D. The Obligation to Provide a Forum

CONSTITUTIONAL LIMITS ON CHOICE OF LAW

A. Due Process: K rights are property rights that can’t be taken away w/o DP. Ct can’t use statute to override legal K provision.

Home Ins. Co. v. Dick (US SC 1930) *ALWAYS cite this for const. analysis of choice of law. P(TX); D(MEX, NY Ins co’s). Ins K said suit must be filed in 1 yr. TX law: can’t enter K where time to sue is < 2 yrs. US SC: Statute violates DP b/c it takes away prop right in K. K provision is subst and must be followed

B. FFC & Choice of Law:(Art.IV §1): Apply FFC to public Acts, records, judicial proceedings of every other state. Cong may proscribe manner in which such acts will be proved and the effect thereof.

●OLD TEST: Cts must give FFC to state law w/ most contacts UNLESS it violates forum’s pub pol. Bradford Elec.Light Co.v.Clapper (1932): P killed in NH while working for VT er D. NHTC: Allowed tort claim instead of requiring VT WC action. USSC: FFC required NH to recognize VT WC defense

●NEW FFC TEST (AK Packers Assoc. v. Indus. Acc. Comm’n (1935)): 1) Default: forum applies its own laws; 2)If party objects to forum applying its laws, party has burden of showing foreign state’s interests are superior forum’s. *High burden: So long as forum has interest, foreign interest won’t override w/o very strong reason not to apply forum law.

●EXCEPTION: Law of State of incorp. for ins co must be given FFC in interpreting ins policy.

C. Convergence of a SINGULAR analysis for FFC and DP conflicts Qs

●SUFF. CONTACTS TEST: State must have enough contacts so that choice of its law is not arbitrary or fundmntly unfair. MOST sig. contacts NOT required Allstate Ins Co v. Hague(1981): *DP&FFC analysis woven together here.

●Parties’ Expectations: important for determining if there are suff. contacts

●State whose law is chosen must have SOME significant contact w/ case

D. The Obligation to Provide a Forum

●Can’t bar c-house doors: Under FFC, State may not refuse to recognize other states’ transitory causes of action (WD, tort, etc.). Hughes v. Fetter (1951): State can’t enact statute refusing to hear other states’ causes of action.

●Can’t build a fence around COA: Under FFC, State may not create a transitory subst. right and then limit place in which suit may be brought to enforce right to that state. TN Coal, Iron & RR Co. v. George (1914)

●BUT: Some cases, right & remedy may be so intertwined that you can’t apply one and not other such that both proc. & subst. law must be applied.

E. Unconst. Discrim. in Choice of Law: P&I might work.BUT: not yet used

Sup. Ct of N.H. v. Piper (1985): State can’t limit bar admission to only state residents b/c of P&I clause & b/c profession is fund. right.

●Piper might make valid choice of law grounds: if cause of action is deemed a priv. ●Analysis of P&I Claim: 1)Is P or I involved fundamental? 2)If so, state may still refuse to give that P&I if A)Substantial reason for difference in treatment; B)Means bears substantial r-ship to state’s objective.

OTHER APPLICATIONS: CT JX: NOW: Cts want to exercise Jx as far as they can to extent of Const. -2 factors: 1)Must have local law or stat basis for Ct to exercise jx; 2)Can’t exercise jx if there is a const. prohibition on it.

In personam: jx based on person in state; In rem: jx based on prop in state to est. rights/interest in property to ALL of world; Quasi IR: jx to est rights/ interest in prop as to particular individuals (prop stands in place of person for jx). Factors of QIR Jx: -No deficiency jdgmts available when obligation exceeded value of property; -No res judicata or collateral estoppel. Type 1 QIR jx: settle dispute over rights & interests in the property itself; Type 2 QIR jx: Dispute is unrelated to the property, which was simply attached for purposes of jx and to satisfy a jdgmt against a D

●Pennoyer v. Neff (1877): 1)States have exclusive Jx over persons/prop w/in state’s territory; 2)State can’t exercise direct jx over persons/property outside territory. N served by publication, M got DJ, executed & got prop sold. USSC: Sale violated DP b/c ct had no PJ over Neff b/c suit was on debt, not prop

-Publication OK service for in rem jx, but NOT for PJ

●Int’l Shoe v. WA: MIN CONTACTS TEST: “substantial & continuous contacts” w/ state trying to exercise PJ. Ct can get PJ over individual not present in state if person has sufficient “MC” in state such that it doesn’t violate “traditional notions of fair play and substantial justice.”

-Corp. doing business in a state is enough MC

-Must have MC & Notice so person has fair opportunity to appear & defend

-POLICY: Unfair to subject person/corp to ct’s jx UNLESS there is some act by which D availed itself of the benefits in that state.

