Choice of Law in the American Courts

                      in 1995: A Year in Review

                                                                By

                                              Symeon C. Symeonides*

Published in 44 American Journal of Comparative Law 181 (1996).

Copyright by the author and the American Society of Comparative Law, Inc.

                                                         OUTLINE

I.    INTRODUCTION............................................................................................... 2

II.   METHODOLOGICAL HIGHLIGHTS

            1. Maryland Retains the Lex Loci Delicti Rule but Opens

               a Renvoi Hole in the Lex Loci Contractus Rule............................................ 2

            2. Michigan Confirms Partial Abandonment of the

               Lex Loci Contractus Rule........................................................................... 6

            3. Alaska adopts the Restatement Second For Contract Conflicts...................... 8

            4. Wyoming retains the lex loci delicti rule...................................................... 8

            5. Turning the Clock Back -- Canadian Style.................................................... 8

III.  UPDATING THE METHODOLOGICAL MAP

            Map 1. Tort Conflicts.................................................................................... 12

            Map 2. Contract Conflicts............................................................................. 13

            Table 1: Traditional States............................................................................. 14

            Table 2. Restatement Second and "Significant Contacts" States....................... 16

            Table 3. "Other States".................................................................................. 18

IV.  TORTS

            1. Vehicle Owner's Liability Statutes.............................................................. 19

            2. Neumeier Rules........................................................................................ 25

            3. Other Loss-Distribution Conflicts............................................................... 26

            4. Conduct-Regulation Conflicts..................................................................... 27

            5. Products Liability...................................................................................... 29

            6. Other Tort Conflicts.................................................................................. 32

V.   MARITIME TORTS......................................................................................... 32

VI.  CONTRACTS

            1. Contracts Containing Choice-of-Law Clauses............................................. 34

                        (a) Cases Invalidating Choice-of-Law Clauses.................................... 34

                        (b) Cases Upholding Choice-of-Law Clauses...................................... 35

            2. Contracts Without a Choice-of-law Clause................................................. 37

VII. ARBITRATION............................................................................................... 38

VIII. INSURANCE CONFLICTS

            1. Coverage for Environmental Pollution......................................................... 42

            2. Products Liability Insurance....................................................................... 43

IX.  STATUTES OF LIMITATION.......................................................................... 44

X.   MARITAL PROPERTY.................................................................................... 45

XI.  DOMESTIC RELATIONS................................................................................ 47

XII.  IN LIEU OF CONCLUSIONS: CONFLICTS ON OTHER SUBJECTS............ 50

                                                       I. INTRODUCTION

      This is the ninth annual Survey of American Choice-of-Law Cases, conducted at the request of the Conflicts Section of the Association of American Law Schools as a service to fellow Conflicts teachers. [FN1][1] The Survey covers cases decided between January 1, 1995 and December 31, 1995. [FN2][2] Because the pur­pose, scope, and method of this Survey have been ex­plained in previous years, [FN3][3] no further expla­nations are necessary.  The reader is reminded, however, that the Survey is intended to merely identify and to describe briefly, rather than to evaluate or to discuss in depth, the most important choice-of-law cases decided during the year. Although the selection of those cases might have been subconsciously influenced by this author's predilections, a deliberate effort has been made to keep the descrip­tion of the selected cases as neutral as possible and to quote relatively long excerpts from these cases so as to provide the reader with a representative flavor of the opinion. In keeping with the goal of neutrality, this author has tried, whenever possible, to refrain from comment­ing on those excerpts.

                                     II.  METHODOLOGICAL HIGHLIGHTS

      1. Maryland Retains the Lex Loci Delicti Rule but Opens a Renvoi Hole in the Lex Loci Contractus Rule.

      Maryland is one of the states that still adhere to the traditional theory for both tort and contract conflicts. In 1995, Maryland's highest court, the Court of Appeals, had the opportunity to reconsider its adherence to the old dogma in both areas.

      With regard to tort conflicts, the court passed up this opportu­nity in CHAMBCO v. Urban Masonry Co. [FN4][4] In that case, a roofing subcontractor had sued a mason­ry subcon­tractor for economic loss caused by the latter's alleged negligence in masonry work per­formed on a building located in the District of Columbia. Both parties assumed that the case was governed by Maryland law, and neither party gave notice of intent to rely on District of Columbia law, as was required by a Maryland statute. This as­sumption must have been based on the existence of some significant connec­tion between Mary­land, the parties, and the dispute, but the case makes no mention of such a connec­tion and does not mention the parties' respective domi­ciles. Proceeding on the above assump­tion, the two lower courts applied Maryland law, which did not provide a cause of action. The Court of Appeals of Maryland reversed. The court did not think that the choice-of-law issue deserved much discus­sion and did not see the need to examine Maryland's connections with the parties and the dispute. "Mary­land ad­heres to the principle of lex loci delictus," [FN5][5] said the court. "Conse­quent­ly, the law of the District of Columbia governs the tort issue in the present case." [FN6][6] The court also did not think that the parties' failure to plead and prove District of Columbia law presented any problem, because "where it is clear that one or more issues in the case are con­trolled by another jurisdiction's law, a court in its discretion . . . may take judicial notice of the other state's law. . . . In the present case, . . . we exercise our discre­tion to require that the law of the District of Columbia be ascertained and applied [upon remand]." [FN7][7]

      In American Motorists Ins. Co. v. ARTRA Group, Inc., [FN8][8] a contract conflict, the same court not only dis­cussed at length the choice-of-law issue but also appeared to be much more recep­tive to modern teachings. This relative recep­tiveness to modern teach­ings had already sur­faced in several recent decisions of that court. For example, in National Glass v. J.C. Penney, [FN9][9] the court followed § 187 of the Restate­ment Second in analyzing a contractual choice-of-law clause. [FN10][10] Similarly, in Bethle­hem Steel Co. v. G.C. Zarnas & Co., Inc., [FN11][11] the court had opened anoth­er hole in the lex loci contractus rule when, using an expansive notion of public policy, re­fused to apply Pennsylva­nia law to a contract made in that state, and applied instead the law of Maryland. In an interest­ing footnote the court spoke of the two states' contacts and interests, and invoked a renvoi rationale. The court concluded that "Pennsyl­vania ha[d] no strong interest in having the contract provision en­forced here . . . [because] had [this] suit . . . been brought in Pennsylva­nia, the Pennsylva­nia court would likely have decided the issue according to Maryland law [because of Maryland's 'significant contacts' with the case]." [FN12][12]

      In ARTRA, supra, the trial court had con­cluded that the above statement amounted to an adoption of renvoi, and applied Maryland law to an action arising from an insurance contract made in Illinois. In that action, plaintiff, an Illinois corporation, had sought a judicial declara­tion that certain insurance policies issued by it to defen­dant, also an Illinois corpora­tion, did not provide coverage for soil and groundwa­ter contami­na­tion caused by the operation of defendant's paint-manufac­tur­ing factory. The factory was located in Maryland, and the policies insuring it were issued in Illinois between 1976 and 1985. [FN13][13] Under Illi­nois law, but not under Maryland law, these policies would be interpret­ed as requiring plaintiff to provide cover­age. Both lower courts, as well as the Court of Appeals, assumed that under the Restate­ment Second which is followed in Illinois, an Illinois court would have applied Maryland law because, al­though both the insurer and the insured were Illinois corporations and the insurance policies had been issued and delivered in Illinois, Maryland, as the state in which the insured risk was located, would have a more signifi­cant rela­tionship to the dispute. [FN14][14] The trial court accept­ed this renvoi and applied Maryland law, but the inter­mediate court, holding that renvoi was not recog­nized in Maryland, applied Illinois law under the lex loci contrac­tus rule.

      The Court of Appeals reversed and remanded the case with in­structions to apply Maryland law. [FN15][15] In so doing, the court adopted a "limited renvoi exception" under which:

      Maryland courts should apply Maryland substan­tive law to contracts entered into in foreign states jurisdic­tions [sic] in spite of the doctrine of lex loci contractus when:

                  1) Maryland has the most signifi­cant relation­ship, or, at least, a substan­tial relation­ship with re­spect to the contract issue pre­sented; and

                  2) The state where the contract was entered into would not apply its own sub­stantive law, but instead would apply Mary­land substan­tive law to the issue before the court. [FN16][16]

      As stated in the above excerpt, the adopted renvoi exception is limited in the sense that it will be invoked solely in cases in which it results in remission back to the lex fori, and not in cases in which it results in transmis­sion to the law of a third state. [FN17][17] Whether this exception is also limited in the sense of being applicable in con­tract cases only, is not entirely clear. Although some language in the opinion suggests that other conflicts, such as tort conflicts, are not exempted from the possibility of ren­voi, [FN18][18] the above-quot­ed excerpt, as well as the thrust of the whole opinion, coupled with the same court's decision in CHAMBCO, supra (which had been decided only two weeks earlier) suggest that, at least for the time being, only contract cases will be subject to this exception. Finally, the above-quoted excerpt, as well as the rest of the opinion, suggest that the renvoi exception is to be em­ployed only when the other state involved in the conflict employs a flexible approach, such as the Restatement Second's most-significant-relationship formula, and not when that state follows a mechanical rule such as the lex loci solutionis rule. What re­mains unclear is whether the determina­tion that "Maryland has the most significant . . . or, at least, a substantial rela­tion­ship" [FN19][19] is to be made indepen­dently by Mary­land courts, or whether such a determination is to be made according to the standards and prece­dents of the other involved state or states.

      The court described its decision as a "hold­ing that Maryland's adherence to lex loci contrac­tus must yield to a test such as Restate­ment (Second) Conflict of Laws § 188 when the place of contracting would apply Maryland law pursuant to that test," [FN20][20] but insisted that this "is not a total jettisoning of lex loci contrac­tus." [FN21][21] The court recog­nized that "[w]ith modern technolo­gy and modern business practices, the place of contracting becomes less certain and more arbi­trary," [FN22][22] and that "'[t]he lex loci contractus rule . . . frequently elevates fortuitous and insignificant circumstances to crucial importance in establishing control­ling law.'"[FN23][23] The court also said that its recent decisions invoking the ordre public exception and those adopting §187 of the Re­state­ment Second which "in effect, allow[s] the parties in their contract to select the juris­dic­tion with the most signifi­cant relation­ship," [FN24][24] signified "some move­ment away from rigidly following the rule of lex loci con­tractus." [FN25][25] The court was appar­ent­ly satisfied that these two developments, coupled with the "limited renvoi exception" adopted therein, would suffice to preserve the lex loci contractus rule for the immediate future, but concluded as follows:

      Lex loci contractus is still the law in the majori­ty of jurisdic­tions, although there is a signifi­cant modern erosion of the rule. If that erosion contin­ues, however, this Court may, in the proper case, have to reevalu­ate what the best choice‑of‑law rules ought to be to achieve simplic­ity, predictabil­ity, and uniformity. [FN26][26]

      A dissenting Justice began his dissent with a poem describing the complexity of, and absence of common sense from, conflicts law during Beale's time. He contin­ued with another poem lamenting the uncertainty of the new approaches, and then ac­cused the majority of "fail[ing] to shed new 'light' on the murky maze of Conflict of Laws" [FN27][27] and of "unwisely qualif[ying] a solid, predict­able rule in favor of the often criticized and rejected doctrine of renvoi." [FN28][28]

