Conflict Of Laws Outline PDF

**Conflict of Laws** Professor Macleod Fall 2024 Table of Contents {#table-of-contents.TOCHeading} ================= [Module 1: The Basic Problem and Different Solutions 3](#module-1-the-basic-problem-and-different-solutions) [The Problem: Ius and Lex 3](#the-problem-ius-and-lex) [A Solution:...

**Conflict of Laws** Professor Macleod Fall 2024 Table of Contents {#table-of-contents.TOCHeading} ================= [Module 1: The Basic Problem and Different Solutions 3](#module-1-the-basic-problem-and-different-solutions) [The Problem: Ius and Lex 3](#the-problem-ius-and-lex) [A Solution: The Ius Gentium 5](#a-solution-the-ius-gentium) [The Ius Gentium in Practice 8](#the-ius-gentium-in-practice) [Sovereignty & Comity 9](#sovereignty-comity) [Another Solution: Vested Rights 10](#another-solution-vested-rights) [Comity and Rights in Practice 12](#comity-and-rights-in-practice) [Another Solution: Balancing Tests 14](#another-solution-balancing-tests) [Balancing Tests in Practice 20](#balancing-tests-in-practice) [Module 2: Domicile and Jurisdiction 21](#module-2-domicile-and-jurisdiction) [Domicile 21](#domicile) [Jurisdiction Over Persons 23](#jurisdiction-over-persons) [The Modern Approach 27](#the-modern-approach) [Jurisdiction Over Things 29](#jurisdiction-over-things) [Limitations I: Judicial Incompetence 31](#limitations-i-judicial-incompetence) [Limitations II: Contracts & Wrongs 33](#limitations-ii-contracts-wrongs) [Module 3: Foreign Judgments 36](#module-3-foreign-judgments) [Recognition and Enforcement 36](#recognition-and-enforcement) [Effects 39](#effects) [Full Faith & Credit 41](#full-faith-credit) [Defenses 43](#defenses) [Miscellaneous Issues 45](#miscellaneous-issues) [Module 4: Conflicts in Particular Areas of Private Law 48](#module-4-conflicts-in-particular-areas-of-private-law) [Torts I 48](#torts-i) [Torts II 50](#torts-ii) [Contracts 51](#contracts) [Real Property 53](#real-property) [Personal Property 56](#personal-property) [Marriage 59](#marriage) [Divorce 62](#divorce) [Custody and Support 64](#custody-and-support) Module 1: The Basic Problem and Different Solutions =================================================== The Problem: Ius and Lex ------------------------ I. **Institutes of Justinian** a. "Justice (**iustitia**) is the set and constant purpose which gives to every man his due as a matter of right (**ius suum cuique**)." b. "Jurisprudence (**Iurisprudentia**) is the knowledge of things divine and human, the science of the just (**iusti**) and the unjust (**iniusti**)."... c. "The precepts of the law (**iuris**)..." d. "Our law is partly written, partly unwritten, as among the Greeks. The written law consists of statutes (**lex**), plebiscites, senatusconsults, enactments of the Emperors (**principum placita**), edicts (**edicta**) of the magistrates, and answers of those learned in the law (**responsa prudentium**). II. **An Early Conflict of Laws** e. "But the law of nations (**ius autem gentium**) is common to the whole human race; for nations have settled certain things for themselves as occasion and the necessities of human life required. For instance, wars arose, and then followed captivity and slavery, which are contrary to the law of nature (**iuri naturali**); for by the law of nature all men from the beginning were born free." f. "...slavery is an institution of the law of nations, against nature subjecting one man to the dominion of another." III. **Parts of the Law** g. "The study of law consists of two branches, law public, and law private. \... Of private law then we may say that it is of threefold origin, being collected from the precepts of nature, from those of the law of nations, or from those of the civil law of Rome." h. "The law of nature is that which she has taught all animals\... Those rules which a state enacts for its own members are peculiar to itself and are called civil law: those rules prescribed by natural reason for all men are observed by all peoples alike and are called the law of nations." IV. **Where does the authority of natural law, law of nations, and civil law come from?** i. The authority of natural law comes from nature. j. The authority of the law of nations comes from universal reason. k. The authority of civil law comes from the state i. These 3 parts of private law can conflict with each other due to jurisdictions overlapping. V. **Law of Nations:** Law with respect to nations VI. **Civil Law:** Law of Humans VII. **Parts of the Holy Roman Law** VIII. **Cicero** l. Lex is the way to achieve right (ius) and to avoid wrongs (iniuriae). m. "Law (lex) is highest reason (ratio summa), which orders those things that ought to be done and prohibits the opposite." n. One right answer to practical questions, the "rule of right and wrong." o. "Therefore, since nothing is better than reason, and since its \[is\] in both human being and god, the primary fellowship of human being with god involves reason; and among those who have reason in common, correct reason is also in common. Since that is law, we should also consider human beings to be united with gods by law. Furthermore, among those who have a sharing in law, there is a sharing in right." p. What follows "is that we have been made by nature to participate in right, one with another, and to share it among all persons. And I want that to be understood in this entire debate when I say that \[right\] is by nature." IX. **Aquinas' Definition of Law** q. In order for a law to not be defective and not violate natural law, it must be: ii. \(1) an ordinance of reason; iii. \(2) for the common good; iv. \(3) the law in question must be made by someone who has the lawful authority to make the law; and v. \(4) it must be put into effect properly (must be known to the public and applied consistently) X. **Sources of Law Pursuant to Aquinas' Definition of Law** r. Human Law s. Natural Law t. Human Law v. Human Law A Solution: The Ius Gentium --------------------------- I. **Vatel's Theory on the Law of Nations** a. Nations, just like persons, have obligations, duties, and rights. b. The Nation's obligation is to wield the power for the benefit of the people. c. Due to the fact that the nation has the obligation to promote safety and cooperation among its people, it also has the moral right to promote that safety and cooperation among its people. d. Since Nations have this obligation and moral right, other nations have the same moral right. II. **Necessary Law:** Natural Law e. **Internal Natural Law:** applies within the actual moral person (the person is the nation), in this case, the nation and as a matter of conscious (meaning it's not legally enforceable) between nations. f. **External Natural Law:** applies between moral persons and nations and it's an objective source of obligation (rules which pertain across state and national boundaries) i. **Perfect Law:** an external natural law that is fully determined by right reason and therefore, it's also a law that can be coerced in its own authority. 1. The perfect law are those rights and duties of a necessary Ius Gentium which are directly derived from natural law. ii. **Imperfect Law:** an external natural law that needs voluntary settlement in order for it to become fully determined. 2. Due to not being fully determined, it cannot be coerced until its agreed to either by custom or treaty. 