shows discrimination similar to that in the auto accident cases that Prof. Klerman put in square brackets to illustrate Ely’s argument?

Ely Qs II• Ely mentions that according to Huber, an influential 18th century conflict of laws

thinker, contractual capacity, at the time Constitution was drafted and ratified, was determined by the law of the party’s domicile. Can you think of a hypothetical involving the contractual-capacity-follows-the-parties’-domicile choice-of-law regime that shows discrimination similar to that in the auto accident cases that Prof. Klerman put in square brackets to illustrate Ely’s argument? – What does this imply about the constitutionality of modern choice of law

approaches?• Ely argues that Austin is wrong. Do you agree?• Do you think that modern choice of law approaches violate the Full Faith & Credit

Clause?

Erie Doctrine• Swift v Tyson (1842).

– Federal courts apply state statutes, but “general common law”– Rules of Decision Act requires federal courts to apply “state law”

• Common law is not “state law”• Erie (1938).

– Federal courts in diversity cases must apply state substantive law, including state common law

– Statutory: Rules of Decision Act. • Common law is “state law” not “brooding ominipresence of reason”

– Constitution: Neither Congress nor judiciary have power to make tort law or other areas of common law -- Probably wrong

– Policy of discouraging forum shopping between federal and state courts• But Erie allows forum shopping between state courts and between federal courts

located in different statess– Federal courts can apply some federal law

• E.g. FRCP (Hanna)• Rough distinction between substantive law (state) and procedural law (federal)

– But Court says that’s not distinction (Guaranty Trust)– Depends primarily on whether application of federal law would encourage

forum shopping between federal and state courts (Hanna)

Klaxon (1941)• Issue was pre-judgment interest (like Shutts)• Federal district courts must apply choice of law rules adopted by

state courts of state where federal court located• Otherwise federal and state courts sitting next to each other would

apply different law• Non-uniformity between federal courts is result of federal system

Van Dusen (1964)• Airline crash in Boston, lots of deaths• Some plaintiffs filed suit in PA• Defendant requested and was granted transfer of case under 1404 to Boston federal court• Q. Should Boston federal court apply PA or MA choice of law principles• USSC. Boston federal court should apply PA choice of law principles

– Otherwise, transfer could be equivalent to motion to dismiss • e.g. where transferee court would apply shorter statute of limitations)

– Plaintiffs have “venue privilege” not upset by 1404– Courts would be reluctant to order transfers if law might change– Federal diversity jurisdiction should not give defendant’s choice of law advantage not

available in state court• If in state court, not transfers between state courts, so plaintiff’s choice of forum and

resulting choice of law would be respected. • Note that transfers under 1406 different

– 1404. transfers when venue in original forum proper• Choice of law of transferor forum applies

– 1406. transfers when venue in original forum improper• Choice of law of transferee forum applies

Questions on Klaxon and Van Dusen I• Why is it so important for there to be uniformity of law between federal and state

courts located in the same state?• Why is it more important that there be uniformity between federal and state courts

located in the same state than between federal courts located in different states?• The Court in Van Dusen states that a Pennsylvania state court might not apply

Massachusetts’s caps on wrongful death damages, even though that court would apply Massachusetts wrongful death law. Why might a Pennsylvania state court decide Massachusetts’s damage caps were inapplicable?

• The Court in Van Dusen states that the plaintiff has a right to choose the court. Why? Is that a right that plaintiffs should have?

• Is the Court’s assumption that the plaintiff has a right to choose the court consistent with the existence of 1404, which gives federal courts the power to transfer cases from one federal court to another?

• The Court assumes that it should respect a plaintiff’s right to select applicable law by choosing the court. Why? Is that a right that plaintiffs should have?

• Van Dusen involved a transfer of venue requested by the defendant. What if the plaintiff requested the transfer of venue? Should the transferee court still apply the choice of law rules of the state in which the transferor court was located?

Questions on Klaxon and Van Dusen II• If a case is brought in state court in State A, and the state court thinks courts in

State B would be much more convenient, then the court in State A can dismiss the case on forum non conveniens grounds. In that situation, the plaintiff must refile the case in state court in State B, and the court in State B will apply its own choice of law rules. What does that suggest about the law that should be applied in federal court when a case is transferred under 1404 because the court where the plaintiff filed was very inconvenient?

• In footnote 2, the Court states that the transferee court “may still apply its own rules governing the conduct and dispatch of cases in its own court.” How is that consistent with the holding of Van Dusen? What rules might the Court have been referring to?

Questions on Gottesman• Do you agree with Gottesman that American choice of law is “wasteful and unfair”? Can

you think of reasons other than the ones he mentions why the current system is problematic? Can you think of reasons why the situation is not as problematic as he describes?

• Do you agree that it would be good to have federal choice of law rules that preempted state laws?

• Do you agree that it there should be federal choice of law rules only in frequently litigated contexts, but that other disputes should be left to state choice of law rules?

• Do you agree that Congress rather than the federal courts should generate federal choice of law rules?

• Do you agree with Gottesman’s proposed choice of law approach? Can you think of a better one?

• Do you agree with Gottesman that just about any uniform, federal solution would be better than the current situation?

• Do you agree with Gottesman’s proposed rules for statutes of limitations? • What rule would you formulate for product liability? Do you agree that choosing the

law of the place of wrong (manufacture) would lead to a “race to the bottom” (p. 15)? Do you agree that McConnell’s solution (law of the place of purchase) “is worse than the evil to which it is addressed” (p. 17).