●McGee v Int’l Life Ins Co (1957): PJ over co that insured one person in state

●Choice of Law clauses: Gen. enforced. Choice of Forum clauses: Enforced if there is no unconscionability b/c of differing bargaining power b/t parties

●Hanson v. Denckla (1958): No PJ b/c D didn’t PURPOSELY AVAIL himself of privilege of conducting activities in forum, invoking benefits & protections of forum. -Unilateral activity of one party NOT suff. to establish MC. Woman moved to FL w/ trust in DE didn’t subject trustee to PJ in FL.

●Long Arm Statutes: extend power of state to hear case to extent of const.

AFTER HANSON v. DENCKLA: States began passing “long arm” statutes,

●World-Wide VW v. Woodson (1980): No PJ b/c not FORESEEABLE that car purch in NY would be used in OK. -STREAM OF COMMERCE: If corp. delivers its products into S of C w/ expectation that products will be purchased by consumers in forum, this may be enough to establish MC in forum.

●Asahi Metal Industry Co. v. Superior Ct (1987): Co must do more than just place products in St. of Com. to be subject to liability in forum. Ex: Design product for market in forum; Advertise in forum; Establish channels for regular advice to customers in forum; Market product through distributor/sales agent in forum. Mere awareness that product may/not reach forum is NOT enough.

-Balancing factors: Burden on D; Forum’s Interests; P’s interest in obtaining relief; Forum’s Interest in settling action; Interstate judicial system’s interest in obtaining most efficient resolution of controversies; Shared interests of states in furthering fundamental social policies

●Burger King v. Rudzewicz (1985): D has FAIR WARNING that he may face suit in forum if D 1)Purposely directs his activities at forum’s residents, AND 2)Litigation results from alleged injuries that “arise out of or relate to those activities.” *One contact w/ forum may be enough

●Carnival Cruise Lines v. Schute (1991): FORUM SELECTION clause in K is usually upheld, unless there is vastly diverse bargaining power b/t parties that deprives party of fair play & substantial justice.

●GEN. JX: continuous and systematic contacts w/ jx such that no particular contact gives jx the ability to exert PJ over D; SPECIFIC JX: contact w/ jx relates to cause of action that gave rise to parties being in Ct;

●DOMICILE: enough for GJ over person that can’t be personally served there. Miliken v. Meyer (1940)

●Shaffer v. Heitner (1977): Int’l Shoe fairness factors apply to in rem, jx, too. Ownership of 1 share is NOT enough to subject person to PJ in state of incorp.

Incorp. state COULD make law that D was subject to PJ for owning 1 share

-No in rem jx to get PJ over D who only has ins in a state

-In rem jx can be used to enforce money jdgmt in state where D has property

-P can attach property pre-jdgmt if statute authorizes it under in rem jx.

●TRANSIENT JX: person personally served b/c you caught him in state. This is still OK after Int’l Shoe. Burnham v. Superior Ct of CA (1990).

Grace v. MacArthur (EDAR1959): Trans. Jx over D served in plane over AR.

●INT’L LAW: “COMPARATIVE JX”: EU has compact on judicial jx that is more systematic than US: states’ basis for when jx can/not be exercised; gives discretionary bases. -No “doing business” basis for PJ. -Tort: where tort occurred; -Libel: Must sue in place of publication if you want all damages-If you sue where sold/distributed, you are limited to damages you can prove that occurred in that place; -Corp.: can sue where any branch is located for actions arising out of that branch’s actions. Otherwise, must sue in corp.’s HQ’s; -Alimony: where person receiving alimony resides; -Ins cos: sue in corp. domicile or in state where insured owned policy.

RECOGNITION OF JDGMTS:2 types of attacks on jdgmt: Direct (ex: appeal); Collateral: (Ex: attack on binding effect of earlier litigation)

●Claim Preclusion/Res judicata: Claim can’t be brought again once final jdgmt is rendered on claim; Requires same parties or parties in privity.

●Issue Preclusion/Collateral estoppel: Issue can’t be brought again once final jdgmt is rendered, even if it isn’t same cause of action. Essential findings of earlier litigation are biding in subsequent litigation on another cause of action b/t same parties if party had opportunity to fully & fairly litigate claim in prior action. Privity NOT const. required, but state can require it.

