Agenda for 3rd Class

1. Agenda for 3rd Class • Finish comparison of traditional approach and interest analysis for torts • Modern defenses of traditional approach to torts • Comparative Impairment and torts • Restatement 2nd and torts • Questions about • Bernhard • Kearney • Phillips • AOL

2. Assignment for Next Class I • Traditional Approach to Contracts • First Restatement (CB 35-40 • Milliken (Handout 1-4) • Modern Approaches to Contracts • Lilienthal. (CB 197-201) • Farmers Insurance (Handout 5-7) • Questions on next pages • Optional • Hoffheimer, Chapter 6 (Traditional Analysis of Contracts) • Hoffheimer, Chapter 17 (Interest Analysis) pp. 17-18, Qs 3, 4, 12 • Hoffheimer, Chapter 18 (Comparative Impairment) Q7 • Hoffheimer, Chapter 21 (Restatement 2nd & UCC) pp. 267-68, Qs 1, 2, 10, • Spillenger, pp. 16-20, 111-13, 122-25

3. Questions for Next Class I • How would Milliken be resolved under the First Restatement? • Be sure to consider both sections 324 (Handout p. 496) and 326 (CB p. 37) • Consider the following modern variant on Milliken • In Kansas, the age of majority for contract purposes is 18. • In Nebraska, the age of majority for contract purposes is 19. If a person under the age of 19 enters into a contract, the person may void the contract, in which case the contact is not enforceable. • Junior is 18.5 years old and is domiciled in Nebraska. He buys a stereo on credit by mail order from Loud Inc., a company in Kansas. The Kansas company delivers the stereo, but Junior does not pay for the stereo. The Kansas company sues Junior in Nebraska state court. • What is the applicable law under the reasoning in Milliken? • What is the applicable law under the First Restatement?

4. Questions for Next Class II • Consider the following 16 variants on Loud v Junior: • Loud is a Nebraska (N) or Kansas (K) company. It is both incorporated there and has its sole place of business in that state. • Junior is domiciled in Nebraska or Kansas. • The contract is made in Nebraska or Kansas. For the purpose of these variants, assume that Loud and Junior negotiate the contract in person in a coffee shop in either Nebraska or Kansas to be repaid in the same place. • Loud brings suit in Nebraska or Kansas • The sixteen possible cases are depicted on the chart on the next page. • How would these sixteen cases be resolved under the traditional approach? • How would these sixteen cases be resolved under interest analysis? • How would these sixteen cases be resolved under comparative impairment? • How would these sixteen cases be resolved under the Restatement 2nd? • Should the Rule of Validation (See CB 199) affect the result in these cases?

5. Questions for Next Class III

6. Questions for Next Class IV • Lilienthal • What do you think the outcome of this case would have been under the traditional approach? • What do you think the outcome of this case would have been under comparative impairment? • What do you think the outcome of this case would have been under the Restatement 2nd? • Does your answer to these questions depend on whether suit was brought in California or Oregon? • Farmers • Why do you think that State Farm filed for declaratory relief? • Why does California have “a strong interest in seeing that its anti-stacking law is enforced”? • Why does the court refer to “Governmental Interest Analysis” and section 193 of the Second Restatement of Conflict of Laws, when California has chosen Comparative Impairment as its approach to Conflict of Laws? • Is this a False Conflict or True Conflict case? • What do you think the outcome of this case would have been under the traditional approach? Interest Analysis? Restatement 2nd? • Do your answers to the previous question depend on whether suit was brought in California or Arizona?

7. Evaluating the Approaches I • Consider the 9 cases we have discussed so far -- the 6 illustrative cases in today’s slides, Carroll, Hurtado, and the Boy Scouts hypothetical on the prior slide. • Which approach, the traditional approach or interest analysis, accords more with your views of what makes the most sense in these 9 cases? • All things considered, which approach is better? • Other than reaching outcomes more in accord with what you think makes the most sense, what other considerations are relevant to choosing the best choice of law rule? • Can you think of a better approach than the traditional approach or interest analysis?

8. Comparison of Approaches

9. Modern Defenses of Traditional Approach I • Posner • Law of place of accident is efficient, because conditions vary from place to place, and state where tort happens is the state which has the best information and is thus most likely to design the efficient rule • Goldsmith/Sykes • Applying law of place of accident is necessary to allow firms to compete on a level playing field • Suppose US firm and French firm are both producing oil in Nigeria • Suppose US courts apply choice of law rules which apply (stricter) US law to accidents that take place in Nigeria caused by US firms • Suppose French courts apply traditional rule, so French firms are subject only to (more lenient) Nigerian law • US firm is at a disadvantage • Need to apply law of place of accident to level the playing field • DK • But then US firm operating in US is at disadvantage compared to US firm operating in Nigeria • Need to apply US law to US firm operating in Nigeria to level the playing field

10. Modern Defenses of Traditional Approach II • Restatement 2nd “presumptive rules” are partial return to traditional approach • EU and Oregon codifications attempt to bring back some of traditional approach’s rule-based approach • Query • Would traditional approach make more sense if place of wrong was defined by place where defendant took wrongful action rather than place where plaintiff suffered harm • Align better with purposeful availment doctrine in personal jurisdiction • Hypothetical • If plaintiff buys car in NY, drives it to Oklahoma, gets into accident there, and sue manufacturer and seller for product liability • No personal jurisdiction in Oklahoma, because defendant did not “purposefully avail” itself of Oklahoma • But Oklahoma law applies under traditional approach (and many modern approaches)