      2. Michigan Confirms Partial Abandonment of the Lex Loci Contrac­tus Rule.

      In 1982, in Hardy v. Monsanto Enviro-Chem Systems, Inc., [FN29][29] the Supreme Court of Michigan had cited section 187 of the Re­state­ment Second in upholding the parties' contrac­tual choice of a law other than that of the locus contractus. [FN30][30] That citation to the Restate­ment Second was rather inconse­quential in terms of both outcome and methodology. This is why for some time lower Michigan courts continued to apply the lex loci contrac­tus rule. [FN31][31] More recently, how­ev­er, some lower courts have inter­preted Hardy as having aban­doned the lex loci contractus rule, and have either assumed that Hardy adopted the Restate­ment Second or have predicted that the Michigan Supreme Court will do so on the first available opportuni­ty. [FN32][32] This opportu­ni­ty came with Chrys­ler Corpo­ra­tion v. Skyline Industrial Services., Inc. [FN33][33]

      After reiterating that the lex loci contrac­tus has been the "predominant view" [FN34][34] in Michigan, and that "[t]he question whether to adopt the Restate­ment ap­proach to resolve conflict of laws issues was not square­ly presented in Hardy," [FN35][35] the Supreme Court in Skyline recog­nized that "[t]he trend in this Court has been to move away from traditional choice‑of‑law conceptions toward a more policy‑centered ap­proach," [FN36][36] and noted that, despite criticism by commentators, "[t]he trend nationally . . . has been to adopt the Restate­ment ap­proach." [FN37][37] Citing its earlier decisions in Sexton v. Ryder Truck Rent­al, [FN38][38] and Olmstead v. Ander­son, [FN39][39] in which the court had aban­doned the lex loci delicti rule in favor of the lex fori approach, the court noted that implicit in those decisions was:

      the view that resolving conflicts ques­tions re­quires moving beyond traditional rules. Much as lex loci delicti had proven too inflexible for resolu­tion of tort conflicts, the rigid 'law of the place of contracting' approach has be­come outmod­ed in resolving contract conflicts. Rather, §§ 187 and 188 of the Second Restate­ment, with their empha­sis on examining the relevant contacts and poli­cies of the interested states, provide a sound basis for moving beyond formalism to an approach more in line with modern‑day contract­ing reali­ties. [FN40][40]

      This complimentary reference to the Restatement Second, coupled with another statement by the court that "the concerns for certainty and public policy expressed in the Second Restatement reflect sound considerations that may guide a court in resolving specific conflicts between the contract laws of different states," [FN41][41] suggests that the court adopts the Restatement Second for contract con­flicts. Moreover, the court's reference to both § 187 and §188 of the Restate­ment Second implies that this adop­tion is meant to encompass not only contracts which, as the one in Skyline, contain a choice-of-law clause, but also contracts which do not contain such a clause. [FN42][42] How­ev­er, lest the reader get the impression that the court is "jettison­ing" the lex loci contractus rule, the court ex­plained that, having not been asked by the parties to "explicitly abandon" that rule, the court "decline[s] to do so here . . . [but] clari­f[ies] that that rule may prove to be unwork­able under certain factual situations, such as those presented here, which demand a more extensive review of the relative inter­ests of the parties and the interested states." [FN43][43] Thus, as is the case with so many other states, Michigan's abandonment of the tradition­al rule is only partial.

      In the long run, the court's decision to adopt the Restatement Second, albeit partially, may prove to be as important as the court's decision not to extend to contract conflicts the lex fori approach [FN44][44] which the court had previously adopted for tort conflicts. [FN45][45] This decision may suggest that the court is having second thoughts on the soundness of the lex fori approach for tort conflicts. However, it remains to be seen whether this court would be prepared to abandon that approach officially. [FN46][46]

      3. Alaska Adopts the Restatement Second for Contract Conflicts.

      In 1968, in a tort conflict involving the issue of interspousal immunity, the Supreme Court of Alaska reversed a lower court decision that had applied the lex loci delicti and applied instead the law of the parties' common domicile. [FN47][47] In so doing, the court relied on the New York case of Babcock v. Jackson and similar cases from other states, as well as on the Restate­ment Second. In 1985, in another tort conflict, the court relied exclusively on the Restatement Second. [FN48][48] Thus, by 1985, Alaska could be classified safely in the Restatement Second camp with regard to tort conflicts. However, the same could not be said with regard to contract conflicts because no such conflict had reached Alaska's highest court since 1968. This is why in the 1993 Survey, Alaska had been placed in the traditional camp with regard to contract conflicts. [FN49][49] This classifica­tion must be changed as a result of a 1995 decision, Palmer G. Lewis Co. Inc. v. ARCO Chemical Co., [FN50][50] a case involving a contract con­flict. In this case, the Supreme Court of Alaska spent no time wondering whether its 1985 adoption of the Restate­ment Second for tort conflicts was meant to encompass contract conflicts as well. In one short sentence, the court gave a quick affirmative an­swer. [FN51][51]

      4. Wyoming Retains the Lex Loci Delicti Rule.

      Wyoming is one of those states that has shown some receptivity to modern theory in con­tract con­flicts, [FN52][52] but has not shown a similar disposition with regard to tort conflicts. In 1989, the Supreme Court of Wyoming had the oppor­tunity to reconsider its adherence to the lex loci delicti but chose instead to reaffirm it, albeit in dicta. [FN53][53] The same opportunity re-appeared in 1995. In Jack v. Enterprise Rent-A-Car Co. of Los Angel­es, [FN54][54] a case arising out of a Wyoming accident that is discussed infra, [FN55][55] the court refused to apply a California statute holding the lessor of a vehicle liable for accidents caused by his lessees. Quot­ing from a 1954 decision of the same court which had quoted from Corpus Juris Secun­dum, the court said: "It is thoroughly established as a general rule that the lex loci delicti . . . is the law that governs and is to be applied with respect to the substan­tive phases of torts . . . . The accident occurred in Wyo­ming. . . . Wyo­ming law, therefore, was the appli­cable substan­tive law." [FN56][56]

      5. Turning the Clock Back -- Canadian Style.

      Although this Survey is dedicated to American conflicts cases, a digression to describe an important Canadian case should be forgiven. [FN57][57] According to a Canadian author, this case is "one of the most unexpected and extraordinary judgments . . . so unexpected that it is as if one encountered a practicing alchemist." [FN58][58] The case is Tolofson v. Jensen; Lucas (Litigation Guardian of) v. Gagnon, [FN59][59] in which the Supreme Court of Canada: (a) aban­doned its adherence to the double-actionability rule for tort conflicts and adopted the lex loci delicti rule; and (b) abandoned the traditional characteriza­tion of statutes of limitation as procedural and adopted the view that such statutes are substantive.

      As its full name suggests, this case involved two separate appeals, one from the Court of Appeal of British Columbia, and another from the Court of Appeal of Ontario. The first appeal, Tolofson v. Jensen, arose out of a two-car collision in Saskatchewan between a car driven by a resident of that province and a car driven by a resident of British Columbia. The collision resulted in injuries to a passenger of the British Columbia car, who was also a British Columbia resident, and who sued the drivers of both cars in British Columbia. Under British Columbia law, the plaintiff's actions against each driver could be maintained, but, under Saskatchewan law, the plaintiff's action against his host driver was barred by that province's guest statute, while his action against the other driver was barred by that province's statute of limitation.

      The second appeal, Lucas v. Gagnon, arose out of a two-car collision in Quebec between a car driven by a Quebec resident and a car driven by an Ontario resident. The collision resulted in injuries to two passengers of the Ontario car, who were also Ontario residents. On their behalf, their mother sued the Ontario host driver, who in turn filed a cross-claim against the Quebec driver for contribu­tion. Plaintiff's action would be maintained under the law of Ontario which had already repealed its infamous guest statute. However, the action would be barred by Quebec law which provided that victims of Quebec traffic accidents shall be compen­sat­ed from a specially constituted fund (La Regie) regard­less of fault, but, in return for such compensa­tion, they are deprived of "all rights, recourses and rights of action . . . by reason of bodily injury caused by an automobile . . . before any court of justice." [FN60][60]

      In both cases, the respective courts of appeal had held for the plaintiffs under the law of the forum, and, in both cases, the Su­preme Court of Canada reversed. In the process, the Court examined the history and sound­ness of the English double-actionabili­ty rule [FN61][61] as adopt­ed in Canada by the 1945 case of McLean v. Pettigrew, [FN62][62] a case that was very similar to Babcock v. Jackson. Accord­ing to the Canadi­an version of this rule, an action can be main­tained for an act committed in another jurisdiction if the act: (a) is actionable under the law of the forum; and (b) is "not justifiable" under the law of the place of the act. Borrowed from the English case Machado v. Fontes, [FN63][63] the quoted words in the second prong of the above rule had become an unexpected source of needed flexibility for the courts of the Canadian provinces. For example, in cases of the Babcock pattern, these courts were able to provide the plaintiff with a cause of action under the law of the fo­rum/common domi­cile because, al­though the act on which the action was based was not "ac­tion­able" under the law of the locus state, the act was neverthe­less pro­scribed and thus was "not justifiable" under that law. [FN64][64]

      The Su­preme Court of Canada found this flexibili­ty to be disturbing, and "refor­mulat­ed" both prongs of the double-actionabili­ty rule into a single-actionability rule that amounts to a wholesale return to the lex loci delicti rule. The Court dropped the first prong of the rule which required actionability under the law of the forum, because, in the Court's opinion, the role of that require­ment could be adequately performed by the ordre public reserva­tion, [FN65][65] and because that require­ment "relat­ed more to jurisdic­tion than to choice of law" [FN66][66] and could be dealt with through the doctrine of forum non conveniens. The court focused mostly on the second prong of the double-actionability rule and recast it into a Bealian lex loci delicti rule, giving reasons that would sound very much déjà vu to any American conflicts lawyer. In an opinion for the Court, Justice La Forest stated:

            From the general principle that a state has exclu­sive jurisdiction within its own territo­ries and that other states must under princi­ples of comity respect the exercise of its jurisdiction within its own territory, it seems axiom­atic to me that, at least as a general rule, the law to be applied in torts is the law of the place where the activity occurred, i.e., the lex loci delic­ti. . . .

            The rule has the advantage of certainty, ease of applica­tion and predict­ability. Moreover, it would seem to meet normal expecta­tions. Ordi­narily people expect their activities to be governed by the law of the place where they happen to be and expect that concomi­tant legal benefits and responsibilities will be defined according­ly. [FN67][67] The govern­ment of that place is the only one with power to deal with these activities. . . . [A] multi­plicity of compet­ing exercis­es of state power in respect of such activi­ties must be avoid­ed. . . .

