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Modern Approaches Outline

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Modern Approaches A. Party Autonomy and the Rule of Validation i. Party Autonomy a) Choice of Law Provisions
? Cases
? Siegelman v. Cunard White Star Ltd. (pg. 99)
? Re Validity
? "Where the law of the parties' intention has been permitted to govern the validity of contracts, it has often been said (1) that the choice of law must be bona fide, and (2) that the law chosen must be that of a jurisdiction having some relation to the agreement, generally either the place of making or the place of performance." Siegelman v. Cunard White Star Ltd. (pg. 101)
? Re Interpretation
? "[I]t is clear that the federal conflicts rule will give effect to the parties' intention that [the chosen law]
is to be applied to the interpretation of the contract." Siegelman v. Cunard White Star Ltd. (pg. 100)
? In Wyatt v. Fulrath, the court determined that the parties' express intention, found within a written agreement, to have New York survivorship law apply with respect to certain movable property controlled. (pp. 111-12)
?????Second Restatement
? SS 187. Law of the State Chosen by the Parties.
? (1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.
? (2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
? (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, OR
? (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of SS 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.
?????(3) In the absence of a contrary indication of intention,

the reference is to the local of the state of the chosen law.
? SS 187 Comment g
? To be "fundamental," a policy must in any event be a substantial one. Except perhaps in the case of contracts relating to wills, a policy of this sort will rarely be found in a requirement, such as the statute of frauds, that relates to formalities . . . . Nor is such policy likely to be represented by a rule tending to become obsolete, such as a rule concerned with the capacity or married women . . . , or by general rules of contract law, such as those concerned with the need for consideration . . . . On the other hand, a fundamental policy may be embodied in a statute which makes one or more kinds of contracts illegal or which is designed to protect a person against an oppressive use of superior bargaining power .
. . . To be "fundamental" within the meaning of the present rule, a policy need not be as strong as would be required to justify the forum in refusing to entertain suit upon a foreign cause of action. (pg. 107)
? Subsequent provisions of the Second Restatement particularize these general rules and make the parties' choice of governing law controlling on matters other than validity.
? The Second Restatement adopts party autonomy to determine the law governing the validity of testamentary and inter vivos trusts in movables. Second Restatement SSSS
269-270 (pg. 110) b) Choice of Forum Provisions
? In Bremen v. Zapata Off-Shore Co, the Court enforced choice of forum clauses that were the result of arms-length bargaining, arguing that this would help to achieve predictability in international business transactions. (pg. 110)
? In Carnival Cruise Lines, Inc. v. Shute, the Court enforced the choice of forum clause notwithstanding the fact that the contract was not subject to negotiation, because the choice of forum clause served several desirable ends such as limiting the fora in which the defendant would have to litigate, making clear in advance where litigation would occur, and reducing the fares to passengers. The Court also noted that Florida was not a "remote alien forum," and the inconvenience to the Shutes in having to litigate there was not intolable. (pp. 110-11) c) Choice of Law for Inter Vivos and Testamentary Trusts [SEE pp. 113-16]
d) Why would we want party autonomy?
? Party expectations
? Uniformity and predictability
? Less uncertainty/transaction costs
? Simplifies litigation

?

BUT Forum state loses some control (regulatory/legislative authority) ii. Rule of Validation (A supplement to party autonomy) a) With respect to contracts, there is a "presumption that the obligor has voluntarily submitted himself to a particular local law . . . ." Pritchard v. Norton (pg. 98) b) "[T]hat presumption may be rebutted, either by an express declaration to the contrary, or by the fact that the obligation is illegal by that particular law, though legal by another." Pritchard v. Norton (pg. 98) c) "The parties cannot be presumed to have contemplated a law which would defeat their engagements." Pritchard v. Norton (pg. 98)
? Therefore, where there is a conflict between two states' laws and one state's laws would invalidate a contract, while the other state's laws would uphold the contract, the law that would uphold the contract should be applied. See id.
? In Seeman v. Philadelphia Warehouse Co., the Supreme Court followed this approach with respect to a note issued in New York that was usurious under New York law. The Court held that that question of where the note was issued was immaterial because "a policy of upholding contractual obligations assumed in good faith" required application of the law permitting the higher interest rate. (pg. 108)
? Second Restatement SS 203 endorses this approach in usury cases:
? The validity of a contract will be sustained against the charge of usury if it provides for a rate of interest that is permissible in a state to which the contract has a substantial relationship and is not greatly in excess of the rate permitted by the general usury laws of the state of the otherwise applicable law under the rule of SS 188 (pg. 108)
? Second Restatement SS 203 cmt. b notes that the usury rule rests on the belief that "the parties will expect on entering a contract that the provisions of the contract will be binding on them." (pg. 108) d) Apart from statutes validating foreign executed wills, the rule of validation is rarely used. B. Interest Analysis (followed by 2 juris re torts/0 juris re contracts) i. In General a) "[T]he law of the jurisdiction having the greatest interest in the litigation will be applied and . . . the [only] facts or contacts which obtain significance in defining State interests are those which relate to the purpose of the particular law in conflict." Schultz v. Boy Scouts of America, Inc. (pg. 144) b) Chesney v. Marek (pg. 117)/Marek v. Chesney (pg. 119) is an example of a case where the policies/interests of the laws at issue are invoked to resolve the dispute
? In Chesney v. Marek, the 7th Circuit invoked the following