3. Imperfect law requires some human law to give them further specification. III. **Voluntary Law:** Law that comes from agreements g. **Customary Law:** agreements that are reached by the people of that nation either through their practices or actions like customs h. **Positive Law:** agreements that are reached by various people through positive enactments like legislation or treatises. IV. **According to Vatel's Theory on the Law of Nations, where can conflicts of law exist?** i. Voluntary Law v. Necessary Law j. Voluntary Law v. Voluntary Law V. **Vatel's Conflict Resolution between Voluntary and Necessary Law** k. The law of nature always prevails if its external, perfect law. iii. If so, it is fully determined and obligatory in its own authority and thus, superior to voluntary law. iv. If its internal law or external imperfect law, the law of nature does not automatically prevail. VI. **Vatel's Conflict Resolution between Voluntary and Voluntary Law** l. **Vatel's Maxims of Interpretation** creates uniform and consistent rules and judgments when a conflict between 2 voluntary laws arises. m. Maxims v. In all cases where what is barely permitted is found incompatible with what is positively prescribed, the latter claims a preference. vi. The law or treaty which permits, ought to give way to the law or treaty which forbids. vii. The law or the treaty which ordains, gives way to the law or the treaty which forbids. viii. If the collision happens between two affirmative laws, or two affirmative treaties: 4. If concluded between the same persons or the same states, that which is of more recent date claims a preference over the older one; 5. If made with two different powers, the more ancient claims the preference ix. Of two laws or two conventions, we ought (all other circumstances being equal) to prefer the one which is less general, and which approaches nearer to the point in question. x. What will not admit of delay, is to be preferred to what may be done at another time. VII. **Overview** VIII. **Conflicts Within the Ius Gentium** n. Conflict between voluntary law and law of nature law of nature prevails xi. The right infringed must be necessary, external, and perfect. xii. e.g. just war, Nuremberg o. Conflict between voluntary laws Vattel's maxims of interpretation (Chapter XVII) xiii. e.g. "It is not allowable to interpret what has no need of interpretation." IX. **More on Vatel's Maxims of Interpretation** **Goal = Uniform and Consistent Rules and Judgments** p. Examples: xiv. In all cases where what is barely permitted is found incompatible with what is positively prescribed, the latter claims a preference. xv. The law or treaty which permits, ought to give way to the law or treaty which forbids. xvi. the law or the treaty which ordains, gives way to the law or the treaty which forbids. xvii. If the collision happens between two affirmative laws, or two affirmative treaties: 6. if concluded between the same persons or the same states, that which is of more recent date claims a preference over the older one; 7. if made with two different powers, the more ancient claims the preference. xviii. Of two laws or two conventions, we ought (all other circumstances being equal) to prefer the one which is less general, and which approaches nearer to the point in question. xix. What will not admit of delay, is to be preferred to what may be done at another time. X. **Sources of Law** q. Constitution of the United States, Art. I §8 (1789) xx. "The Congress shall have Power... To define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations; To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water...." r. Paris Declaration (1856) (U.S. not a party) xxi. Privateering is and remains abolished. s. Universal Declaration of Human Rights (1948) (U.S. is a party) xxii. Article 2: "Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as... national or social origin, property, birth or other status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs\...." xxiii. Article 3: "Everyone has the right to life, liberty and security of person." xxiv. Article 17(2): "No one shall be arbitrarily deprived of his property." t. International Committee of the Red Cross study of customary rules xxv. Rule 146. "Belligerent reprisals against persons protected by the Geneva Conventions are prohibited." The Ius Gentium in Practice --------------------------- I. ***Home Insurance v. Dick:*** A state violates due process if it purports to govern the contractual rights and duties of persons who have no connection to the state II. ***Swift v. Tyson*** a. Arguments of Counsel i. Counsel for Swift: 1. "The general rule as to negotiable paper is, that where it is not unlawful and void in its inception, he to whom it is transferred, while current, in due form, and who receives it in good faith, and for a valuable consideration, without notice of anything which would exonerate the maker or acceptor of it from paying it to the one from whom he receives it, can recover its amount from such maker or acceptor, although the party from whom he received it could not." 2. The discharge of a just debt is a valuable consideration. ii. Counsel for Tyson: 3. Section 34 "imposed on the supreme court an obligation, as well to apply the decisions of the courts of this state, as the statutes, to cases which come before this court." 4. It would seem to be a self-evident proposition, that the adoption of the common law must have been by the constitution or legislative enactment. Courts cannot do it. 5. The use of common law terms in the Constitution does not entail adoption of the principles of the common law itself. 6. Without the aid of a statute, the common law cannot be called in aid of the jurisdiction of the courts, or for rules of decision. III. ***The Amistad:*** Individuals kidnapped from Africa and forced into the transatlantic slave trade are entitled to freedom upon reaching the United States b. Laws implicated: iii. Free English Soil iv. Customary law of salvage v. Constitution of the United States article III vi. Judiciary Act 1789 §34 vii. Treaty for the protection of property between United States and Spain 1795. viii. Treaty for the abolition of the slave trade between Great Britain and Spain 23 September 1817 ix. Contracts and bills of lading IV. **Universal Rule between *Swift* and *the Amistad*** c. Story, J. in *Swift*: The general law of the commercial world is that debt is a valid consideration for a note. A good faith holder in due course is unaffected by prior fraud of which he had no notice. d. Story, J. in *Amistad*: Nothing is more clear in the law of nations, as an established rule to regulate their rights and duties, and intercourse, than the doctrine, that the ship's papers are but prima facie evidence, and that, if they are shown to be fraudulent, they are not to be held proof of any valid title. Sovereignty & Comity -------------------- I. **Joseph Story's View on the Law of Nations** a. Unlike Vatel, Story did not believe it was universal. b. It was voluntary. Therefore, its authority relied on the consent of the sovereign in the territory where it must be enforced. c. To support his new view on the Law of Nations, he invented the Doctrine of Comity of Territorial Sovereignty. i. This is the dominant view in the United States. II. **The Doctrine of Comity of Territorial Sovereignty:** There is no universal or transcendent private