            . . . I do not accept the [double-ac­tionabili­ty] rule . . . [be­cause it] seems to me to fly against the territoriality principle . . . . [and] invite[s] forum shop­ping by liti­gants in search of the most beneficial place to litigate an issue. [FN68][68]

      Justice La Forest thought that his adoption of the lex loci delicti rule was supported by the practice of the American states because, according to his count, their "vast majority still apply the law of the place of the inju­ry."! [FN69][69]

      Justice La Forest recog­nized that deter­min­ing the place of the tort might at times be difficult, [FN70][70] but noted that neither of the two cases before the court presented any such difficulty because in both of them the conduct and the injury had occurred in the same province. [FN71][71] The Justice also discussed the possibil­i­ty of exceptions to the lex loci delicti rule in other situations, especially those in which both involved parties are domiciled in the same non-accident state. [FN72][72] After differentiating between interna­tional and interprovin­cial conflicts, he eventually concluded that excep­tions were not necessary in either category. [FN73][73] He particularly disapproved of the ten­den­cy of certain courts, including Ameri­can courts, to apply the law of the common domi­cile, a tendency which he attributed to the courts' dislike for the substantive laws of the locus delicti. Although these laws may appear to outsiders to be unwise, or unfavorable to plaintiffs, said the Justice, "one does not ordinarily ignore the law of the land in favour of those who visit. . . . [S]uch differ­ences are a concomi­tant of the territoriality princi­ple. While, no doubt . . . the under­lying principles of private international law are order and fairness, order comes first." [FN74][74]

      Then Justice La Forest proceeded to postulate that: (a) the rule of lex loci delicti is supported by Canadian "consti­tu­tional imperatives;" [FN75][75] and that (b) other approach­es, such as what he referred to as the American approach of the "proper law of the tort," or a common-domicile rule might raise "intrac­table constitu­tional problems," [FN76][76] because they entail conflicting assertions of legislative jurisdiction by more than one province. [FN77][77]

      Justice La Forest then turned his attention to the conflict in Tolofson between Saskatchewan's statute of limitation, which barred the action, and the corresponding statute of British Columbia, the forum province, which did not. After comparing the Anglo-American view, which considers statutes of limitation as procedural, with the continental view, which considers these statutes as substantive, and taking note of the fact that England had statutorily adopted the latter view, he declared his preference for the continental view. He thought that the Anglo-American view was premised on "the rather mystical view that a common law cause of action gave the plaintiff a right that endured forever [and that] a statute of limitation merely removed the remedy in the courts of the jurisdiction that had enacted the statute," [FN78][78] as well as on "the view that foreign litigants should not be granted advantages that were not available to forum litigants." [FN79][79] He found both premises unaccept­able, because "Canadian courts have . . . begun to shatter the mystique of . . . the notion that statutes of limitation are directed at the remedy and not the right," [FN80][80] and because "[t]he notion that foreign liti­gants should be denied advan­tages not available to forum litigants does not sit well with the proposition . . . that the law that defines the character and conse­quences of the tort is the lex loci delicti." [FN81][81]

      Applying the above analysis to the two appeals before the court, Justice La Forest held that: In Tolofson, the plaintiff's action against his host driver was barred by Saskatchewan's guest statute, while his action against the driver of the other car was barred by that province's statute of limitation; and that in Lucas, the plaintiff's action against the host driver and the latter's cross-claim against the other driver were barred by Quebec's no-fault statute. [FN82][82]

                              III. UPDATING THE METHODOLOGICAL MAP

      In the surveys conducted in previous years, this author has used the term "method­ological map" in a metaphorical sense to describe the manner in which the states of the United States congregate in the various method­ological camps. This time, graphic technology has made it possible to provide actual maps, one for tort conflicts and another for contract conflict. The two maps reproduced below show the major methodological camps in tort and contract conflicts, respectively, as of December 31, 1995.

                                                     Map 1. Tort Conflicts

                                                 Map 2. Contract Conflicts

      In both maps, the tra­di­tion­al states are shown in black, the Re­state­ment Sec­ond, or "sig­nifi­cant rela­tion­ship," or "sig­nifi­cant con­tacts" states are shown in grey, and the states that fol­low "oth­er modern" ap­proaches are shown in white. Included in this lat­ter group are states that fol­low in­ter­est analysis, the lex-fori approach, the bet­ter-law ap­proach, and other "com­bined modern" ap­proach­es. The fact that a single color is used for states that follow such di­verse ap­proach­es ex­em­pli­fies the limita­tions of graphic technolo­gy available to this author. In fact, even the black color which is used to indi­cate the states belonging to the tradition­al camp may be some­what mis­leading in that it gives the im­pres­sion that the states belonging to that group are a sol­id, ho­mo­ge­neous group. They are not. For example, some of those states are firmly com­mit­ted to the traditional theory and have recently reaffirmed their com­mit­ment to it, [FN83][83] other states have made small steps in the direction of abandon­ing it, [FN84][84] while other states ap­pear ready to abandon it on the first avail­able op­portu­ni­ty. [FN85][85]

      Simi­lar­ly, the fact that the "grey group" lumps together the states following the Restate­ment Second and the "significant contacts" approach misleadingly blurs the significant differences between these two approach­es. Moreover, even if one were to focus solely on the states following the Restate­ment Second, the use of a single color for all those states gives the misleading impres­sion that those states share the same degree of commit­ment to the Restatement Second. They do not. Some states use the Restatement Second solely as an escape from a traditional choice-of-law rule that co-exists with the Restatement. Some states use the Restatement Second as a camouflage for a "grouping of con­tacts" approach, while other states use it as a vehicle for restraining interest analysis. Unfortu­nately, all of these gradations of com­mit­ment cannot be shown on these maps without using all the colors in the spectrum. It is still hoped, however, that these maps can be helpful to the reader and that the accompany­ing tables and textual material can prevent most erroneous impressions.

      In these ta­bles, the names of states are ac­com­pa­nied by citations only: (a) if the classification of the particular state is question­able; or (b) if such classifica­tion results from a decision rendered in the last three years. In addition, cases decided during 1995 are cited even when they do not affect that state's classifica­tion or are other­wise insignificant. For further citations, the reader is referred to the 1993 and 1994 sur­veys. [FN86][86]

      As the two maps indicate, as of December 31, 1995, only twelve states follow the lex loci delicti rule and only ten states follow the lex loci contractus rule. These states are listed below.

                                                                   Table 1: Traditional States

                  The maps also show that 23 jurisdictions follow the Restatement Second or the "significant contacts" approach in tort conflicts, and 29 jurisdictions do likewise in contract conflicts. [FN102][102] These jurisdictions are listed in Table 2, infra, which separates pure Restate­ment Second states from states following a "significant con­tacts" or "significant relationship" approach.

                Table 2. Restatement (Second) and "Signif­icant Contacts" States

      Finally, three jurisdictions follow a pure interest analysis, and two other jurisdictions follow the kindred lex-fori approach in tort conflicts. No jurisdic­tion follows these approaches in contract conflicts. Five states follow Professor Leflar's better-law approach in tort conflicts and two of the five do likewise in contract conflicts. Six jurisdictions follow an eclectic approach in tort conflicts and nine do so in contract conflicts. For lack of a better term, the latter approach is called a "combined modern" approach. These states are listed in Table 3, infra.

                                                    Table 3. "Other States"

                                                            IV.  T O R T S

      1. Vehicle Owner's Liability Statutes.

      Jack v. Enterprise Rent-A-Car Co. of Los Angeles, [FN143][142] men­tioned earlier, is one of six 1995 cases involving the issue of the extraterri­torial application of statutes holding the owner of an automo­bile liable for accidents caused by a driver to whom the owner had leased or otherwise en­trusted the automo­bile.[143] Conflicts teachers are familiar with these statutes from such famous cases as Levy v. Daniels U-Drive Auto Renting Co., [FN144][144] Farber v. Smolack, [FN145][145] and Sexton v. Ryder Truck Rent­al. [FN146][146] All three cases had applied the owner's liability statute of the forum state against an owner who had leased the automobile in that state to a driver who had caused an accident in another state, the law of which would not hold the owner liable. These cases are illustrated in Table 4, infra, together with the six 1995 cases and some other cases involving the same pattern. The state whose law was applied by each case is indicated by shading.

                                                               Table 4. Cases Involving Conflicts on Vehicle Owner's Liability

      a. Lex-Loci-Delicti Cases. Except for the fact that the law suit had been filed in the accident state, Jack, supra, involved the same fact/law pattern as Levy, Farber, and Sexton, in that the car had been rented in California, a state that had such an owner's liability statute, and was involved in an accident in Wyoming, a state that did not have such a statute. If Jack is notable, it is because the court appears to be immune to any "deep-pocket" consid­er­ations. The court also seems to be oblivious to the need to discuss the policies underlying such a statute and their bearing on the question of the statute's territorial reach. Confined by its adherence to the lex loci dogma, the court felt bound to apply Wyoming law because "[t]he accident occurred in Wyoming. In addition, the [victims] resided in Wyoming, the negligent operation of the vehicle occurred in Wyoming, and the damages were sustained in Wyo­ming." [FN149][149]

      Deitchman v. Weiner [FN150][150] was also decided under the lex loci delicti rule followed in Kansas. The court's predispo­sition to apply the law of the accident state, Missouri, may explain why the court did not see the need to discuss the law of the other involved state, Kansas, in which the owner had entrusted his car to the driver. [FN151][151] Under Missou­ri's doctrine of negligent entrust­ment, the owner would be liable if he had knowingly entrusted his car to a less-than-prudent driver. The court's entire choice-of-law discussion was confined to a footnote in which the court pondered momentarily about localizing the tort. [FN152][152] The court applied the law of the place of injury. and eventually held for the defendant.

      b. Connecticut Cases. Although the above lex loci delicti cases can be criticized on many grounds, they cannot be accused of officially favoring local law or local litigants. The same is not true, however, of recent Connecticut cases decided under that state's "flexible" choice-of-law approach which is based on the Restate­ment Second. For example, in Bosler v. National Car Rental, [FN153][153] discussed in the 1993 survey, [FN154][154] the court applied Connecticut's lessor liability statute to a case in which Connecticut's only contact was that the plaintiff had been domiciled in that state at the time of the accident, [FN155][155] because that statute "is presumably de­signed to allow individ­uals to secure relief for acci­dents involv­ing rented vehicles from the lessor." [FN156][156] Similarly, in Brunow v. Burnett, [FN157][157] the court applied the statute to a case in which Connecticut's only contact was the occur­rence of the accident in that state, because that statute "was enacted 'to protect the safety of traffic upon high­ways.'" [FN158][158]

      Kolpa-Acker v. Hertz Rent-A-Car [FN159][159] is similar to Bosler, in that Connecticut's only contact was the domi­cile of the plaintiff who was injured in Florida by a car leased by defendant in that state to a Spanish national who had caused the accident. Kolpa-Acker applied the Con­necticut statute and thus reached the same result as Bosler. Nevertheless, the result in Kolpa-Acker is defensi­ble in that there was no real conflict between Connect­icut and Florida law. Although Florida did not have a lessor liability statute like Connecticut's, Florida imposed strict liability on the lessor through the common law doctrine of "dangerous instrumen­tality." This fact distinguishes this case from Matteis v. National Car Rental Systems, Inc., [FN160][160] in which the court refused to apply the Connect­i­cut statute to a case in which the rental and accident state did not impose such liability on the lessor.

      c. New York and New Jersey Cases. New York has an owner's liability statute similar to Connecticut's, but neighboring New Jersey does not. Three 1995 cases, one from New York and two from New Jersey, involved the applicability of the New York statute to a New Jersey accident. Interestingly, the New York case held the New York statute to be inapplicable, while the New Jersey cases held the New York statute to be applicable. [FN161][161]

      The New York case, Heisler v. Toyota Motor Credit Corp., [FN162][162] arose out of a New Jersey accident injuring a New York plaintiff, and caused by a New Jersey driver who had rented the car from a California corpora­tion. The court does not say where the car had been rented, but the tenor of the opinion suggests that it had not been rented in California [FN163][163] and that it probably had been rented in New York. [FN164][164] The court characterized the conflict between the New York and New Jersey rules as a conflict between loss-distribu­tion rules and applied New Jersey law under the third Neumeier rule. [FN165][165] The court specifi­cal­ly reject­ed plaintiff's attempt to invoke the escape clause of the third Neumeier rule, [FN166][166] finding that the plaintiff had "not demon­strat­ed that the substi­tution of New York law would advance the purpos­es underlying [the New York statute] without simulta­neously under­min­ing multi‑state litigation (by, for instance, encourag­ing forum shopping, or by appearing to favor the local party) or producing uncer­tainty for litigants." [FN167][167] But then the court ap­peared to confuse this escape with the public policy escape of Loucks [FN168][168] and to equate the burden of persua­sion required by the two es­capes. [FN169][169] It is there­fore not surpris­ing that, having thus elevated the plaintiff's hurdle, the court concluded that the plaintiff was unable to overcome it. [FN170][170]

