Agenda for
th
10
Class
• Papers & Presentations
• Review of Recognition of Judgments
• Next Class
– Erie. Choice of Law in federal court
– Assignment will be posted and emailed tomorrow (Tuesday)
• Constitutional Limitations on Choice of Law
– Due Process and Full Faith & Credit
• Allstate Insurance v Hague
• Phillips Petroleum v Shutts
– Privileges and Immunities
• Austin v New Hampshire
• Ely article
Papers & Presentations
• First Draft
– Due this Friday, 5PM
– Email to me. dklerman@law.usc.edu
– Roughly 10 pages per credit
• So 20 pages if taking class for 2 credits; 30 pages if taking class for 3 credits
• Presentations
– 10-15 minutes + Q & A from class
– PowerPoint, Keynote or similar
– April 15. Sara Persons and (maybe) Celina Kirchner
– April 22. Hilary Habib and Seth Yandrofski
– April 29. Ryan Alshak, Ryan Moore, and (maybe) Celina Kirchner
• Appointments with me to discuss revisions and presentations
• Final draft
– Due May 16, 5PM
– 2 copies
• 1 paper copy to Dean’s Office (Rm 300)
• Email copy to me. dklerman@law.usc.edu
Recognition of Judgments I
• If court in one state renders judgment, that judgment must be respected in all
other states
– Respected means given same effect as in state which rendered judgment
• Enforcement (although subject to local procedures)
• Res judicata and collateral estoppel (to same degree as in state which
rendered judgment)
• No public policy exception (Fauntleroy v Lum)
• No exception for mistaken application of law (Fauntleroy v Lum)
– Even if mistake was in applying law of place where recognition sought
• Exception for law of personal jurisdiction
– But very narrow
• Only if default judgment
• If party contested jurisdiction in court which rendered judgment, then
cannot contest (“collaterally attack”) judgment in other states
– Decision on personal jurisdiction is entitled to collateral estoppel
Recognition of Judgments II
• Exception for judgments “purporting to accomplish an official act within the
exclusive province of a [sister] state”
– E.g. deciding whether witness can be called to testify (Baker v GM)
– Contested, b/c other ways of reaching result in Baker v GM
• Scalia. Procedural. Need separate suit to enforce injunction, not just raising
issue in related litigation
• Kennedy. Judgment not binding, b/c litigation in Missouri not between
same parties
• Kennedy (edited out of opinion). Judgment not binding, b/c injunctions
always subject to modification
Recognition of Judgments III
• Exception for judgments relating to land
– Only state where land located can issue judgment directly affecting land title
– Fall v Eastin (US SCt 1909)
• Divorce decree in Washington awards land in Nebraska to wife
• Husband executes deed transferring land to third party
• Wife sues to quiet title (and void transfer to 3rd party)
• Court says that Nebraska court need not give effect to Washington
judgment
• BUT Washington court could hold husband in contempt for failing to
transfer land to wife
– Washington divorce decree acts in personam, but not in rem
• Heavily criticized, but still good law
– Altman. Courts will often recognize foreign divorce judgments relating to land
as a matter of comity, even though not constitutionally required to do so
• Similar issues relating to wills, intestacy
– In general, suit needs to be in court where land located and that state’s law will
apply
Recognition of Judgment IV
• Full Faith & Credit Clause. US Const. Art. IV § 1
– [1] Full Faith and Credit shall be given in each State to the Public Acts, Records,
and Judicial Proceedings of every other state. [2] And the Congress may by
general Laws prescribe the Manner in which such Acts, Records and
Proceedings shall be proved, and the effects thereof
• Pursuant to second clause, Congress has legislated effect of judgments in:
– 28 USC 1738
– Parental Kidnapping Prevention Act. 28 USC 1738A
– Full Faith and Credit for Child Support Orders Act. 28 USC 1738B
– DOMA. 28 USC 1738C
Recognition of Judgment V
• Does first clause of Full Faith & Credit Clause constrain Congressional power to
legislate?