FFC: Requires states give exact same degree of F&C that rendering state gives jdgmt. Modifiable in rendering state = modifiable in forum. Non-modifiable in rendering state = non-modifiable in forum. *ONLY applies to FINAL jdgmts

●NO PUB POL EXCEPTION to FFC: R(2d) recognizes exception; US SC has never allowed it. Fauntleroy v. Lum (1908): MS law against futures gambling & enforcing Ks related to it. P got arbitration awd in MS, sued to enforce, and found out K was illegal, so P voluntarily dismissed (no final jdgmt). P sued in MO and got MO jdgmt based on arb. awd. MS refused to enforce jdgmt. USSC: MS must recognize b/c MO jdgmt is final jdgmt on merits

●NO attack b/c rendering ct applied WRONG LAW: Party should have appealed, not collaterally attacked jdgmt.

●Forum can give MORE F&C to foreign jdgmt than foreign ct would give.

ERIS DOCTRINE: Fed cts are bound to follow state CL. Erie R.R. Co. v. Tompkins (1938). Pre-Erie: fed ct didn’t have to follow state CL, which affected outcome of some cases if filed in fed ct or state ct.

Fed Judiciary Act: State law will be applied in civil cases in fed cts, except where fed law has been made. Cts pre-Erie excluded state CL from this.

●CONCURRENT JX: Cong has allowed both fed & state cts to hear FQ cases, but, if filed in state ct., party can remove to fed ct. Cong can always preempt state jx in diversity cases, if it wants (ex: admiralty is exclusive Fed jx)

●Procedural issue: fed law applies; Substantive issue: state law applies.

P: concerns manner & means by which right to recover is enforced (ex: remedy); S: significantly affects the result of litigation.

●STATE LAW determines 1)S of L: Guaranty Trust Co. of NY v. York (1945): Fed ct must apply state S of L b/c it is outcome-determinative b/c it would completely bar recovery; thus, it is considered substantive, so fed ct can’t use fed CL doctrine of laches to defeat S of L. 2)When S of L is tolled. Ragan v Merchnts Transfer & W’house Co. (1949); Walker v. Armco Steel Co (1980): FRCP: when comp filed; some states: when D served; 3)If corp. can bring suit b/c it hasn’t registered to do business in state. Woods v. Interstate Realty Co. (1949); 4)If s-holder must post bond as security for expenses for derivative suit Cohen v. Beneficial Indust. Loan Corp. (1949); 5)Std for reexamining jury verdicts for excessiveness. State std is outcome-determinative & substantive (damages cap) b/c it allows reexamination at a lower std. No 7^th Amend problem b/c Gasperini v. Center for Humanities (1996): Huge verdict for lost pics must be examined under state std; 6) BOP; 7) Conflicts rules Klaxon v. Stentor Elec. Mfv. Co. (1941) 8) Contrib Neg; 9) Whether dismissal is claim preclusive Semtek Int’l v. Lockheed Martin Corp (2001): even though dismissal was “on the merits,” this doesn’t necessarily make it claim preclusive

●FED LAW determines 1)whether issue is tried to jury. Byrd v Blue Ridge Rural Elec Co-op Inc (1958): JURY decides whether P was a stat employee for WC laws b/c 7^th Amend requires jury to decide all factual issues, even if judge decides under state law; 2)Service of process rules Hanna v. Plumer (1965): fed rule allowing summons to be left at house w/ person of suitable age trumps state law requiring personal service b/c rule isn’t outcome-determinative

●TEST for when to apply fed law: 1)Subst v. Proc; 2)Affirmative countervailing considerations in fed law apply, even though state law would be outcome-determinative. (like 7^th Amend. This is a balancing test).

●ERIE GOALS: 1)Discourage of forum shopping; 2)Avoid of inequitable administration of the laws.

●Hanna TEST for clash b/t FRCP & state law: 1)If clash, & rule was valid exercise of Cong’s power, then apply FRCP; 2)If no direct clash apply state law

●FRCP wins: 1)Service of summons; 2)Penalties only allowed for frivolous appeal, not unsuccessful appeal (state law) Burlington No R. v. Woods (1987);

-FRCP loses: tolling of S of L Ragan; Walker; 3) Fed statute (28 USC 1404) for transfer to another fed ct trumps state law’s policy against Forum Selection clauses. Stewart Org, Inc v. Ricoh Corp (1988)

FEDERAL CL:Erie said no GEN fed CL—NOT that there was NO fed CL.

●Where issue is primarily & substantively fed, apply fed CL, not state law

●Fed cts can make fed CL when 1)Cong hasn’t acted, AND 2)There is const. authority where Cong could act. Clearfield Trust Co. v. US (1943): US sued bank for guaranty over fraudulent endorsement of US Treas Check guaranteed by bank. This is a fed issue. Fed CL, not state law, should apply b/c issue is primarily fed & b/c of potential for vastly different rulings in different states.

●BUT: If fed issue isn’t central b/c issue is essentially private, apply state law Bk of Am v. Parnell (1956): diversity case involving conversion of bearer bonds. State BOP law should have been applied.