      Heisler is similar to and consistent with Buglioli v. Enterprise Rent‑A‑Car, [FN171][171] which also arose out of a New Jersey accident caused by a car rented in New York by a New York driver. Buglioli had refused to apply the New York statute to that accident because, inter alia, "New York has no interest in permitting a New Jersey plaintiff to impose vicarious liability on the New York owner of an automobile involved in an accident in New Jersey simply because the owner is a New York domiciliary." [FN172][172] Heisler is distin­guish­able from, and a closer case than, Fried v. Seippel, [FN173][173] in which the New York Court of Appeals refused to apply the New York statute to a Jamaica accident caused by a car rented in Jamaica. Although in Fried both the victim and the driver were New York domiciliaries, the car involved therein was "registered, operated and used exclusively on the island of Jamaica, far beyond New York's borders." [FN174][174] Hence, said the court, the New York statute did "not extend to owners of vehicles that have never been registered, used, operated or intended for use within this State." [FN175][175] In turn, this factor distinguished Fried from Farber v. Smolack, [FN176][176] in which the same court had applied the New York statute to a North Carolina accident because the car involved in that case "had been registered in New York, had been used in New York before the accident and had been on its way back to New York after a brief sojourn to Florida at the time the accident occurred." [FN177][177]

      In the New Jersey case Haggerty v. Cedeno, [FN178][178] the car was registered in New York and was owned by a corpora­tion that had its principal place of business in that state. However, the car had been leased to a Florida driver in New Jersey and was involved in an accident in New Jersey resulting in injuries to a New Jersey plain­tiff. Thus, this case was distinguish­able from Farber. Yet the New Jersey trial court thought that Farber provided strong support for the court's decision to apply the New York statute. The court made no effort to conceal the fact that its decision was influenced in part by the fact that the application of that statute was beneficial to the New Jersey plaintiff. Adding insult to injury, the court claimed that its plaintiff favoritism was vindicated by a statement made in Babcock in which the New York Court of Ap­peals said that "[o]ur courts should if possible provide protection for our own State's people against unfair and anachronistic treatment." [FN179][179] Conve­niently ignoring the fact that the Babcock court was referring to anachro­nis­tic treatment under non-forum law, the Haggerty court concluded that "[t]he Babcock comment is applicable to this case and suggests that New Jersey should provide the best treat­ment to its resident, who although not affected by an 'unfair and anachronistic' law may benefit by the applica­tion of a more expansive one." [FN180][180]

      The Appellate Division affirmed, [FN181][181] but, apparently embarrassed by the trial court's frankness, felt the need to repudiate the trial court's reliance on the fact that the application of New York's law would be "financially beneficial to the plain­tiff." [FN182][182] The Appellate Division stated that that fact was "irrelevant in resolving the choice of law issue in this case . . . [and that [i]t would indeed be anomalous to apply foreign law solely to gain access to a deep pocket when local law denies that access." [FN183][183]

      Speaking of contacts and interests almost inter­change­ably, the Appellate Division characterized New Jersey's contacts with the vehicle and its owner as being "fortu­itous," [FN184][184] "fleeting and tenuous," [FN185][185] and New York's contacts as being "sub­stan­tial and directly relat­ed" [FN186][186] to the purpose of New York's owner's liability stat­ute. Then, examining the interests of the two states, the court concluded that, because New Jersey's rule was designed to shield the owner from liability, New Jersey's interest was "sub­stan­tially diluted" in this case in which the owner was not a New Jersey resident, had its princi­pal place of business in New York, and the vehi­cle was registered in that state whose law would hold the owner liable. In contrast, said the court

            An owner registering a vehicle in New York is on notice regarding its liability exposure for the torts of persons who are permitted to operate the vehicle and is required to insure the vehicle consonant with that expo­sure. Thus, New York, as the vehicle's home state, occu­pies a unique and critical position for the regulation of the owner's legal obligations arising out of the ownership and use of the vehicle. . . . New Jersey . . . has little interest in protecting [the owner] when New York withholds that protection. [FN187][187]

      The above analysis was found to be "comprehensive, well-reasoned, and instructive" [FN188][188] by the court in McKinney v. S & S Truck­ing, Inc. [FN189][189] Indeed, McKinney followed the same analysis and reached the same result in a situation that involved the same pattern as Haggerty, except for one important difference: the car in McKinney had been rented in New York by a New York driver from a New York owner. This factor rendered the case identical with Farber, in which the New York Court of Appeals had applied the New York liability statute.

      2. Neumeier Rules.

      Surprisingly, only two New York cases, decided in 1995, involved the application of the Neumeier Rules: Miller v. Bombardier, Inc., [FN190][190] and Venturini v. Worldwide Marble & Granite Co. [FN191][191] In Miller, two Connecti­cut spouses filed a personal injury and a loss of consor­tium action, respective­ly, arising out of an injury suffered by the husband during a snowmo­biling trip in Quebec that was organized by defendant, a Quebec corporation. Quebec law favored the defendant while Connecticut law favored the plaintiffs. The court applied Quebec law under the first sentence of the second Neumeier rule which, roughly translated, provides that when the tortfeasor's conduct occurred in his home state the law of which is more favorable to the him than is the victim's domicile, the law of the former state applies. The court also concluded that the application of Quebec law did not offend New York's public policy because that state's relation­ship with the case was too attenuated. The plaintiff was employed by a New York company, the trip to Quebec was employ­ment related, and the victim had received medical treatment in New York that was paid by his employer.

      In Venturini, a case somewhat similar to Cooney, [FN192][192] a New York company and a Michigan company filed third-party actions against a New Jersey employer for contri­bution and indemnifica­tion, in connection with an injury sus­tained in Michigan by a truck driver employed by the New Jersey company. Under New Jersey and Michigan law, an employer who provides worker's compensation benefits is immune from a claim for contribution by his joint tortfeasors. Under New York law contribu­tion is avail­able. The court concluded that under "the second and third Neumeier rules," [FN193][193] the law of Michigan applied to both ac­tions and barred both the contribu­tion and indemnifica­tion claims. Quoting Schultz out of context, the court opined that, for purposes of applying the Neumeier rules, the "place of wrong" is "'where the last event necessary to make the actor liable occurred'." [FN194][194] The last event had occurred in Michigan where the truck driver was injured while unloading marble slabs that had been negligently loaded in New York.

      3. Other Loss-Distribution Conflicts.

      Duhon v. Union Pacific Resources Co., [FN195][195] is somewhat similar to Venturini and was decided under the new Louisiana conflicts codification, which officially adopts the distinc­tion between conduct-regulating and loss-distributing rules. Duhon arose out of an employment accident in Texas resulting in injury to a Louisiana worker who had been hired in that state by a Texas subcontractor for work in Texas for another Texas contractor. After having receiv­ed worker's compensation benefits through the subcontractor's carrier under Louisiana law, the worker sued the Texas general contractor in tort. Under Texas law, the general contractor would not be responsi­ble for worker's compensation but would be liable in tort. Under Louisiana law, the general contractor, who would be consid­ered the plaintiff's "statutory employer," would be responsible for worker's compensation benefits but would be immune from tort liability.

      The court characterized the resulting conflict as one between loss-distribution rules, and then considered Article 3544 of the Louisiana Civil Code which provides in part that, when both the conduct and the injury occurred in the domicile of the defendant, the law of that state applies, in this case Texas. However, an escape clause con­tained in Article 3547 of the same code authorizes a judicial deviation from Article 3544 if the policies of another state "would be more seriously impaired if its law were not applied to the particu­lar issue." The court concluded that this was an appropriate case for utilizing this escape and for applying Louisiana law under it, thus affording tort immunity to the Texas general contrac­tor. [FN196][196] The court did not need to provide a long explanation for this conclusion because, two months earlier, in Carriere v. Chandeleur Energy Corp., [FN197][197] a virtual­ly identical case, the court had under­tak­en a more complete analysis of the policies of the two states and had explained why Louisiana's policies would be more seriously impaired if its law were not applied than Texas's policies would be if Texas law were not ap­plied. [FN198][198] The Duhon court found Carriere to be control­ling and incorpo­rated it by attaching it as an appendix to Duhon. [FN199][199] Although it confused contacts with interests, that analysis correctly recognized the close interdepen­dence between a rule that imposes on an employer responsibility for providing worker's compensa­tion benefits and a rule that relieves that employer from tort liability. Because of this interde­pendence, allowing the worker to pick and choose would have resulted in an inappropriate dépeçage which the court correctly decided to avoid. [FN200][200]

      In Collins v. Trius, Inc., [FN201][201] the Supreme Judicial Court of Maine endorsed the distinc­tion between conduct-regulating and loss-distributing rules, and applied the law of the parties' common domicile, Canada, to a claim for pain and suffering arising out of a bus accident that had occurred in Maine and involved exclusively Canadian parties. The court said, inter alia:

      Although Maine has a significant interest in regulating conduct on its highways, the rule at issue is primarily 'loss‑allocating' rather than 'conduct‑regulating.' . . . Canada has demonstrat­ed a profound interest in achieving a measure of uniformity in tort recovery among Canadian residents.

            . . . [O]ne incontestably valuable contribu­tion of the choice‑of‑law revolution in the tort conflict field is the line of decisions applying common‑domicile law . . . The superiority of the common domicile as the source of law govern­ing loss‑distribution issues is evident. At its core is the notion of a social contract, whereby a resident assents to casting her lot with others in accepting burdens as well as benefits of identifica­tion with a particular community, and ceding to its lawmak­ing agencies the authority to make judg­ments striking the balance between her private substan­tive interests and competing ones of other mem­bers of the communi­ty. [FN202][202]

      4. Conduct-Regulation Conflicts. [FN203][203]

      The Dis­trict of Columbia is one of the many jurisdictions that have not officially endorsed the distinction between loss-distrib­uting and conduct-regulating issues. Neverthe­less, the decision of the District of Columbia Court of Appeals in District of Columbia v. Coleman [FN204][204] offers support for the proposi­tion that, when the issue with regard to which there is a conflict pertains to regulation of conduct, then territorial factors are bound to dominate the court's choice-of-law analysis. Coleman also reaffirms the oft-repeated observation that the geographical growth of some of the nation's greater metropolitan areas across state boundaries, combined with the smallness of some of this country's territorial units, tend to produce conflicts of laws which in most other countries of the world are considered most unlikely to occur.

      The Coleman facts were as follows: David Pigford, a Maryland domicili­ary, was employed as a detective by the District of Columbia police depart­ment. While he was on an errand for his employ­er between two points in the District of Columbia, Pigford drove through Maryland where he encoun­tered two men attacking another man. Re­sponding to the victim's desperate cries for help, Pigford intervened and in the process shot and killed one of the attackers, also a Maryland domiciliary. In the ensuing wrongful death action filed by the dead man's mother, the trial court found that Pigford had acted negligently and awarded a money judgment against Pigford's employer under the doc­trine of respondeat superior.