laws. No laws can reach beyond the territory that the sovereign rules and those sovereigns have no obligation to give effect to the laws of other sovereigns. d. Two Principles ii. **The Sovereignty Principle:** the laws of one country can have no intrinsic force, except within the territorial limits and jurisdiction of that country iii. **The Comity Principle:** any effect laws have outside the country comes not from a built-in authority to apply them abroad, but from the respect other countries choose to give them for reasons of public policy. III. **Story's Maxims for Doctrine of Comity** e. Every nation possesses exclusive sovereignty and jurisdiction within its own territory. f. The laws of every state binds all of the following: iv. All property (real and personal) within its territory; v. Every resident within the state; vi. Every contract made within the state; and vii. All acts done within the state g. If you aren't a resident of the state, or if the property isn't within the state, the state cannot bind you. h. Every nation has the power to bind its own residents to its own laws even if they are in another place. i. No nation must respect the laws of another nation governing the other nation's citizens who are no longer resident in that nation. The country where the persons reside may disregard contrary laws of the nation where the residents are citizens. (A nation is not obligated to uphold the laws of another nation when it concerns citizens of the latter nation who no longer reside there. The country where these individuals currently live can choose not to enforce laws that conflict with its own). j. The extent to which a nations laws apply in another nation relies entirely on the explicit or implicit consent of that other nation. k. A conflict of laws can only arise when the host nation's customary laws and positive laws are silent. l. In the silence of laws affirming or denying the operation of foreign laws, courts presume their own government's tacit adoption. (When there are no explicit laws either affirming or denying the effect of foreign laws, courts generally presume that their own government has implicitly accepted those foreign laws). IV. **Non-Legal Reasons to Recognize Official Foreign Action Under the Doctrine of Comity** m. Under the Doctrine of Comity, nations have no legal reasons to treat the laws and judgments of nations as laws. n. However, there are many non-legal reasons for recognizing and enforcing foreign official actions, such as: viii. Comity between sovereigns (treat other sovereigns as I want to be treated) ix. Conclusive obligation of judgments (ought to be final and not reopened) x. Federalism (important for states in the U.S.) xi. Practical necessities of commercial and maritime trade (quid pro quo) xii. Protection for the rights of my own citizens when they travel abroad V. ***Hilton v. Guyot:*** A U.S court may re-examine the merits of a claim earlier adjudicated by a foreign court in a country that would also re-examine the merits of a claim earlier adjudicated in a U.S court VI. **Four Specifications in the U.S. Constitution** o. U.S. Const. art. 4 §1: "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State." p. U.S. Const. art. 4 §2 cl. 1: "The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States." q. U.S. Const. art. 4 §2 cl. 2: "A Person charged in any State with Treason, Felony, or other Crime, who shall flee from Justice, and be found in another State, shall on Demand of the executive Authority of the State from which he fled, be delivered up, to be removed to the State having Jurisdiction of the Crime." r. U.S. Const. amendment 14 §1: "No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States." Another Solution: Vested Rights ------------------------------- I. **Dicey's View on Rights** a. Rights were immutable and unchangeable once settled by the actions of the relevant parties. II. **Vested Right:** A substantive right (any type of right, for example, right to exclude other people from one's property or etc.) that also has an immunity (meaning no other person has the legal power to take away my right). b. Whenever you have a vested right, everyone else now has a legal disability against you because they cannot take your right of way, even if they're a public official. Once it's yours, it's yours to keep. III. **When does a law cause a right to vest?** c. The law of the place of vesting, that's also the law that governs. d. Wherever a right was vested, that place's law governs. IV. **Vested Rights Simplifies Conflict of Laws** e. Once the act which causes the right to vest has occurred, we look to the law of the place where the act occurred. f. After this, were all now under the legal disability arising out of the law of that place (we are bound by the ruling and can't take away that person's vested right) V. **In order to resolve the challenges facing the concept of vested rights (because people were confused on where vesting occurred and thus didn't know whose law governed), what are the high-level principles and mid-level principles that Dicey gave us?** g. High-Level Principles i. Any right which has been duly acquired under the law of any civilized country is recognized, and in general, enforced by English courts, and no right which has not been duly acquired is enforced or, in general, recognized by English courts. 1. This is vested rights principle. If you're looking to see whether English courts should give legal recognition to some right, you look to the law of the civilized country where the right vested. 2. However, there are some exceptions to the vested rights principle. ii. Exceptions: 3. If the right is inconsistent with extra territorial acts of parliament. For example, acts of parliament governing the vesting of patent rights or rights in personal property. 4. If the right is inconsistent with "policy," "moral rules," or "political institutions" of English law (For example, a contract for the performance of some illegal act like murder for hire, prostitution, or gambling); and 5. If the right interferes with a foreign sovereign where he is sovereign (so any vested right which would divest a person of sovereign immunity or power over citizen subjects who are now residing in England) h. Mid-Level Principles iii. Jurisdiction obtains if a court can give "an effective judgment" (an effective judgment is one which conclusively resolves the conflict between the parties) iv. Jurisdiction also obtains over anyone who submits to it (so consent to jurisdiction is going to be dispositive) v. The nature of a right acquired under the law of any civilized country must be determined in accordance with the law under which the right is acquired (So if it's plain for example that the law of France would allow the vesting of rights in a secured transaction which was consummated in France, we look to the law of France to resolve the validity of any claimed rights) vi. A right that is dependent on intention is determined according to the law contemplated by the parties (so the parties are always free, if they choose, to choose the law under which their rights will have vested) i. You apply these listed rules in international cases. For interstate cases (cases within a nation like cases in the U.S between 2 states) you use Beale's rules. VI. **What did Beale do to Dicey's concept of vested rights?