– Kramer. Yes. Congress can enforce FFC, but cannot relieve states of obligations
under first clause. Like 14th Amendment
– Rensberger. No
• First clause relates to “evidentiary effect,” not “substantive effect”
(Whitten)
• FFC should not give more weight to judgments than to legislation
– Enforcing judgments relating to same-sex marriage undermines state
legislation
• Full Faith and Credit for Child Support Orders Act shows accepted that
Congress can lessen effect of judgments
• DOMA
– Section 2 relieves states of obligations to respect judgments relating to a “right
or claim arising from [relationship between persons of same sax that is treated
as marriage]”:
• Constitutionality depends on Kramer/Rensberger debate
– Bishop v Oklahoma. DOMA does not apply to civil union or foreign marriages
– Miller-Jenkins. DOMA does not affect Parental Kidnapping Prevention Act
• Same reasoning suggests DOMA does not affect Full Faith and Credit for
Child Support Orders Act
3 Relevant Constitutional Provisions I
• Full Faith & Credit Clause. US Const. Art. IV § 1
– “Full Faith and Credit shall be given in each State to the Public Acts,
Records, and Judicial Proceedings of every other state. And the
Congress may by general Laws prescribe the Manner in which such
Acts, Records and Proceedings shall be proved, and the effects
thereof.”
– Primarily about enforcement of judgments
– Requires some respect to other state’s laws
• Together with Due Process Clause, interpreted to mean that
forum cannot apply own law unless forum has “some contact
with the controversy”
• Due Process Clause. US Const., Amendment XIV, Section 1
– “nor shall any State deprive any person of life, liberty, or property
without due process of law.”
– Primarily about procedural fairness
– Requires purposeful availment for personal jurisdiction
– Together with Full Faith & Credit Clause, interpreted to require
“some contact with the controversy”
3 Relevant Constitutional Provisions II
• Privileges & Immunities Clause. US Const. Art. IV § 2
– “The Citizens of Each State shall be entitled to all Privileges
and Immunities of Citizens in the several states.”
– Primarily about forbidding states to discriminate against
citizens of other states
– Relied upon by Ely to question constitutionality of modern
choice of law methods
– Note that different from similar clause in 14th Amendment
• “No State shall make or enforce any law which shall
abridge the privileges and immunities of citizens of the
United States.”
• Since “privileges and immunities” of U.S. citizens not well
defined, this clause has had very little effect
Allstate v Hague (1981) I
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Hague, motorcycle passenger, killed in motorcycle-car accident in Wisconsin
Hague, motorcycle driver, and car driver were all residents of Wisconsin
Hague commuted to work in Minnesota.
Hague’s widow moved to Minnesota after accident.
Accident was near Minnesota border
Wisconsin law forbade stacking; Minnesota law allowed stacking
Widow sued in Minnesota court, and Minnesota courts applied Minnesota law, because
allowing stacking was “better rule”
Insurance company appealed case to USSC and challenged constitutionality of
application of Minnesota law
Brennan +3
– Choice of law is sufficient under DP and FFC if “some contact with the controversy”
• To ensure that choice of law “neither arbitrary nor fundamentally unfair”
– Hague’s work in MN is contact, b/c state has interest in its workers
– Hague’s commuting to work in MN is contact, b/c covered by insurance during
commute
– MN has interest in wife, since she now lives in MN
• Post-occurrence change of residence is not, of itself, sufficient, but valid as part
of “aggregation of contacts”
– Insurance company does business in MN, so knows laws and subject to MN
regulation
Allstate v Hague (1981), Stevens opinion
• FFC & DP are different
– FFC sometimes requires application of another state’s laws
• if failure to do so would “threaten federal interest in national unity by …
infringing upon legitimate interest of another State”
– DP sometimes forbids application of forum law
• if insufficient contacts means forum law would be unfair
• Application of MN law is unsound as a matter of choice of law, but not
unconstitutional
• FFC not violated, b/c “no threat to national unity or Wisconsin sovereignty”
• DP.
– Not clear whether application of forum law “ever .. wholly irrational”
– Choice of law only unfair if party “could not reasonably have anticipated that
their actions would later be judged by this rule”
• Stacking allowed by most states
• Coverage applied throughout US
• Allstate did business in MN
• No explicit contractual provision forbidding stacking or choice of law clause
– Post-accident move to MN and work in MN are irrelevant
• But commute relevant
Allstate v Hague (1981), Powell opinion
• Dissent, joined by 2.