      The Court of Appeals reversed and remanded for a new trial, holding that the trial court should have applied Maryland law under which Pigford and his employer could assert the affirma­tive defenses of contributory negligence and assumption of risk, either of which would bar recovery by the plain­tiff. Under District of Columbia law, those defenses would not have been available to a police officer who, like Pigford, had failed to follow certain statutes and ordinances prohibiting excessive force. The Court of Appeals rea­soned that the policy behind District of Columbia law on this issue was "to promote the safety of citizens by deterring police use of excessive force," [FN205][205] and that "[t]he major focus of the policy, then, is on public safety within the District itself, where the obliga­tions and concerns of the District are paramount and where the police have the special authori­ty to resort to use of force granted to law enforcement officers." [FN206][206]  Since the conduct in question had occurred in Maryland, the District of Columbia could not have an interest in applying its law, [FN207][207] and that law could not have "such extraterri­to­rial effect as to bar the application by Mary­land of its law." [FN208][208]

      On the other hand, said the court, "Maryland has the primary obligations and duties with respect to public safety in Maryland and the right to determine the circumstances under which liability shall attach for acts relating to public safety undertaken within its bor­ders." [FN209][209] Maryland's decision to retain the common law defenses of contributory negligence and assumption of risk and its refusal to make them unavail­able to police officers such as Pigford, the court reasoned, were motivated by concerns about regulation of conduct and promot­ion of public safety. To the extent that these defenses are designed to make plaintiffs act more careful­ly, Maryland had an interest in applying these defenses since the plaintiff had acted in that state. [FN210][210] To the extent that these defenses were de­signed to affect the defendant's conduct by "encouraging 'good samaritans' to rescue victims without fear of liability," [FN211][211] Maryland had an interest in applying these defenses since Pigford's attempt to rescue a victim had taken place in that state. Thus, under interest analysis, Maryland was the only interested jurisdiction and its law should apply on remand.

      5. Products Liability. [FN212][212]

      Forum shopping does not always pay. Two 1995 cases resem­bling very much the well-known cases of Allstate Insurance Co. v. Hague, [FN213][213] and Ferens v. John Deere Co., [FN214][214] indicate that forum shopping does not always pay. In Hague, the plaintiff had moved to Minnesota, the forum state, subse­quent to the accident on which her action was based. Her acquisition of a Minnesota domicile was found to be bona fide, and was one of the three contacts on which the United States Supreme Court based its conclusion that the application of Minnesota's pro-plaintiff law by the Minnesota court was constitution­al­ly permissi­ble.

      Minnesota's pro-plaintiff law must have been the main reason for which the plaintiff in Nesladek v. Ford Motor Co. [FN215][215] decided to move to Minne­sota from Nebraska, subsequent to an accident in the latter state that had resulted in the death of her son. She and her husband "admitted that they moved to Minnesota in part because they consulted an attorney and were aware that their case was a non-starter, whereas Minnesota's law was more favor­able." [FN216][216] Indeed, the plaintiff's action was barred by Nebraska's ten-year statute of repose but could have been maintained under Minnesota's "useful life" statute. As in Hague, the defendant Ford Motor Company did business in Minnesota, and, unlike Hague, the defendant had one additional connection with the forum state: a critical component of the car that had caused the Nebraska accident, the transmission gear-selection system, had been installed in the car in Ford's assembly plant in Minnesota. According to plaintiff's allegations, that transmission was defective and had caused the car to move backward and roll over plaintiff's three-year son.

      Following all five of Leflar's choice-influencing consid­er­ations, the court held that Nebraska's statute of repose applied, and dismissed the action under it. The court concluded that Hague was distinguish­able because Ms. Hague had not moved to Minnesota "'for the purpose of filing suit'." [FN217][217] In con­trast, the plaintiff in Nesladek had moved to Minnesota precise­ly for that purpose. [FN218][218] Hence, "[b]ecause of the distinct presence of forum shopping in this case, we have good reason to believe that the balance of interests [and the other choice-influencing considerations] favor applica­tion of Nebraska law." [FN219][219] A dissent­ing judge accused the majority of "offer[ing] a sanction or punish­ment rather than an analysis as to choice of law." [FN220][220]

      In Bonti v. Ford Motor Co., [FN221][221] the plaintiff tried to emulate the Ferens plaintiff's success by filing her prod­ucts liabili­ty action in Mississippi. As in Ferens, Mississippi's only connection with the case was that the defendant Ford was doing business in that state. The case arose out of a single-car accident in South Carolina which resulted in the death of plaintiff's husband, a North Carolina domiciliary. The car, a Ford Bronco, had been designed by Ford in Michigan, assembled in Ken­tucky, and sold to plaintiff in North Carolina. Five years after the accident and eight years after the purchase of the Bronco, the plaintiff decided to sue Ford. By that time, her options had run out. Were she to file in South Carolina, a lex loci delicti state, her action would have been dismissed under that state's three-year statute of limitation for wrongful death actions. Were she to file in her home state, North Carolina, also a lex loci delicti state, her action would likely have been dismissed either under South Carolina's statute of limitation or under North Carolina's six-year statute of repose for products liability actions. Were she to file in Michigan, her pros­pects would not have been better, in light of that state's notorious protec­tionism of forum litigants. [FN222][222]

      Hence, the plaintiff chose to file in Mississippi which has a more generous statute of limita­tion/repose. Surprisingly, however, rather than arguing for the application of Mississippi law, the plaintiff argued for the application of South Carolina law, without realizing that that state's "built in" statute of limita­tion would bar her action. Following the Restate­ment Second, the court concluded that North Carolina had the most significant relationship and applied North Carolina law, including that state's statute of repose which barred the action. The plaintiff countered that if the court were to apply North Carolina law, the court should also apply North Carolina conflicts law (the lex loci delicti rule), which would lead to the applica­tion of South Carolina law. The court rejected this renvoi argument because, the forum's choice-of-law rules "clearly point to the application of North Carolina substantive law which does not include the appli­cation of the lex loci delicti rule (which is a proce­dural rule) but does include the application of North Carolina's statute of repose (which is substan­tive)." [FN223][223]

      Product Liability and Statutes of Limita­tion. Undoubtedly, the most important 1995 case on this subject is Braune v. Abbott Laboratories, [FN224][224] a DES products liability case decided by Judge Weinstein. It involved actions filed by several plaintiffs against the manufactur­ers of DES, a synthetic drug prescribed in the 1950s and 1960s to pregnant women to prevent miscar­riages. The plaintiffs were among the daughters of those women, and had been exposed to DES during gestation in their mother's wombs. As a result of that exposure, plaintiffs had developed various abnormalities in their reproductive organs, including infertility, miscarriages, and cervical cancer. This phase of this protracted litiga­tion was confined to the issue of the timeliness of the plaintiffs' actions. Under New York's borrowing statute, actions brought by non-residents and "accruing without New York" are governed by the shorter of the New York statute of limitation or that of the state "where the cause of action ac­crued." [FN225][225]

      "Reluc­tantly paying atten­dance" [FN226][226] to Sec­ond Circuit precedents, Judge Weinstein concluded in Braune that, for purposes of the borrowing statute, a cause of action accrues at the place of the injury, which, in products with latent defects, is not the place of the exposure to the product, but rather the place in which the injuries became mani­fest­. In turn, the place of manifes­tation is the place of diagno­sis, rather than either the place of the first symptoms or the place of plaintiff's subjective aware­ness of an illness and its cause. However, the judge also concluded that this "bright-line rule" need not be applied to cases in which the injury had been manifested outside New York. Such a rule would be "insen­sitive to the parties' individu­al situations and to the views of the jurisdic­tions with an interest in their cases." [FN227][227] Noting that, "[i]n stark contrast to the modern progressivism of choice‑of‑law analysis of sub­stantive issues, borrowing statutes remain con­strained, by and large, in unyielding adherence to form over sub­stance," [FN228][228] Judge Weinstein explained that:

      [w]ithout importing Babcock whole­sale into the bor­rowing context, it is possible to adhere to its fundamental insight: that sensitivity to other states' potential interests in a claimant's recov­ery, or a defendant's protec­tion, requires a cer­tain amount of flexibility and ad hoc consider­ation of the parties' and states' particu­lar situations.

            The borrowing statute, once it has served its anti‑forum shopping purpose, does not require blindness to these variations, and to the possible unfairness to plaintiffs that could result from an automatic rule. [FN229][229]

      6. Other Tort Conflicts.

      The space limitations of this Journal do not permit mention, much less discus­sion, of the many more 1995 cases involving tort conflicts. In lieu of such a discussion, therefore, the reader is provided with citations to some of the most notable of those cases which involve issues other than those dis­cussed above, such as defamation, [FN230][230] tort cases involving the sub­stance/procedure dichotomy, [FN231][231] and torts in violation of international law. [FN232][232]

                                                     V. MARITIME TORTS

      Two major decisions have been rendered in 1995 by federal appellate courts on the issue of the extraterritori­al application of American maritime law, and both applied American law to personal injury actions brought by American seamen for injury sustained in foreign territorial waters.

      The first decision, Coats v. Penrod Drilling Corp., [FN223][233] dutifully weighed the eight factors adopted by the United States Supreme Court in Lauritzen [FN234][234] and Rhoditis [FN235][235] for determining the reach of American maritime law, and concluded that most of those factors (or, as seen by the Coats court, "contacts") supported the application of American law. The plaintiff was an American citizen who had been hired in the United States for work in the United Arab Emirates. He was injured in the territorial waters of that country while working on an American-flag vessel owned by an American corporation. The application of American law in such a case is entirely uncontroversial. [FN236][236]

      In the second decision, Neely v. Club Med Manage­ment Services, Inc., [FN237][237] the American connections were not as overwhelming but, despite a strong dissent, the application of American law in that case could also be character­ized as uncontroversial. The plaintiff was an American citizen who had been hired in the United States for work in St. Lucia. She was injured in the territorial waters of that country while working on a vessel registered in St. Lucia and apparently bearing no flag. The vessel was owned by a St. Lucian corporation which derived most of its income from American tourists attracted to that vessel through active solicita­tion in the United States by a corporation affiliated with the defendant.

      The significance of Neely lies in the court's attempt to modernize the Lauritzen-Rhoditis test by importing into the arena of maritime conflicts the teachings of modern choice-of-law analysis, and attempting to remedy the inherent vagueness of the Lauritzen analysis, which the court characterized as "amorphous" and "mallea­ble." [FN238][238] The court decried contact-counting as a choice-of-law method by saying that "'the actual conflict before the court is a conflict between competing laws, not between physical contacts. Such conflicts can be resolved intelli­gently and rationally only by ascertaining and evaluating the polcies underlying the competing laws.'" [FN239][239] Rather, the court said, the Lauritzen analysis should be ap­proached as "a special­ized form of interest analysis designed to ensure that American maritime law of personal injuries applies only where significant American interests are implicated and only in conformi­ty with international law." [FN240][240] This analysis should proceed in two steps. In the first step, the court must:

      ask whether one of the following factors is in­volved in the incident, in which case there is a basis for pre­scriptive jurisdic­tion (which . . . means that signifi­cant American interests are implicated): injury to an American seaman or a seaman with American dependents, injury in Amer­ican territory, American defendants, an American flagged ship, or a con­tractual choice‑of‑law clause speci­fying American law. [FN241][241]

If the answer to the above question is affirmative, then the court is to proceed to the second step "to ascertain whether application of American law is reason­able under the circumstanc­es." [FN242][242] In this step, the court should be mindful of the needs of the international system and should construe American law "in harmony with interna­tional law." [FN243][243]

      A concurring judge found this two-step analysis to be "too cumbersome to be work­able," [FN244][244] and as "adding layers of complexity to the Lauritzen inquiry which already had sufficient flexibili­ty." [FN245][245] A dissenting judge criticized the majority for "muddy[ing] the waters by creating a new choice‑of‑law test that rejects binding Supreme Court precedent." [FN246][246] He also interpreted the majority opinion as "effectuat[ing] a shift in the burden of proof: rather than require the plaintiff to prove that the factors weigh in favor of the application of United States law, the majority forces the defendants to show that United States law does not apply," [FN247][247] and as "com[ing] dangerously close to creating a per se rule that the Jones Act applies to all United States seamen." [FN248][248]

                                                         VI. CONTRACTS

      1. Contracts Containing Choice-of-Law Clauses.

      As in previous years, the 1995 cases involving choice-of-law clauses are too numerous to count, much less to discuss. This section attempts to do no more than to simply provide citations to a few notable cases for those readers interested in this area of conflicts law. Suffice it to say that choice-of-law clauses are routinely upheld by the vast majority of cases, often without much discussion. For example, of the more than two hundred 1995 cases on this subject, only twenty six have invalidated a choice-of-law clause, in whole or in part.