** j. He imported them to the U.S and it became the dominant approach for 1 generation. k. However, he made some changes to it. Beale made the vested rights theory more simple by creating very clear secondary rules that aren't affected by the merits of any primary substantive rules. l. The three most central rules are these: vii. In torts, the law of the place of injury governs viii. In contracts, the law of the place of making the contract governs (the place where the contract was accepted, it's not the place of the offer) ix. In real property, the law of the situs of the property governs m. Dicey's approach is for the international context, but Beale's new rules only applies in the U.S because his view was the first restatement of conflicts. VII. **Why was Beale's approach to the vested rights theory criticized?** n. Because the question of the primary claim or duty is conceptually separate from the question of the power or the right to recover. o. One by itself does not logically entail the other. p. For example, if you and I have a contract in Texas, that does not by itself logically entail that the law of Texas should govern the contract. VIII. **Vested Rights in Practice** q. ***Alabama Great Southern Railroad Co. v. Carroll*** (Ala. 1892) x. The law of the home state of an injured employee, employer, and employment relationship doesn't govern when the employee is injured in a different state r. ***Victor v. Sperry*** (Cal. Ct. App. 1958) xi. A forum court may refuse to apply the tort law of a foreign country where an accident occurred if that foreign law is contrary to the forum state's public policy. s. ***Milliken v. Pratt* (**Mass. 1878) xii. A person's capacity to contract should be determined by the state where the contract was made. Comity and Rights in Practice ----------------------------- I. **Territoriality and Comity Approach** a. The laws of every state/nation bind directly: i. All property, real and personal, within its territory; ii. All persons resident within; iii. Contracts made within; and iv. Acts done within b. Whatever force or obligation a nation's laws have in another, depends entirely on the other nation's express or tacit consent **BUT** v. In the silence of laws affirming or denying the operation of foreign laws, courts presume their own government's tacit adoption. c. This opens the door to the idea that courts should begin with a strong presumption that rights vested in another sovereign's territory remains vested once they come to the forum. d. Vested Rights vi. Torts: the law of the place of injury governs vii. Contracts: the law of the place of making the contract governs viii. Real property: the law of the situs governs II. ***Sinclair v. Sinclair:*** The law of the situs of real estate should govern its intestate succession as opposed to the law of the decedent's domicile. III. ***Toledo Society for Crippled Children v. Hickok:*** For choice-of-law purposes, real property gifted in a will is not equitably converted into personalty by virtue of a pre-death contract that is incorporated by reference in the will that provides that the realty be traded for stock so that the law of the decedent's domicile at death will govern the distribution of the gift as opposed to the law of the situs of the real property. **Severance of Legal from Equitable Title a Conflict of Rules** e. If the will is valid, what estates and interests? Trustee legal FSA W & C equitable 20-year term of years Charities equitable vested remainder in FSA f. If the contract and will are valid, what estates and interests? Trustee legal FSA, subject to choose in action Corporation chose in action in real property W & C equitable 20-year term of years in stock Charities equitable vested remainder in FSA in stock g. If the Ohio statute applies, what estates and interests? Trustee legal FSA, subject to choose in action Corporation chose in action in real property W & C FSA in stock (by inheritance) IV. **The Renvoi Circle** h. **Renvoi:** the process whereby a court refers to the law of another jurisdiction to resolve a legal issue, but that jurisdiction then refers back to the original jurisdiction\'s law. (circular) ix. To break the circle, you must stay within the forum. x. Example: 1. F1 points to F2 but F2 points to F1. i. Solutions to break the circle: xi. \(1) Where both states have the same primary, substantive rule, apply that rule. xii. \(2) Where the secondary rule of the foreign state would apply the primary rule of the forum state then the forum court applies its own state law, even if its secondary rule directs it to apply the primary rule of the foreign state. V. ***American Motorists Insurance Co. v. ARTRA Group Inc.:*** Courts in the forum state may apply the forum state's substantive law to a contract entered into in another state if two criteria are met Another Solution: Balancing Tests --------------------------------- I. **The Legal Realist Revolution** a. They did away with all the classical theories. b. The Ius Gentium (classical approach), Joseph Story's Doctrine of Territoriality and Comity Theory, and Dicey's Vested Rights Theory were all thrown away. II. **Differences between Legal Realism and Classical Approaches** c. The legal realists believed in judicial supremacy. d. Below are 3 critical elements to their belief system: i. First, they reframe the problem. 1. The problem is no longer to identify and declare what rights and duties have. Now the problem is recast as something known as the choice of law. 2. Judges are no longer trying to determine what law governs the case, rather the judges themselves are choosing the law that will govern the case. 3. This they say cannot be resolved by settled rules. ii. Second, they all agree that judges, because they're not referring to pre-existing law, must make various value judgements about what they call the "relative importance" of different policies. 4. So, what is driving these decisions now is no longer law which transcends national and state boundaries, instead its policy decisions made by the judges. iii. Third, the most basic consideration that judges should take into consideration is the smooth functioning of what they call "systems of interstate and international private law". 5. Note these are systems designed by the judges, we're no longer talking about immemorial customary rights, the necessary law, the natural law, natural rights, pre-existing institutions, customs, and forms of practice that have existed for some time. These are new systems designed by judges to solve the practical problem of choosing which law is going to govern the case. III. **Currie's Legal Process Theory:** This theory is based on judicial supremacy, so this theory claims that judges choose the law. When judges are choosing the law, they need to analyze competing governmental interests. This theory believes that judges will choose the correct law if they follow the correct process. e. The correct process, which is judicial interpretation, has two steps. The two-step process is below: iv. First, the judge is supposed to look at the substantive laws and ascertain from those laws what are the relevant states policies which gave rise to them. v. Second, the judge is supposed to evaluate the state interests in those policies and weigh them against each other. f. There are 3 caveats that need to be paired with the two-step process outlined above. These 3 caveats are: vi. If a conflict is