policies in order to determine that the attorney's fee award for the plaintiff should be upheld, notwithstanding the language of Fed. R. Civ. P 68:
? "Section 1988 [the attorney's fee provision for civil rights claims] was intended to encourage the bringing of meritorious civil rights actions . . . ." (pg. 118)
? "[P]rivate attorneys general' should not be deterred from bringing good faith actions to vindicate the fundamental rights here involved by the prospect of having to pay their opponent's counsel fees should they lose." (pg. 118)
? "By the same token, they should not be deterred from bringing good faith actions to vindicate fundamental rights by the prospect of sacrificing all claims to attorney's fees for legal work at the trial if they win, merely because on the eve of trial they turned down what turned out to be a more favorable settlement offer. (pg. 118)
? 42 U.S.C. SS 2072 provides that the Federal Rules of Civil Procedure "shall not abridge, enlarge or modify any substantive rights . . . ." (pg. 118)
? The court determined that "[f]or the present purposes it is substantive" such that the court could uphold the attorney's fees award.
? In Marek v. Chesney, the Supreme Court reversed the 7th Circuit stating that "Rule 68's policy of encouraging settlements is neutral, favoring neither plaintiffs nor defendants; it expresses a clear policy of favoring settlements in all cases." (pg. 120) c) Brainard Currie, Married Woman's Contracts: A Study in Conflictof-Laws Method (pg. 133)
? INTERST ANALYSIS
? (1) Ascertain purposes of the laws at issue
? (2) Assume a law only applies where the purposes of that law are served
? Domestic Choice of Law Process
? (1) Where competing rules, look at purposes and intent
? (2) If conflict, apply some second order principle (e.g. Latter in time, more specific statute over more general statute)
? Multi-State Choice of Law Process
? (1) Look at purposes and see if purposes are advanced by application
? (2) If conflict, resolve as best you can
? Where there is a true conflict, presumption that forum law should apply
? In the article, Currie points to four factors that may be relevant to the case of Milliken v. Pratt (pg. 18):
? (1) The domicile, or nationality, or residence, or place of business of the creditor;

?

(2) The domicile, or nationality, or residence of the married woman;
? (3) The place of the transaction, i.e., the place where the contract is made, or possibly the place where it is to be performed;
??? ?(4) The place where the action is brought d) FRAMEWORK FOR ANALYSIS
? State 1's Law
? (1) Ascertain the purposes of the relevant law at issue
??? ?(2) Look at the purposes of the law and determine whether those purposes are advanced by application to the case at bar (that is, does the state have an interest in its law applying to the instant case?)
? State 2's Law
? (1) Ascertain the purposes of the relevant law at issue
??? ?(2) Look at the purposes of the law and determine whether those purposes are advanced by application to the case at bar (that is, does the state have an interest in its law applying to the instant case?)
? IF one state has an interest in applying its law and the other state does not have an interest in applying its law
? = False Conflict
??? ?In this case, apply the law of the state with an interest in applying its law
? IF neither state has an interest in applying its law
? = Unprovided for Case
? In this case, since neither state has an interest at stake, apply forum law.
? See Erwin v. Thomas (pg. 154) (applying forum law where neither state had an interest in the litigation, noting that if the interests and policies "of neither state are vitally involved, the law of the forum should apply")
??? ?ALSO, forum better at applying its own law.
? IF BOTH states have an interest in applying its law
? = True Conflict
? In this case, resolve the conflict as best as you can by weighing interests
? BUT Currie advocates applying forum law
? "The sensible and clearly constitutional thing for any court to do, confronted with a true conflict of interests, is to apply its own law." B. Currie, Married Woman's Contracts: A Study in Conflict-of-Laws Method (pg. 133); see also Lilienthal v. Kaufman (pg. 160) (applying forum law where neither state had a more significant interest in the litigation)
? It should apply its own law, not because of any notion or pretense that the problem is one relating to