      (a) Cases Invalidating Choice-of-Law Clauses. It is interesting to note that, in most of the 1995 cases in which the court refused to apply the law chosen by the parties, the court did so because the issue with regard to which the chosen law was invoked was a non-contractual issue. For example, the court refused to apply the chosen law to issues of fraud or other tort claims, [FN249][249] attorneys fees, [FN250][250] foreclosure of a mort­gage, [FN251][251] or statutes of lim­i­ta­tion. [FN252][252]

      Of the cases that refused to apply the law chosen by the parties with regard to contractual issues, four cases deserve mention: Education­al Employees Credit Union v. Mutual Guaranty Corp., [FN253][253] Lombard v. Economic Devel­op­ment Admin. of Puerto Rico, [FN254][254] Curtis 1000, Inc. v. Youngblade, [FN255][255] and Barton Press, Inc. v. American Envir. Int'l, Inc. [FN256][256]

      (b) Cases Upholding the Choice-of-Law Clause. Of the cases that upheld the choice-of-law clause, perhaps the most notable is the Skyline case discussed supra. [FN257][257] It arose out of a contract for construction services to be rendered in Illinois by Skyline, a Michigan corporation, for Chrysler, a corpora­tion that has its princi­pal place of business in Michigan. The contract contained a choice of Michigan law and an indemnifi­cation clause that was valid under Michigan law but not under Illinois law. Relying on §187(2)(b) of the Restate­ment Second, the court of appeal had concluded that, as the place of performance of the contract, Illinois had a greater interest in applying its law than did Michigan, and that to uphold the parties' choice of Michigan law and the validity of the indemnification clause under it would be contrary to a fundamental policy of Illinois.

      The Supreme Court of Michigan reversed. The court noted that the fact that Illinois was the place of the performance of the contract did not necessar­ily mean that Illinois was also the place of perfor­mance of the indemnification agree­ment, and that, although Illinois had a great interest in deterring specific construction practices in its territory, Illinois did not have "a mate­rially great­er inter­est than Michi­gan suffi­cient to ignore the parties' choice of Michi­gan law . . . [or] a great­er inter­est in reach­ing into the con­trac­tual ar­range­ments of out‑of‑state com­pa­nies when those com­panies have nego­tiated an agree­ment in their own state." [FN258][258]

      After examining the laws of Michigan and Illinois on the validity of indemnifi­cation agreements, the court conclud­ed that the two laws conflicted, that Michi­gan had as much an interest as Illi­nois in applying its law, and that, therefore, the court should not "void the parties' express prefer­ence for Michigan law in the absence of compel­ling evidence that Illinois has a materially greater interest than Michi­gan." [FN259][259]

      In Hambrecht & Quist Venture Partners v. American Medical Int'l, Inc., [FN260][260] the court held that "a standard choice of law provision (which states that a contract shall be governed by the 'laws' of a particu­lar jurisdiction) incorpo­rates the statute of limita­tions of the chosen state," [FN261][261] at least when that statute provides for a short­er period than that of the forum state. The court noted that statutes of limitation have traditionally been classified as procedural, and that many cases have held that a choice-of-law clause does not include the procedur­al laws of the chosen state. Without questioning the premise that a choice-of-law clause ordinarily does not include the chosen state's procedural law, the court concluded that, since the forum state, California, no longer adheres to the traditional character­ization of statutes of limitation as procedural, there was no reason to exempt such statutes from the scope of the parties' choice when the parties failed to address this issue expressly. [FN262][262]

      The court then discussed the enforceabil­ity of the choice-of-law clause under §187(2) of the Restate­ment Second. The court concluded that the fact that one contracting party was incorporated in the state whose law was chosen, Delaware, provided a "substan­tial relation­ship" or at least a "reason­able basis" to support the parties' choice under the preliminary prong of §187(2), even when that party had its principal place of business in the forum state and the other party was domiciled in the latter state. Then, the court concluded that the second prong of §187(2) was also satisfied because the chosen law did not contravene a funda­mental policy of the forum state. Although Delaware's statute of limitation provided for a shorter limitation period than did California's correspond­ing statute, the application of the Delaware statute did not offend California's public policy because California permitted parties to contrac­tually shorten a statutory limitation period.

      CPS International, Inc. v. Dresser Industries, Inc., [FN263][263] involved four interrelat­ed contracts, three of which began with the phrase "[i]n the Name of God the Merciful, the Compassion­ate" [FN264][264] and provided that the parties "shall abide" [FN265][265] by the law of Saudi Arabia. The court conclud­ed that, although these clauses could be regarded as choice-of-law clauses, a more specific clause contained in the fourth contract was the controlling choice-of-law clause. That clause called for the application of the "Laws of the United States of Ameri­ca," [FN266][266] and, since Texas was the only state of the United States that had any relation­ship with the parties, the court interpreted the clause as a choice of Texas law and upheld the choice under §187(1) of the Restatement Second. Then the court discussed the plaintiffs' tort claims arising out of the plaintiffs' contrac­tual relationship with the same defen­dants, and assumed without discussion that those claims fell outside the scope of the choice-of-law clause. Finally, employing a tort choice-of-law analysis under §145 of the Restatement Second, the court concluded that the tort claims were governed by Saudi Arabia law. [FN267][267]

      2. Contracts Without a Choice-of-law Clause.

      Seubert Excavators, Inc. v. Anderson Logging Co., [FN268][268] is almost identi­cal to Skyline, supra, except for the fact that the parties in Seubert did not have the foresight to insert a choice-of-law clause in their contract. The contract was between an Idaho contractor and an Idaho subcontractor and called for construction work in Oregon. The contract contained an indemnifica­tion agreement that was void under Oregon law but valid under Idaho law. An Idaho plaintiff, whose husband had been killed in Oregon while working for the subcontractor and who had received worker's compensation benefits from that subcontractor under Idaho law, filed a wrongful death action against the contractor in Oregon. The contractor settled the suit for $100,000 and then sued the subcon­tractor for indem­ni­fication in Idaho. Reversing a court of appeals decision that had applied Oregon law under a tort choice-of-law analysis, the Supreme Court of Idaho emphasized that the issue in this case was purely contractual. Follow­ing §188 of the Restatement Second, the court concluded that Idaho had the most significant relation­ship with regard to the indemnifica­tion issue and its law should apply. The court attributed particular importance to the fact that the application of Oregon law would have invalidat­ed the indemnification clause. Said the court, "it defies logic to believe that the parties would include an indem­nification provision which they did not intend to be fully binding on them." [FN269][269]

      Wildey v. Springs, [FN270][270] was a rather unusual case involving a breach of a promise to marry. Richard, an Oregon cattle rancher, and Sharon, an Illinois attorney, had become acquaint­ed through long-distance telephone calls from their respective domiciles and then took a five-day joint trip to Florida. While waiting in the Orlando airport for the return flight to Illinois, Sharon "suggest­ed" marriage and Richard agreed, reluctantly. During a subse­quent visit to Chicago, Richard purchased an engagement ring, "got down on one knee," [FN271][271] and restat­ed the marital promise. The parties set a date for a wedding to be performed in Illinois. A few months later, Richard decided to break the engagement. Sharon responded with a letter in which, inter alia, she threat­ened to sue Richard for breach of promise to marry. She eventu­al­ly filed suit in Illinois. A Florida statute provides that agreements to marry made in Florida may not be en­forced "'within or without this state'." [FN272][272] An Illinois statute allows enforcement of such agreements, but sets rigid require­ments of written notice.

      The trial court applied Illinois law and awarded Sharon $60,000 in damages. The court of appeals af­firmed the applica­tion of Illinois law but reversed on the merits.  The court dismissed as "some­thing of a fortu­ity" [FN273][273] the fact that the initial exchange of promises to marry had taken place in Florida and, employing §188 of the Restate­ment Second, concluded that the law of Illinois should apply because that state had "the most significant contacts". [FN274][274] Unfortunately for Sharon, the application of Illinois law could not salvage her cause of action because her letter, although carefully drafted so as to comply with the Illinois statute, had failed to include the date on which the promises had been exchanged. Inclusion of that date was a necessary requirement under the Illinois statute, the true purpose of which was, according to the court, to make very difficult the enforcement of such agreements.

                                                       VII. ARBITRATION

      The recent dramatic increase in the use of arbitration clauses has begun to surface in conflicts cases as well. Two such cases reached the United States Supreme Court in 1995. [FN275][275] The first case is Mastrobuono v. Shearson Lehman Hutton, [FN276][276] which held that a choice-of-law provision contained in a contract that also contained an arbitration clause did not incorporate the chosen state's prohibition against arbitrators awarding punitive damages. The contract provided that the contract "shall be governed by the laws of the State of New York," [FN277][277] and that any dispute arising out of the contract "shall be settled by arbitra­tion in accordance with the rules then in effect, of the National Associa­tion of Securities Dealers, Inc. [NASD] . . . ." [FN278][278] An arbitration panel, convened under the arbitration clause and under the Federal Arbitration Act (FAA), had awarded punitive damages. The lower courts had disal­lowed the award of punitive damages, following a New York case that had held that only courts, not arbitra­tors, may award such damag­es.