unavoidable, and the policies are more or less equal weight, then the fallback is to resort to the forum's law. Judges simply apply the law of their own sovereign. vii. If the conflict involves the laws of two other states, states that are not within the forum, then you apply the forums own law or engage in candid exercise of legislative discretion. In other words, the judge will make a new rule, meaning create law, to solve the problem which is most consistent with the forum's laws. viii. If there are national interests at play, then we defer to any laws enacted by Congress. IV. **Leflar's Better Rule Approach:** this theory is based on judicial supremacy, so this theory believes judges choose the law. According to this theory, judges should be looking at what rule will produce the best outcome from the opinion of the judge. The rule that the judge chooses is called the "better rule". So, it's the judge's job to figure out which rule is going to produce the best consequences. g. Below is how this theory should be followed: ix. Law is chosen according to evaluative factors. x. Those factors can be correlated with outcomes and systematized. xi. The most important factor is the "better rule." An older or "anachronistic" rule is never the "better" rule. V. **Mehren's and Trautman's Functional Analysis Theory:** This theory is based on judicial supremacy, so this theory believes judges choose the law. According to this theory, the judge's first task is to identify the state's interests as expressed in the state's laws. Then the judge is supposed to construct a regulating rule from those state interests, always striving to the extent possible to reconcile those state interests to each other. However, if any conflict does remain because the state interests are just directly in contradiction with each other, then you apply the rule of the state that is predominantly concerned. h. Below is how the rule is supposed to be followed: xii. Identify the states' interests xiii. Construct a "regulating rule" from those state interests xiv. If a conflict remains, apply the rule of the state that is "predominantly concerned" VI. **Cavers' Principles of Preference & Universal Justice Theory:** This theory is based on judicial supremacy, so this theory believes judges choose the law. According to this theory, courts should employ principles of preference to choose what Cavers calls "the best rule". i. For example, the more stringent standard of care is always preferable and should apply. Additionally, the judge can choose "the best rule" from either the entire world or modern trends. j. David Cavers: xv. Court should employ principles of preference to choose the best rule. xvi. For example, the more stringent standard of care is always preferable and should apply. k. Friedrich Juenger: xvii. Courts should choose the best rule from either 6. the entire world or 7. modern trends. VII. **Second Restatement:** takes parts of all the legal realist approaches mentioned above and combines them together in a way where it's unclear to understand what "rules" courts should abide by. VIII. **The Second Restatement** l. In order to understand the Second Restatement, you need to look at the "master principles" that govern the entire project. The "master principles" is a statement of principles that leads to all the balancing tests listed in the Second Restatement. m. The three most significant sections of the second restatement, which each contain "master principles", are: xviii. §6---General Principles "factors," court's "choice" of law xix. §145---Torts "most significant relationship" test xx. §188---Contracts parties' "choice of law," "most significant relationship" test IX. **§ 6 Choice-of-Law Principles** n. This section lays out the basic general principles for the entire Second Restatement project. There are 2 "master principles" in §6 which is set out below: xxi. \(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law. (In other words: First, if a legislature has promulgated the secondary rule of recognition, then the forum court must obey it) i. \(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include: (In other words: Second, if the legislature has not promulgated a secondary rule, then the court chooses the substantive primary rule with a reference to a non-exhaustive list of factors. Notice the term "include", meaning that there may be other factors here that the judge could decide for himself to use even though they're not included in the list. Notice that each of the factors on the list refers to one or more of the various legal realist theories I explained above) 8. \(a) the needs of the interstate and international systems, 9. \(b) the relevant policies of the forum, 10. \(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, 11. \(d) the protection of justified expectations, 12. \(e) the basic policies underlying the particular field of law, 13. \(f) certainty, predictability and uniformity of result, and 14. \(g) ease in the determination and application of the law to be applied. X. **First Master Principle of §6 of the Second Restatement** o. The American Law Institute teaches that a legislature can direct a court to a secondary rule in one of two different ways: either explicitly or implicitly. p. Examples of explicit direction are found in the UCC which directs courts to enforce the law chosen by the parties and in the absence of a choice, apply certain states laws to certain issues arising out of the sales of goods or liens on chattels or commercial paper. q. Explicit legislative direction is rare; however, a court may nevertheless infer implicit direction by finding in a statute an intended range of application. r. Even if a statute is silent about its intended range of application, a court may read a range into it by judicial construction. XI. **Comments on § 6** s. *d*. *Needs of the interstate and international systems.* Probably the most important function of choice-of-law rules is to make the interstate and international systems work well. Choice-of-law rules, among other things, should seek to further harmonious relations between states and to facilitate commercial intercourse between them. In formulating rules of choice of law, a state should have regard for the needs and policies of other states and of the community of states. Rules of choice of law formulated with regard for such needs and policies are likely to commend themselves to other states and to be adopted by these states. xxii. Adoption of the same choice-of-law rules by many states will further the needs of the interstate and international systems and likewise the values of certainty, predictability and uniformity of result. t. *e*. *Relevant policies of the state of the forum.* Two situations should be distinguished. One is where the state of the forum has no interest in the case apart from the fact that it is the place of the trial of the action. Here the only relevant policies of the state of the forum will be embodied in its rules relating to trial administration (see Chapter 6). The second situation is where the state of the forum has an interest in the case apart from the fact that it is the place of trial. In this latter situation, relevant policies of the state of the forum may be embodied in rules that do not relate to trial administration. u. *f*. *Relevant policies of other interested states.