11. Intro to Comparative Impairment • Many dissatisfied by forum law bias in Currie’s interest analysis • Seems arbitrary, possibly unconstitutional • Encouraged forum shopping • Obvious solution is to compare interests of relevant states and apply law of state with greater interest • In essence, that is solution of both Comparative Impairment and Restatement 2nd • Choice of law is not zero sum game • In particular case, one state “wins” and one state “loses,” but some wins (and losses) are bigger than others • If each state “wins” when its interest is bigger and “loses” when its interest is smaller, over multiple disputes, all states come out better than under approach which always applies forum law to conflicts • Imagine legislators negotiating in a single session over applicable law in a large number of conflict of laws situations • Then would bargain to solution which maximizes total gains and minimizes total losses • Would allow foreign law to apply when forum state’s interest is smaller (less impaired) than foreign state’s interest • Would apply forum law when forum state’s interest is greater (more impaired) than foreign state’s interest • Not supposed to “weigh” state interest • Unclear what Baxter meant. Comparative impairment is weighing. • Perhaps he meant not supposed to evaluate which rule is better • Adopted by Cal and, in modified form, by Louisiana

12. Intro to Comparative Impairment II • State X imposes liability on food processors only if there was negligence • State Y imposes strict (absolute) liability on food processors

13. Intro to Comparative Impairment III • State X imposes negligence per se liability for driving faster than speed limit • State Y does not impose negligence per se liability • Accident in State X • X has regulatory interest in preventing accident, b/c accident in state X • X has loss-distribution interest in allocating losses, if there is party from X • Y has loss-distribution interest, if there is a party from Y

14. Restatement 2nd I • 3 Levels of Analysis • Basic principles (all fields) • General principles (field specific) • Specific rules (issue specific) • I. Basic principles (§ 6) • Needs of the interstate and international systems • Relevant policies of the forum • Relevant policies of other interested states and the relative interests of those states in the determination of the particular issue • Protection of justified expectations • Basic policies underlying the particular field of law • Certainty, predictability and uniformity of result • Ease in the determination and application of the law to be applied

15. Restatement 2nd II • II. General Principle (§ 145) • (1) [Apply] local law of that state which … has the most significant relationship to the occurrence and the parties • (2) Contacts to be taken into account … include • (a) the place where injury occurred, • (b) the place where the conduct causing the injury occurred, • (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and • (d) the place where the relationship, if any, between the parties is centered. • These contacts are to be evaluated according to their relative importance….

16. Restatement 2nd III • III. Specific Rules • Generally, apply the law of the place of injury, “unless ….. some other state has a more significant relationship…” • § 146. Personal Injuries. In an action for a personal injury, the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied. • § 175. Right Of Action For Death. In an action for wrongful death, the local law of the state where the injury occurred determines the rights and liabilities of the parties unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.

17. Questions • How would the following cases be decided under the Comparative Impairment and Restatement 2nd approaches • Libel tourism hypothetical • Babcock (Guest Statute I and Richman article) • Neumeier (Guest Statute II and Richman article) • Erwin (Loss of Consortium and Richman article) • Carroll, Hurtado, Boy Scouts • For Bernhard and Kearney • How would you argue, using comparative impairment, for the opposite result in these cases? • How would these cases have come out using the traditional approach, interest analysis, and Restatement 2nd approach? • For Phillips and AOL • How would you argue, using the Restatement 2nd, for the opposite result in these cases? • How would these cases have come out using the traditional approach, interest analysis, and comparative impairment approach?

18. Questions • In Phillips, the Montana Supreme Court observes that “applying the law of the place of manufacture would be unfair because it would tend to leave victims under compensated as states wishing to attract and hold manufacturing companies would raise the threshold of liability and reduce compensation…. [A state with a high concentration of manufacturing] could enjoy all the benefits associated with liability laws which favored manufacturers in order to attract and retain manufacturing firms and encourage business within its borders while placing the costs of its legislative decision, in the form of less tort compensation, on the shoulders of nonresidents injured by its manufacturers’ products.” (p. 249). • Suppose Montana has a relatively low concentration of manufacturing. Would its citizens benefit from laws which raised the threshold of liability and reduced compensation? Or would its citizens benefit by laws which lowered the threshold of liability and increased compensation? If it lowered the threshold of liability and increased compensation, who would bear the increase in costs? What does this suggest about the fairness of applying Montana law?

19. Questions • In Phillips, the Montana Supreme Court asserted that “we do not believe that the purpose of any potentially applicable Michigan product liability law would be to regulate the design and manufacture of products within its borders. The purpose of product liability law is to regulate interstate sales or sales to residents and to set the level of compensation when residents are injured.” (p. 249) • If the plaintiffs in Phillips had filed the case in Michigan state court, do you think Michigan state judges would have agreed that its laws are inapplicable? What purpose might a Michigan judge ascribe to product liability law to show that Michigan law should apply? • Do you see any reasoning in Phillips that is similar to renvoi? Is that reasoning persuasive? • Do you see any reasoning in the cases in this assignment which are similar to purposeful availment? • Of the choice of law methods we have discussed so far – traditional approach, interest analysis, comparative impairment, and Restatement 2nd – which do you think is best and why? • Can you think of a different approach which would be better or a way of improving the approaches mentioned above?