      The Supreme Court reversed. In an opinion authored by Justice Stevens, the Court said that perti­nent prece­dents make clear that if the contract includes pu­nitive damages among the is­sues to be ar­bi­trated, the FAA requires enforcement of the contract according to its terms, notwith­standing any state rule to the contrary. Thus, said the Court, "the case before us comes down to what the contract has to say about the arbitrability of petitioners' claim for puni­tive damag­es. [FN279][279] Although the contract was silent on the issue of punitive damages, the Court inferred an implied agreement that such damages were contemplated from the arbitration clause's reference to the NASD rules which authorize arbitra­tors to award "damages and other relief." [FN280][280] Thus interpreted, the arbitration clause conflicted with the law designated by the choice-of-law clause, but the Court concluded that the conflict could be resolved by simply narrowing the scope of the choice-of-law clause and reading that clause so as "to encompass substantive principles that New York courts would apply, but not to include special rules limiting the authority of arbitra­tors. [FN281][281]

      In Vimar Seguros Y Reaseguros, S.A. v. M/V Sky Reefer, [FN282][282] the contract, a maritime bill of lading, provid­ed for arbitra­tion in Tokyo under Japanese law. A Moroccan supplier had sold to a New York distributor a shipload of oranges to be transported from Morocco to Massachu­setts by a Panamanian-owned ship chartered to a Japanese company. When the cargo was damaged, the New York distributor and its insurer sued the shipowner in Massa­chusetts. The defendant moved to stay the action and compel arbitration in Tokyo under the bill of lading and § 3 of the FAA, which requires courts to stay proceedings and enforce arbitration agreements covered by the Act. The plaintiffs opposed the motion, arguing that the arbitra­tion clause was unenforceable under the FAA because it violated section 3(8) of the Carriage of Goods by Sea Act (COGSA) [FN283][283] which prohib­its the "lessening" of the carrier's liability for fault. [FN284][284] Pursuant to this section, lower courts have routinely invalidated foreign forum-selection clauses because such clauses "put[] 'a high hurdle' in the way of enforcing liability, and thus . . . effec­tive[ly enable] . . . carriers to secure settlements lower than if cargo [owners] could sue in a convenient forum." [FN285][285] Lower courts have also ex­pressed strong doubts as to whether foreign tribunals "would apply [COGSA] in the same way as would an American tribunal subject to the uniform control of the Supreme Court." [FN286][286] Since foreign arbitration clauses are but a subset of foreign forum-selection clauses in general, lower courts have also invalidated such clauses under the same rationale. [FN287][287]

      This rationale and its consequences have now been repudiated by the Supreme Court. In an opinion written by Justice Kennedy, the Court read the above section of COGSA as prohibiting only the lessening of the substantive liability of the carrier, "without address­ing the separate question of the means and costs of enforcing that liability." [FN288][288] The Court rea­soned:

            If the question whether a provision lessens liabili­ty were answered by reference to the costs and inconve­nience to the cargo owner, there would be no principled basis for distinguish­ing national from foreign arbitra­tion clauses. Even if it were reasonable to read § 3(8) to make a distinction based on travel time, airfare, and hotels bills, these factors are not susceptible of a simple and enforceable distinction between domestic and foreign forums. Requiring a Seattle cargo owner to arbitrate in New York likely imposes more costs and burdens than a foreign arbitration clause requiring it to arbitrate in Vancouver. [FN289][289]

      The Court also characterized as "parochial" the argument that foreign tribunals or arbitrators might not be able or willing to apply COGSA correctly. Quoting from The Bremen, [FN290][290] Scherk, [FN291][291] Mitsubishi Motors, [FN292][292] and other "internationalist" cas­es, the Court said, inter alia:

      [T]he historical judicial resistance to foreign forum selection clauses 'has little place in an era when . . . businesses . . . now operate in world markets.' . . .  'The expansion of American business and industry will hardly be encour­aged . . . if, notwith­standing solemn con­tracts, we insist on a parochi­al concept that all disputes must be resolved under our laws and in our courts.' . . . [I]f international arbitral institu­tions 'are to take a central place in the interna­tional legal order, national courts will need to 'shake off the old judicial hostility to arbitration,' and also their customary and understandable unwillingness to cede jurisdiction of a claim arising under domestic law to a foreign or trans­national tribunal' . . . 'A parochial refusal by the courts of one country to enforce an international arbitration agree­ment' would frustrate 'the order­li­ness and predictability essential to any interna­tional business transaction.' . . .

            . . . If the United States is to be able to gain the benefits of international accords and have a role as a trusted partner in multilat­eral endeav­ors, its courts should be most cautious before interpreting its domestic legislation in such manner as to violate international agreements. That concern counsels against construing COGSA to nullify foreign arbitration clauses because of inconve­nience to the plaintiff or insular distrust of the ability of foreign arbitrators to apply the law. [FN293][293]

      Finally, the Court found "premature" [FN294][294] the petitioners' argument that the Japanese arbitrators would not apply COGSA but rather the Japanese Hague Rules, which in fact lessen the carrier's liability for the acts or omissions of stevedores hired by the shipper. Apparently forgetting the choice-of-law clause, the Court thought that it was "mere speculation that the foreign arbitrators might apply Japanese law," [FN295][295] but said that, since the district court had retained jurisdic­tion to enforce the arbitration award, that court had the tradi­tional power to refuse enforcement if the award was "repugnant to the public policy of the United States." [FN296][296]

      Justice Stevens in a strong dissent observed facetious­ly that, under the majority's reasoning, "[a] carrier who truly wished to relieve itself of liability might select an outpost in Antarcti­ca as the setting for arbitration of all claims," [FN297][297] and could also "require the consignee to pay the costs of the arbitra­tion, or perhaps the travel expens­es and fees of the expert witnesses, interpreters, and lawyers employed by both parties." [FN298][298] Justice Stevens also criticized the majority's failure to address the issues raised by the choice-of-law clause. [FN299][299]

                                    VIII. INSURANCE CONFLICTS [FN300][300]

      1. Coverage for Environmental Pollution.

      This year has produced as many decisions as the last two years involving conflicts on the issue of insurance cover­age of envi­ronmental contamina­tion. [FN301][301] The 1995 cases have done little to bridge the gap between the cases that view this issue as one of contract interpretation, and apply the law that governs the insurance contract regardless of the location of the insured risk (the "uni­form-contract-interpreta­tion" approach), [FN302][302] and cases that focus on the location of the insured risk, and apply the law of that state unless another state has a more signifi­cant relationship with regard to that issue ( the "site-specific" approach). [FN303][303]

      One of the most important decisions on this subject in recent years is Gilbert Spruance Co. v. Pennsyl­va­nia Manufacturer's Ass'n Ins. Co., [FN304][304] discussed in the 1993 Survey, [FN305][305] in which the Supreme Court of New Jersey rejected the "uniform-contract-interpretation" approach in favor of the "site-specific" approach, and applied New Jersey's pro-coverage law to an insurance policy issued by a Pennsylvania insurer and covering the opera­tions of a Pennsyl­vania paint factory whose waste had been deposited in New Jersey. However, the court was careful to explain that its holding did not necessarily apply to the converse situation, in which waste generated in New Jersey was predictably disposed in another state. Noting that one lower court had enunciated an unquali­fied bilateral rule calling for the applica­tion of the law of the state of the waste-site location, and that another court called for an analysis under §6 of the Restate­ment Second, the Gilbert Spruance court chose to "express no view" [FN306][306] on either proposi­tion.

      This converse situation was present in General Ceramics Inc. v. Firemen's Fund Insurance Co. [FN307][307] in which, again, the court applied New Jersey law. In this case, the insurance policy had been issued to a New Jersey compa­ny and provided coverage for its New Jersey factory. Waste from that factory had been deposited in Pennsyl­vania, the law of which would not provide insurance coverage in this situation, whereas the law of New Jersey would, as in Gilbert Spruance. The General Ceramics court found it "tempting" to extract from Gilbert Spruance a "bright‑line rule" of applying the law of the state in which the waste disposal site is located "as long as it was reasonably foresee­able to the contracting parties that the insured's waste could predictably come to rest in that state." [FN308][308] Such a rule, said the court, would be attractive not only because of its simplici­ty, but also because on its apparent fairness: "[I]n Gilbert Spruance, New Jersey's overriding inter­est in protect­ing its environ­ment was sufficient to overcome Pennsylvania's interest in applying its contract interpre­tation rules to a Pennsyl­vania insurance con­tract. It would thus only seem fair if in the reverse situation, Pennsylvania's environ­mental policies would override New Jersey's con­tract interpreta­tion rules." [FN309][309]

      However, the court rejected this rule because Gilbert Spruance had specifically refused to adopt it, and because such a rule would defeat New Jersey policies without furthering Pennsylva­nia poli­cies. [FN310][310] Instead the court opted for a "more extended analysis pursuant to §6(2) of the Restatement Second," [FN311][311] and eventually concluded that New Jersey pro-coverage law should govern. In that analysis, the court said, inter alia, that New Jersey's pro-coverage interpretation of insurance policies is motivated by a concern for protec­ting New Jersey insureds and contracts negotiated in New Jersey and for "promoti[ng] . . . honesty before the state's regulatory agencies." [FN312][312] Although those interests were not impli­cat­ed in Gilbert Spruance, which involved an out‑of‑state insured and an out‑of‑state policy, they were implicated in this case, which involved a New Jersey insured and an insurance policy that had been negotiat­ed and paid for in New Jer­sey. [FN313][313] In contrast, Pennsylvania's interpre­tation of insurance contracts, which was designed to "protect the contract­ing parties by giving them the freedom to bargain for and agree on the alloca­tion of risk in the manner they think is best . . .[, was] not implicat­ed here because neither party to this suit is a citizen of Pennsylva­nia. [FN314][314]

      2. Products Liability Insurance.

      The same court that decided General Ceramics, decided NL Industries v. Commercial Union Insurance Co., [FN315][315] in which the court held that the site-specific approach of Gilbert Spruance should be confined to insurance for environmen­tal contamination and should not be followed in products liability insurance.

      NL Industries involved an action for a declaratory judgment that a certain insurance policy (issued in New York by a New York insurer to a New Jersey corporation that had its principal place of business in New York) provided coverage for lead exposure caused by the insured's products in several other states. Relying on Gilbert Spruance and interpreting it as requiring the application of New Jersey law, the district court applied that law. The Third Circuit Court of Appeals reversed, holding that New York law applied. The court found that the reasons for adopting the site‑specific approach in Gil­bert Spruance were not present in product liability coverage actions, because, inter alia, a state's interest in determin­ing coverage for prod­uct liability actions is "more amorphous and there­fore less compelling than its inter­ests in environ­mental cleanup . . . [and because] [t]here is . . . less predictability concerning the situs of product liability claims, and a man­age­ability problem in light of the potentially far larger number of product liability claims." [FN316][316] Thus, the court concluded, "because the benefits of the site‑specific approach are reduced while the prob­lems associ­ated with its implementa­tion are magni­fied outside the environ­mental coverage context," [FN317][317] the New Jersey Supreme Court would not extend the site‑specific approach to the product liabili­ty coverage actions. Consequent­ly, according to this federal court, these actions will contin­ue to be handled under the pre-Gilbert Spruance approach, accord­ing to which, "unless a 'dominant and signifi­cant relationship' man­dates the applica­tion of another state's law, the law of the place of contract will apply." [FN318][318]

                                            IX. STATUTES OF LIMITATION

      Of the many cases involving conflicts among statutes of limitation decided in 1995, the most important is New England Telephone v. Telegraph Co. v. Gourdeau Con­struction Co. [FN319][319] in which the Supreme Judicial Court of Massa­chu­setts decided to abandon its previous position of considering statutes of limitation as procedural, and to adopt the approach provided in the new version of § 142 of the Restatement Second for resolving statute of limitation con­flicts. [FN320][320]

      On a related subject, the United States Supreme Court held in Reynoldsville v. Hyde [FN321][321] that its decision in Bendix, [FN322][322] which had held the Ohio tolling statute to be uncon­stitutional under the Commerce Clause, applied retroac­tively to pre-Bendix torts.