* In determining a question of choice of law, the forum should give consideration not only to its own relevant policies (see Comment *e*) but also to the relevant policies of all other interested states. The forum should seek to reach a result that will achieve the best possible accommodation of these policies. The forum should also appraise the relative interests of the states involved in the determination of the particular issue. In general, it is fitting that the state whose interests are most deeply affected should have its local law applied. Which is the state of dominant interest may depend upon the issue involved. So, if a husband injures his wife in a state other than that of their domicile, it may be that the state of conduct and injury has the dominant interest in determining whether the husband\'s conduct was tortious or whether the wife was guilty of contributory negligence (see § 146). On the other hand, the state of the spouses\' domicile is the state of dominant interest when it comes to the question whether the husband should be held immune from tort liability to his wife (see § 169). v. *g*. *Protection of justified expectations.* This is an important value in all fields of the law, including choice of law. Generally speaking, it would be unfair and improper to hold a person liable under the local law of one state when he had justifiably molded his conduct to conform to the requirements of another state. Also, it is in part because of this factor that the parties are free within broad limits to choose the law to govern the validity of their contract (see § 187) and that the courts seek to apply a law that will sustain the validity of a trust of movables (see §§ 269- 270). xxiii. There are occasions, particularly in the area of negligence, when the parties act without giving thought to the legal consequences of their conduct or to the law that may be applied. In such situations, the parties have no justified expectations to protect, and this factor can play no part in the decision of a choice-of-law question.... w. *k.* *Reciprocity*. In formulating common law rules of choice of law, the courts are rarely guided by considerations of reciprocity. Private parties, it is felt, should not be made to suffer for the fact that the courts of the state from which they come give insufficient consideration to the interests of the state of the forum. It is also felt that satisfactory development of choice-of-law rules can best be attained if each court gives fair consideration to the interests of other states without regard to the question whether the courts of one or more of these other states would do the same. XII. **§145 Torts---The General Principle** x. This section has 2 "master principles" which is set down below, but they also follow judicial supremacy and don't achieve uniformity: xxiv. \(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6. xxv. \(2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include: 15. \(a) the place where the injury occurred, 16. \(b) the place where the conduct causing the injury occurred, 17. \(c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and 18. \(d) the place where the relationship, if any, between the parties is centered. xxvi. Note: These contacts are to be evaluated according to their relative importance with respect to the particular issue. XIII. **§188---Law Governing Contracts in Absence of Choice by Parties** y. Before we learn what §188 says, remember that: xxvii. First, the parties are always free to choose for themselves the law that will govern their contract. xxviii. Second, if they do not choose a law to govern their contract, we then apply the law of the state with the most significant relationship to the transaction. z. Moving on to what §188 says, there are 3 "master principles" which provides that: xxix. \(1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6. xxx. \(2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include: 19. \(a) the place of contracting, 20. \(b) the place of negotiation of the contract, 21. \(c) the place of performance, 22. \(d) the location of the subject matter of the contract, and 23. \(e) the domicile, residence, nationality, place of incorporation and place of business of the parties. a. These contacts are to be evaluated according to their relative importance with respect to the particular issue. xxxi. \(3) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in §§ 189- 199 and 203. XIV. **Main Takeaway of §188 of the Second Restatement** a. This section indicates that we are not at all interested in the intentions of the parties or even the parties at all. Unless they expressly tell us where to look for a secondary rule, we don't read the contract in search of personal obligations that the parties chose to undertake for themselves. b. Contracts are no longer about rights and duties, they're about state interests. The whole Second Restatement is driven by state interests. XV. **Comments on §188** c. *b*. *Rationale....* The factors listed in Subsection (2) of the rule of § 6 vary somewhat in importance from field to field and from issue to issue. Thus, the protection of the justified expectations of the parties is of considerable importance in contracts whereas it is of relatively little importance in torts (see § 145, Comment *b*). In the torts area, it is the rare case where the parties give advance thought to the law that may be applied to determine the legal consequences of their actions. On the other hand, parties enter into contracts with forethought and are likely to consult a lawyer before doing so. Sometimes, they will intend that their rights and obligations under the contract should be determined by the local law of a particular state. In this event, the local law of this state will be applied, subject to the qualifications stated in the rule of § 187. In situations where the parties did not give advance thought to the question of which should be the state of the applicable law, or where their intentions in this regard cannot be ascertained, it may at least be said, subject perhaps to rare exceptions, that they expected that the provisions of the contract would be binding upon them.... d. *e*. *Important contacts in determining state of most significant relationship....* Standing alone, the place of contracting is a relatively insignificant contact.... e. *f*. *When place of negotiation and place of performance are in the same state.* When the place of negotiation and the place of performance are in the same state, the local law of this state will usually be applied to govern issues arising under the contract, except as stated in §§ 189- 199 and 203. A state having these contacts will usually be the state that has the greatest interest in the determination of issues arising under the contract. The local law of this state should be applied except when the principles stated in § 6 require application of some other law. As stated in Comment c, the extent of a state\'s interest in having its contract rule applied will depend upon the purpose sought to be achieved by that rule. Balancing Tests in Practice --------------------------- I. **Legal Realist Classification Rules** a. The courts that followed the ***Babcock*** (NY) line of precedent (which looks into the "center of gravity" of the contract issue or tort issue at hand) settled on the distinction between two different kinds of rules classified by legal realists according to what the legal realists thought these rules were regulating. They define and divide these rules as conduct regulating rules and loss allocating rules. The definitions of conduct regulating rules and loss allocating rules is below: i. **Conduct regulating rules** → they determine primary rights, liberties, and duties. Examples are: 1. Negligence or strict liability rules (or in general, tort regulating statutes) 2. Criminal statutes ii. **Loss allocating rules** → they determine legal powers and immunities. Examples are: 3. Immunity or limited liability rules 4. Guest statutes 5. Marital immunities 6. Caps on damages II. **Why are Legal Realist Classification Rules Important?