procedure, but simply because a court should never apply any other law except when there is a good reason for doing so. B. Currie, Married Woman's Contracts: A Study in Conflict-of-Laws Method (pg. 133) e) CATEGORIES OF INTERESTS
? (1) Regulating what happens within a state
? P.V. ex rel. T.V. v. Camp Jaycee (pg. 152) (finding, on similar facts as Schultz, that Pennsylvania's interest in regulating the conduct of the parties within its borders was weightier than New Jersey's interest in applying its charitable immunity law.)
? See Bernhard v. Harrah's Club (pg. 172) (noting California's interest in protecting members of the general public from injuries to person and damage to property resulting from the excessive use of intoxicating liquor.)
? (2) Regulating actions by citizens of a state
? See Lilienthal v. Kaufman (pg. 160) (recognizing Oregon's interest in the public authority which may be charged with the expense of supporting the spendthrift and his family if he is permitted to go unrestrained upon his wasteful way)
? (3) Protecting the citizens of a state
? See Tooker v. Lopez (pg. 138) (recognizing that New York had an interest in affording recovery to the estate/family for the death of one of its domiciliaries while Michigan had no interest in applying its law)
? See Schultz v. Boy Scouts of America (pg. 143) (recognizing New Jersey's interest in protecting Boy Scouts of America, of whom were headquartered in New Jersey at the time of the wrongful act while finding that New York had no significant interest in applying its law)
? See Erwin v. Thomas (pg. 154) (recognizing that Washington's interest in protecting domestic defendants by rule that bars actions by married woman for loss of consortium and recognizing Oregon's interest in protecting the rights of married women in allowing Oregon married women to maintain actions for loss of consortium)
? See Lilienthal v. Kaufman (pg. 160) (recognizing Oregon's interest in protecting the spendthrift's family)
? See Bernkrant v. Fowler (pg. 168) (sustaining Nevada's interest in protecting its residents and their reasonable expectations growing out of a transaction substantially related to that state and giving effect to the common policy of both California and Nevada to enforce lawful contracts)
? See Bernhard v. Harrah's Club (pg. 172) (noting that Nevada has an interest in "protect[ing] its resident tavern keepers . . . from being subjected to a civil liability which Nevada has not imposed either by legislative enactment or

decision law" and that California has an interest "in protecting members of the general public from injuries to person and damage to property resulting from the excessive use of intoxicating liquor")
? See Phillips v. General Motors Corp. (pg. 205) (recognizing that Montana had an interest in applying its product liability law in order to protect Montana residents from injuries caused by defectively designed products)
? (4) Regulating activities outside of a state that have an effect within the state
? See Tooker v. Lopez (pg. 138) (recognizing that New York had an interest in affording recovery to the estate/family for the death of one of its domiciliaries while Michigan had no interest in applying its law)
??? ?See Lilienthal v. Kaufman (pg. 160) (recognizing California's interest in having citizen creditors paid and California's interest in having contracts enforced where the contracts are made in California) ii. Identifying False Conflicts a) "Where . . . the interests and policies of one state are involved and those of the other are not (or, if they are involved in only a minor), reason would seem to dictate that the law of the state whose policies and interests are vitally involved should apply . . . ." Erwin v. Thomas (pg. 154) b) In Tooker v. Lopez, the court noted that New York had a "'grave concern' in affording recovery for the injuries suffered by Catherine Tooker, a New York domiciliary, and the loss suffered by her family as a result of her wrongful death." (pg. 138)
? In contrast, the court determined that with respect to the Michigan guest statute, "Michigan ha[d] no interest in whether a New York plaintiff is denied recovery against a New York defendant where the car is insured [in New York]." (pg. 139)
? Thus, since New York had an interest in applying its law, and Michigan had no interest in applying its law, New York law applied. c) In Schultz v. Boy Scouts of America (pg. 143), the court determined that New Jersey had an interest in applying its charitable immunity law to protect the Boy Scouts of America, of whom were domiciled in the state at the time of the wrong.
? In contrast, New York, the forum state, rejected that it had any significant interest in applying its law. The court noted, and rejected, three potential interests that the state of New York might have had in applying its law:
? (1) Protection of medical creditors
? (2) Preventing injured tort victims from becoming public wards in the locus State, and
? (3) Deterrence
? The court rejected each of these and determined that, since New Jersey had a significant interest in protecting its citizens

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