●Central Fed Issue: Foreign rel’s. Banco Nac’l de Cuba v. Sabbatino (1964) (Cuba nationalized US business prop) Fed CL “act of state” doctrine should have been applied instead of state K law b/c Cong could have acted here.

FED LAW IN STATE CTS: Under Supremacy Clause, state can’t decline to hear fed suit where Cong has created concurrent jx UNLESS state doesn’t have a ct of gen jx to hear case (every state has this) Testa v Katt (1947): RISC refused to enforce fed penal law, treating fed govt. like a foreign country.

●Fed CL applies in FELA cases to determine validity of release (FELA: fed tort action to all fed RR workers hurt on job; fellow servant rule is N/A) Dice v. Akron, Canton & Youngstown R.R. (1952).

●Other Ad Hoc FELA decisions: Can’t remove FELA case to fed Ct: P gets to pick where it is filed; State ct can dismiss FELA action under state law where non-resident brought action; BOP: fed law

INT’L CONFLICTS:basically governed by treaty, if anything. Int’l law: FQ

●Legislative jx: Extent of Nation’s power to pass laws.

Territoriality rule: Every state & nation has power to legislate for people, things, occurrences w/in its own borders. Its power stopped there.

●5 Trad’l Bases of Jx over Extra-Territorial Crimes under Int’l Law: (Harvard Treatise) 1)Territorial: jx based on place where offense is committed (trad’l rule universally recognized & still relied upon; 2)Nat’l: jx based on nat’lty of offender; 3)Protective: jx based on whether the nat’l interest is injured; 4)Universal: jx on any forum that obtained physical custody of perpetrator of certain offenses considered particularly heinous and harmful to humanity; 5)Passive Personal: jx based on nationality of the victim (trad’ly rejected by Cong b/c it might subject US citizens to criminal charges in foreign nations.

US v. Yunis (D.D.C. 1988): Ct held that it could hear case RE: D hijacking airplane w/ US citizens on it under Universal & Passive Personal bases

●R401: Rstmt of Int’l law: 3 kinds of jx: 1)Jx to prescribe: nation’s power to apply its subst law to particular persons or events; 2)Jx to adjudicate: nation’s power to subject persons or things to the process of its Cts or admin tribunals; 3)Jx to enforce: nation’s power to compel compliance or punish noncompliance w/ its laws. R402: Nation has jx to prescribe 1)Conduct that takes place w/in its territory; 2)Status of persons, interests, things, present w/in its territory; 3) Conduct outside its territory that has/is intended to have substantial effect w/in territory; 4)Activities, interests, relations of its nationals outside & inside territory; 5)Certain conduct outside territory by persons not its nationals that is directed against security of state or against limited class of other state interests.

R403: Balancing test for when another nation could also apply its law. Policy: foreign relations. Timberlane Lumber v Bk of Am (9^thC) balancing test used

●Effects Doctrine: idea that if action affects country, it has jx over it; NOT protective jx b/c it applies to nat’l & private interests; considered to be a part of territorial jx. US v. Alcoa (2^ndC); Hartford Fire Ins. Co. v. CA (USSC 1993) applied effects doctrine for ANTITRUST litigation. TEST: 1)Under int’l law, would it be permissible for US to legislatively exercise its jx in this case? 2)Did Cong actually exercise its extraterritorial power in the law?

●BUT: US cts likely have no power to strike Cong law that violates int’l law

●Cong’s laws will NOT apply int’ly unless there is clear Cong intent expressed for law to apply int’ly. EEOC v. Arabian Am Oil Co. (1991): No clear intent that Title VII prohibiting racial discrim is to apply int’ly. *This is true even if the other nation doesn’t have an interest b/c Cts & Cong generally are conservative on exercising even permissible extraterritorial jx b/c every time they do it, they risk foreign relations problems.

EXTRATERRITORIAL REACH OF THE CONST: 1)US citizens at home; 2)Aliens in territorial US (most provisions) Wong Wing v. US (1896); Yick Wo v. Hopkins (1886); 3)Aliens not present in US w/ prop located in US Asahi Metal Indus v. Sup Ct (1987); 4)ALL provisions of US Const. protect ALL US citizens wherever they are in the world Reed v. Calvert (1956) (plurality decision later accepted as the rule)

●4^th Amend: does NOT protect foreign persons & property outside US. US v. Verdugo-Uriquidez (1990): ev seized from Mex resident’s Mex property not suppressed. 4^th DOES apply to US govt for US citizen here & abroad; aliens on US territory. 4^th: “the people” only refers to people here

●5^th & 6^th: apply to all b/c they involves trial, which only done on US soil