** b. How the rule is classified is important because the distinction that the courts drew here would determine which rule to apply as a rule of thumb. c. In a conflict between two regulating rules, most courts said that the law of the wrong governs. So, if we're talking about conduct regulating rules, things like criminal statutes, rules of negligence, then the common law standard is that you apply the law of the place the wrongdoing occurred. d. In a conflict between two loss allocating rules, by contrast, the state with the strongest interest in resolution of the issue, again, in the judgement of the court, is the one that governs. III. **How did the Second Restatement Weaken the Full Faith and Credit Clause?** e. In *Hague*, we learn that just because a cause of action accrued State Y, that does not mean that State X cannot apply its own law. iii. The Supreme Court held that, a state (State X) may apply its own law, even if the cause of action didn't accrue there, as long as it has significant contacts to the case in question and the interest the state has in the case is enough to where its choice of law isn't fundamentally unfair. f. In short, State X can apply its own law to a case that occurred in State Y as long as it has significant contacts to the case in question and State X's interest in the case is enough to where its choice of law isn't fundamentally unfair. IV. **The Move Away from Rules** g. ***Reich v. Purcell*** (Cal. 1967): iv. no interested state v. The law of the state where the tort occurred isn't necessarily the applicable law in the forum court. V. **The Apex of Judicial Supremacy** h. ***Milkovich v. Saari*** (Minn. 1973): vi. Leflar's "better rule" test vii. To determine choice of law in tort actions, Minnesota applied the better law approach VI. **The Weakening of Full Faith & Credit** i. ***Allstate Insurance Co. v. Hague*** (U.S. 1981) viii. significant state contacts Module 2: Domicile and Jurisdiction =================================== Domicile -------- I. **Ius Gentium's (Classical Approach) Approach Towards Domicile** a. The Ius Gentium didn't have a have a category for "domicile" or "habitual residence". b. The operative concept for most of the history of Western law was one of nationality. There was no such thing as race but there were ethnicities and nations amongst peoples. c. The basic distinction that the Ius Gentium drew, was between your private rights and your public rights and duties. Your public rights and duties, like your duty not to commit crimes, would be governed by the local law of the place you lived. However, your private rights and duties would be governed by your national law. d. There was no "Domicile" category. Instead, this is how the Ius Gentium approached the subject: i. Local law → is used when public rights are at issue 1. Example: Your duty not to commit crimes ii. National law → is used when private rights are at issue 2. Example: Your contract rights and duties II. **Differences Between the Modern Approach to Domicile and the Ius Gentium's Approach** e. The concept of nationality is replaced by two new concepts: iii. \(1) in common law jurisdictions, we get the concept of domicile and iv. \(2) in in civil law jurisdictions, we get the concept of habitual residence. f. **Common law jurisdictions** → they use the concept of Domicile. g. There are 3 types of Domicile: v. **Domicile of origin:** It's your parent's domicile when you were born. vi. **Domicile of choice:** It's the place you have chosen to replace your past domicile (so it's the domicile you choose). vii. **Domicile by operation of law:** Assuming you are an underage child, it's the domicile of your parents if they move. Also, it can be the domicile assigned to you by a court. viii. **Note:** The Common Law view what you'll spend most of your time studying since 49 out of 50 U.S. states are common law jurisdictions. h. **Civil law Jurisdictions** → they use the concept of Habitual Residence i. **Second Restatement** → they apply the state's interests that are "most seriously impaired" III. **Remember When Evaluating Issues of Domicile** j. Intention matters a lot because a person's domicile is where that person resides and intends to stay there indefinitely. (it's residence + an intent to remain indefinitely) IV. **How to Address Domicile when Person is Moving from One Place to Another** k. A person's domicile is kept until a new domicile is obtained and a domicile is obtained through physical presence and intent to remain indefinitely. l. You don't lose your old domicile until you choose a new one. So, your old domicile isn't lost until a new domicile is obtained. V. **Traditional Rule for Personal and Intangible Property** m. The traditional rule for personal and intangible property is that the law of the domicile at the time of the death controls. n. So, if you die in California, and Texas was your domicile, your personal and intangible property will be governed by Texas law. VI. **Law that Governs the Rights and Duties of Real Property** o. The law of the land where the property sits (this is the Situs rule) VII. **Difference between Habitual Residence (Civil Law View) and Domicile (Common Law View)** p. Habitual residence is used in places that use civil law rather than common law. q. The main difference between habitual residence and domicile is that you can establish a habitual residence without any intention to do so. ix. So, intention is not required for habitual residence. r. Under **habitual residence**, any habit or practice of living in a place or returning there regularly can shift one's legal status to the laws of that place whether or not one intends to live there for the rest of one's life. VIII. **Laws of Domicile Applied to Refugees, Prisoners, Military Personnel, and Students** s. The key inquiry is usually intention or voluntariness. x. Refugees detained against their will are not domiciled in the place of detention. xi. The same rule generally applies to prisoners although a prisoner can expressly or tacitly consent to domicile in the place of their confinement if they so choose. Military personnel are a bit more complicated. xii. For most purposes, military personnel are not domiciled where they are stationed unless they live off base and are free to commute. 3. But states may not prohibit military members from voting wherever they are stationed. xiii. Students are also generally not domiciled where they attend university. 