      Finally, of the cases involving statutes of limitations as applied to judg­ments, [FN323][323] Durham v. Arkansas Department of Human Services, [FN324][324] is the most interesting. It in­volves an issue that is familiar to conflicts teachers from such cases as Union National Bank of Wichita v. Lamb [FN325][325] or Watkins v. Conway, [FN326][326] namely the enforce­ment of a revived sister-state judgment that could not have been revived in the forum state because of that state's statute of limitation. The judgment had been rendered in Illinois in 1975 and the judgment creditor attempted to enforce it in Arkansas, in 1992. Realizing that enforcement would be barred by Arkansas' ten-year statute of limitation, the creditor, perhaps following the advice given by the Supreme Court in Watkins to similarly situated creditors, obtained a revival of the judgment from an Illinois court under that state's twenty-year statute of limitation, and then sought recognition of the revived judgment in Arkansas. If, under Illinois law, the revival had produced a new judgment, then the question of its enforcement in Arkansas would fall squarely under Lamb, and enforce­ment would be required by the full faith and credit clause of the Constitution. If the revival was simply a prolonga­tion of the life of the 1975 judgment, then the question of its enforcement in Arkansas would fall within the grey area which Lamb and perhaps Watkins had arguably left unresolved. Three dissenting members of the Arkansas Supreme Court took the latter position and voted to deny recognition under Arkansas' statute of limitation on the authority of McElmoyle v. Cohen. [FN327][327] The majority did not dwell much on the distinction between a new and renewed judgment, and affirmed the lower court decision which had recognized the Illinois judgment. In a somewhat enigmatic statement the court said: "We perceive no contravention of our domestic policy by giving full faith and credit to a valid Illinois judgment, appropriately revived in that state, under that state's limitations statute." [FN328][328] The court derived this "domestic policy" from Arkansas' adoption of the Uniform Conflict of Laws Limitation Act which authorizes the application of the limitation period of the state on whose law the "claim is substantially based." [FN329][329] This is somewhat surprising, because to date, the Uniform Act has not been applied to judgments.

                                                  X. MARITAL PROPERTY

      The most important decision on matters of marital property decided during 1995 is Dawson‑Austin v. Austin, [FN330][330] in which the court broke new ground by supplementing Texas' "quasi-community property" ap­proach with the so-called "borrowed law" approach. In that case, the spouses had lived much of their married life in Minneso­ta, until 1992, when they decided to separate. The hus­band moved to Texas and, as soon as he had completed six months residence in that state, filed for divorce and for division of marital property. One of the big property items was sixty shares of stock acquired by the husband before the marriage. At issue was 38 million dollars representing the increase in the value of the stock that had accumulat­ed during the marriage. Under Minnesota law, the $38 million would be considered "marital property" and would be subject to "equitable division" between the spouses upon divorce. Under Texas internal law, the $38 million would be the husband's separate property and would not be subject to any claims in favor of the wife.

      The Texas quasi-community property statute provides that a Texas court "shall order a division . . . in a manner that the court deems just and right . . . [of] property that was acquired by either spouse while domiciled elsewhere and that would have been community property if the spouse who acquired the property had been domiciled in [Texas] at the time of the acquisition." [FN331][331] The husband argued that, because the $38 million would not have been commu­nity property (i.e., it would have been his separate property) had he been domiciled in Texas at the time of acquisition, the $38 million could not be subject to division by a Texas court.

      The Dawson-Austin court rejected this argument and refused to be confused by the acoustic similarity between the terms "separate property" in a community property jurisdiction such as Texas, and the term "separate property" in a common-law state. The court tacitly accepted the argument that the above statute did not authorize the division of the $38 million, but refused to read the statute as a "comprehensive choice‑of‑law provi­sion" [FN332][332] that prohibits any choices other than those express­ly authorized therein. The court held that, for property not covered by this statute, the court retains its tradition­al choice-of-law powers, including the power to apply the law of the former domicile.

      The court did precisely that. It held that Minnesota law was applicable to the $38 million and remanded the case to the trial court for division pursuant to Minnesota equitable-division princi­ples. The court explained that "[a]pplication of Minnesota law in this case does not impair Husband's rights be­cause he 'loses no more in a Texas divorce than he loses in a judgment rendered in' Minneso­ta." [FN333][333] The court also noted that the husband's argu­ment, if accepted, "would make Texas a forum shopping haven for spouses attempting to escape their own states' broader definitions of community or marital property." [FN334][334]

      Thus, the Dawson-Austin court has essentially recognized that the pure "quasi-community property approach," as prescribed in the Texas statute, is a very incomplete approach for handling the marital problems of migrant spouses. As explained elsewhere, [FN335][335] this approach works well if the property acquired in the former domicile qualifies as community property under the law of the forum/new domicile. But this approach can be disastrous for the non-owning spouse if the property in question does not so qualify. To remedy this problem, the quasi-community property approach must be supple­mented by the "borrowed-law" approach, namely an approach that authorizes the application of the law of the former domicile with regard to property which, as in Dawson-Austin, does not qualify as community property under the law of the forum. This is precisely what the Dawson-Austin court did. As the court explained:

      Under our interpreta­tion, the trial court first examines whether property acquired during the marriage would be characterized as community property under Texas charac­terization principles. If so, then the property is community property. The trial court need only look to the laws of the other states if the property, although acquired during the marriage, would be characterized as separate property under Texas character­iza­tion princi­ples. [FN336][336]

The same approach had been legislatively adopted by another community property state, Louisiana, [FN337][337] three years before Dawson-Austin.

      In Savelle v. Savelle, [FN338][338] the spouses had moved from a community-property state, Louisiana, to a separate-property state, Mississippi. After living for three years in Mississippi, they obtained a divorce in that state and then sought a division of property. At issue were the husband's retirement benefits accumulated during their thirty-year marriage in Louisiana. Under Louisiana law, these benefits would be community property and would be divided 50:50 between the spouses. Under Mississippi internal law, these benefits would be subject to equitable division but without any guarantee that they would be divided equally. The lower court, applying Mississippi law, awarded the wife a very small lump sum, and she appealed. The Mississippi Supreme Court affirmed, holding that Mississippi internal law governed the case and that the lower court's award was equitable. Justice Prather filed a strong dissent in which she reminded her colleagues that, under applicable choice-of-law principles, the division of the retirement benefits should be governed by Louisiana law.

                                      IX.  DOMESTIC RELATIONS [FN339][339]

      No effort has been made to collect the numerous child custody cases because most of them are invari­ably confined to jurisdictional issues which are beyond the scope of this paper. [FN340][340] To a lesser extent, the same is true of child support cases that are handled under the Uniform Reciprocal Enforcement of Support Act. [FN341][341] Some of the latter cases, however, do discuss the choice-of-law issue, albeit unevenly. [FN342][342]

      Of the cases involving spousal support, Norvell v. Norvell, [FN343][343] deserves mention. Norvell involved the issue of which law governs the modification of a sister-state judgment providing for spousal support. The judgment had been rendered in Tennessee where both spouses were then domiciled. After the husband moved to Louisiana and the wife to Colorado, the wife sought enforcement of the judgment in Louisi­ana. The court rejected the husband's argument that the law of Louisiana should apply to the issue of modification and applied instead the law of Tennessee. The court relied on Article 3515 of the new Louisi­ana conflicts codification, which calls for consideration of "the policies and needs of the interstate and interna­tional systems, including the policies of upholding the justified adverse consequences that might follow from subjecting a party to the law of more than one state," [FN344][344] and on a state­ment in the Reporter's comments to the effect that, "[a]ll other factors being equal, the parties should not be subjected to the law of a state that they had no reason to anticipate would be applied to their case." [FN345][345] The court acknowl­edged that, because Tennessee was no longer the domicile of either party, that state no longer had an interests in applying its law. However, the court concluded, the application of that law was justified based on the parties' expectations because "when the parties litigat­ed their differences in Tennessee . . . they [could not have] anticipat­ed any other state's laws would control future modification." [FN346][346]

      Brawer v. Pinkins [FN347][347] involves some interesting ques­tions of anti-suit injunctions, jurisdiction to annul a marriage, full faith and credit to an annulment judg­ment, inter-spousal rivalry, and more. The facts are as follows: husband and wife, both New York domiciliaries, were married in Nevada, shortly after the wife had obtained a New York divorce from her previous husband.  A few years later, the second husband initiated a proceeding in New York for divorce, custody, and distribution of property. After reaching a preliminary agreement on the issue of custody, the parties agreed that the New York court "shall have exclusive jurisdic­tion over any matrimo­nial matter between the parties," [FN348][348] and the court "so or­dered." [FN349][349] A few months later, Wife fired her attorney and went to Nevada where, appearing pro se, filed an action seeking annulment of her Nevada marriage on the ground that, at the time of that marriage, her previous marriage had not been dissolved because, although the New York divorce decree had been signed by the judge, it had not been entered by the clerk of court until a few days later. Under New York law, the divorce was effective as of the date of the judge's signature, but the Nevada court apparently thought otherwise and, based on that "misun­derstand­ing," [FN350][350] rendered a judgment annulling the Nevada marriage. Armed with that judgment, the Wife returned to New York seeking dismissal of the New York proceeding. She succeeded.

      One issue discussed by the court was whether the New York order in which the court retained exclusive jurisdiction was binding on the Nevada court. Analogizing this order to an anti-suit injunction, the New York court reluctantly concluded that its order, although binding on the parties, was not binding on the Nevada court. [FN351][351] Another issue was whether Nevada had jurisdiction to grant the annulment in light of the fact that Nevada's only connection with the case was that the marriage had been entered into in that state, several years earlier. A Nevada statute vests Nevada courts with jurisdiction under these circumstances. Finding no authority for the proposition that such an assertion of jurisdic­tion is unconsti­tutional, the New York court concluded:

      [i]t is logical to afford to the courts of the state where the marriage is contracted the authority to decide if it is valid. That state has the most substantial contacts to the marriage contract itself;  neither the passage of time nor change of domicile of the parties diminishes that connection. . . . Allowing the state of the marriage to deter­mine its validity does not encourage migratory actions. The parties voluntarily chose Nevada as the site of their marriage." [FN352][352]

      Since the Nevada judgment had been rendered by a court that had jurisdiction, the New York court concluded that it was obligated to give that judgment full faith and credit, despite the fact that that judgment might have been based on a misunder­standing of New York law. [FN353][353] Analogizing this to a case in which the forum must give full faith and credit to a sister-state judgment that has refused to give full faith and credit to a prior forum judgment, the court said that "[t]he federal suprema­cy doctrine requires this court to override its parochial concerns in en­forc­ing its own injunction and in correcting an errone­ous or­der of the courts of another state." [FN354][354]

      Since the giving of full faith and credit to the Nevada annulment judgment meant that the marriage was invalid, the husband's divorce petition had to be dismissed, and the New York court so ordered. His claim for equitable distribution of marital property, however, could have survived the annulment judg­ment because a New York statute allows equitable distribution of property following an "annulment . . . or a foreign judgment of divorce." [FN355][355] The court read the quoted language as allowing equitable distribution after a New York annulment, or after a foreign divorce, but not after a foreign annulment, as in this case. Thus, the court dismissed the Husband's claim for equitable distribution and seemed to seal the Wife's victory. [FN356][356]

                                           XII. IN LIEU OF CONCLUSIONS:

                                         CONFLICTS ON OTHER SUB­JECTS

      Again, the space limitations of this Journal preclude discussion of cases involving conflicts in areas other than those discussed above. In lieu of such a dis­cus­sion, this survey concludes by merely mentioning the most noteworthy cases involving conflicts in the area of proper­ty, [FN357][357] succes­sions, [FN358][358] corpora­tions, [FN359][359] and other conflicts issues such as notice and proof of foreign law, [FN360][360] and recognition of foreign judgments. [FN361][361]

      Rather than providing conclu­sions, this survey ends with the same adage as previous surveys:

            "Thus ended another year in the life of Ameri­can conflicts law in its strive for maturity.”