– Only 8 Justices took part in case, b/c one recused self
• Contacts must be evaluated in light of policies
– Fairness to litigants
– Forum must have interest in order to displace other state’s interest
• Contacts relied upon by majority are constitutionally irrelevant
– Post-accident resident
• Post-accident conduct cannot affect expectations
• Concern about moving to affect choice of law
– Fact that Allstate does business in MN
• Allstate does business in all states
• Would application of Alaska law be justified?
– Fact that insured worked in MN
• Accident had nothing to do with work
• Too tenuous to argue that stacking increases deterrence and so protects
MN workers
Constitutional Limitation Hypos I
• Would the following be constitutional?
– A Nevada resident purchased an accident insurance policy in Nevada and got
into an accident in Nevada. The Nevada resident assigned his interest in the
insurance policy to a California resident. The policy required all claims to be
brought within a year. The one-year claim period is valid under the laws of
Nevada, but under California law the minimum claim period is two years. The
California resident filed suit in California court 18 months after the accident.
The California court decided that California law applied and that the suit was
not barred by the one-year claim period.
– California resident was harmed in California by a product manufactured by a
Nevada company. The Nevada manufacturer was insured by a Nevada
insurance company that does business in every US state. The insurance
contract stated that injured persons may not sue the insurance company
directly, but must sue the manufacturer. Such clauses are valid in Nevada, but
invalid in California. Because of personal jurisdiction issues, the plaintiff could
sue the insurance company in California, but could only sue the manufacturer
in Nevada. The California resident sued the insurer in California court, and the
court decided the California law applied, so a direct suit against the insurer was
proper.
Constitutional Limitation Hypos II; Hague
• Would the following be constitutional? An Illinois resident purchased personal
property insurance from a British company licensed to do business throughout the
U.S. Soon thereafter, the Illinois resident moved to California, where an item
covered by the policy was stolen. The policy required all claims to be brought
within a year. The one-year claim period is valid under the laws of Nevada, but
under California law the minimum claim period is two years. The suit was filed in
California court 18 months after the accident. The California court decided that
California law applied and that the suit was not barred by the one-year claim
period.
• Which opinion in Allstate v Hague did you find most persuasive?
• Would the result in Allstate v Hague be different if the plaintiff didn’t work in
Minnesota? What if he went there frequently to shop, hike, or visit a friend?
• Assume that if the accident had occurred in Minnesota that Minnesota law would
apply. How can an insurance company fairly price its products? Suppose for
example, that some Wisconsin residents frequently drive in Minnesota, while
others nearly always drive in Wisconsin. Is it fair that they pay the same price?
Would it be possible for the insurance company to charge them different prices? Is
this constitutionally relevant?
Shutts (1985)
• Phillips produced or purchased natural gas from land located in 11 states
• Class action of thousands of royalty owners in Kansas court seeking interest on
royalty payments
• Royalty owners won
– Ct. applied Kansas law on pre-judgment interest, including rate of interest
– Ct. said Phillips had sufficient contacts with Kansas because owns property and
does business in state
– Ct. said plaintiffs consented by not opting out
• Phillips appealed to USSC
• USSC for Phillips
– Consent of plaintiffs is irrelevant
– Class action is not reason to apply one law
• Must apply choice of law analysis party-by-party, claim-by-claim
– Application of Kansas law violates expectations
• Parties to TX lease have no reason to anticipate that KS law will apply
• Stevens
– No problem, b/c no evidence that KS law different from that of other states
Shutts Qs
• When the Court in Shutts refers to the parties’ legitimate expectations, what does
it mean? The Court in Allstate held that an insurance company doing business in
Minnesota should not be surprised by the application of Minnesota law to a claim
arising out of an event in Wisconsin. Why shouldn’t a natural gas producer who
does business in 50 states expect that the law of Kansas might apply to its leases in
Texas or Oklahoma?
• How are courts supposed to conduct nationwide class action lawsuits after Shutts?
Whose law applies?
• The Due Process standard articulated in Allstate v Hague and Shutts is much more
lenient than the purposeful availment standard the Court applies in most personal
jurisdiction disputes. Does this make sense? Given that a plaintiff must establish
personal jurisdiction over the defendant in order for a suit to proceed at all, does it
matter? Given the purposeful availment standard, how could State X’s law be
applied if it could not be shown that the defendant had purposefully availed itself
of the benefit of State X’s law?
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
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?