4. But if a student wants to establish domicile in the state where the campus is located, they may do so. Jurisdiction Over Persons ------------------------- I. **Jurisdiction** a. **Jurisdiction** is a judicial power and without jurisdiction, a court cannot act, meaning, jurisdiction is always required. b. Jurisdiction can be obtained over i. \(1) persons (in personam) and ii. \(2) things. (in rem) c. In order for a court to have jurisdiction, a court must have **judicial competence**, meaning, the power to adjudicate over the subject matter in question. d. This idea of judicial competence also means that some courts can be competent in some areas while incompetent in other areas. iii. So, some courts might not be able to adjudicate over any case. iv. For example, admiralty courts have no competence to adjudicate questions of common law. II. **Types of Jurisdiction** e. Personal Jurisdiction v. **Personal Jurisdiction** is the courts' ability to have jurisdiction over the person. 1. Because of the Due Process Clause, courts can only exercise jurisdiction over persons to whom they can give lawful process. 2. Also, it's very important to remember that there [must] be physical presence of the person. 3. There are two types of "persons" under the law: a. \(1) natural and b. \(2) artificial 4. The plaintiff has already consented to jurisdiction by filing a complaint with the court f. In Rem Jurisdiction vi. **In Rem Jurisdiction** refers to a court\'s power to exercise authority over property or a status against a person.  g. Quasi In Rem Jurisdiction vii. Like in rem cases, **Quasi In Rem Jurisdiction** involves property; unlike true in rem cases, quasi in rem cases do not purport to resolve the status of property against all the world. viii. Rather, they proceed like an in personam case, and the property both provides a basis for jurisdiction and a way to satisfy the judgment if the plaintiff wins. III. **Process** h. The next step for carrying on the suit, after suing out the original, is called the process; being the means of compelling the defendant to appear in court. IV. **Common Pleas** i. Steps: ix. \(1) complaint x. \(2) summons 5. The summons is issued to the defendant attaching a copy of the complaint/writ so that the defendant can be on notice of what is being alleged against him. If the defendant disobeys the summons, then the next step would be an attachment which operates as a lien against his assets temporarily until judgement enters or the case is disposed in his favor. xi. \(3) attachment 6. If he ignores the attachment, then he would forfeit his assets by a process called distress/distraint. In that process, the sheriff would take his assets and income until he has paid the default judgement in the case. xii. \(4) distress/distraint xiii. \(5) capias. 7. If he cannot pay or if he committed a violent act or if all of his assets are covered by other liens, then the process of last resort would be something called a Capias. 8. The **Capias** is a writ that allows the sheriff to physically bodily seize the defendant. 9. Additionally, if there was a justified fear that the defendant would abscond before process was completed or if none of his assets could be found to be seized, then the court could skip right to the capias to make the defendant answer. c. Meaning, bodily seizure was the process of last resort. d. Bodily presence within the kingdom was a necessary condition of effective process and without process, a court had no real or effective power. e. This is why even today, physical presence within the jurisdiction is a necessary and sufficient requirement for the exercise of personal jurisdiction. V. **When Can Courts Have Personal Jurisdiction Over a Person?** j. Courts can exercise power over a person only if the person is xiv. \(1) physically present, xv. \(2) physically in the court, xvi. \(3) has an opportunity to be given notice, xvii. \(4) confront witnesses, xviii. \(5) to testify in his own defense, xix. \(6) to be tried in a trial by a jury of his peers in the vicinage, and xx. \(7) all the other requirements of due process. VI. **Two Ways to Attack Jurisdictional Validity of a Foreign Judgment** k. \(1) object to jurisdiction in forum 1 or xxi. If you object to jurisdiction in forum 1 and fail, you cannot attack the jurisdiction of forum 1 in forum 2 at a later date. l. \(2) you can wait for forum 1 to make its judgement and then object to jurisdiction collaterally in forum 2. xxii. Keep in mind that generally, forum 2 won't let you relitigate on the merits if it determines forum 1 had jurisdiction. VII. **Transient Jurisdiction** m. **Transient jurisdiction** is when a defendant is personally served with process while physically present in the forum state. n. Not only is physical presence in the forum a requirement for personal jurisdiction, but physical presence is also a sufficient condition to obtain personal jurisdiction. xxiii. Meaning, just by having physical presence, a forum has personal jurisdiction over you. o. ***Barrel v. Benjamin*** xxiv. Personal service in the forum state on a nonresident defendant who is temporarily in the forum state provides a sufficient basis for personal jurisdiction over the nonresident defendant in the forum state. VIII. **Personal Jurisdiction Over Natural and Artificial Persons (Traditional Approach)** p. **Natural Persons** -- Persons with bodies that can be seized xxv. Physical presence **AND** perfection of service (keep in mind, the defendant cannot coercively be brought into the forum's territory) q. **Artificial Persons** -- Persons without bodies that can be seized xxvi. Physical presence [and] perfection of service on an officer or agent **OR** xxvii. Continuing and systematic minimum contacts with the forum state xxviii. Defined: 10. Assets-in rem 11. Agents-in personam 12. **Explanation for artificial persons theory:** f. Artificial persons have no physical presence of their own, but they do have physical presence by proxy. g. Why? i. Because they have assets, and those assets are usually located in a place. ii. So, corporations and trusts can often answer to in rem jurisdiction placed on their assets. iii. Also, corporations generally have officers, and trusts have trustees. iv. The officers and trustees are natural persons with physical bodies. 1. Meaning, corporations and trusts can also be subject to personal jurisdiction wherever their officers and agents are. IX. **Differences Between Modern and Traditional Rules for Personal Jurisdiction** r. Over the years, courts have expanded personal jurisdiction due to the increase of international commerce. xxix. This change became evident in ***International Shoe***, which created the minimum contacts requirement for personal jurisdiction. 13. **Minimum Contacts** between the defendant and the forum state must exist in order for the forum state to have personal jurisdiction over the person. h. **Purpose:** We need to satisfy traditional notions of fair play and substantial justice in order to satisfy the Due Process requirement of the U.S. Constitution. i. **Systematic and Continuous** v. However, a single or occasional acts in a state might be enough. 14. In ***Shaffer***, minimum contacts must be met for in rem and quasi in rem jurisdiction as well. j. Minimum contacts is now the basic constitutional threshold in order for a forum state to have jurisdiction over a person. k. In Rem Jurisdiction usually satisfies minimum contacts because the property's location creates the necessary connection between the defendant and the forum state, at least for lawsuits arising from disputes about that property. l. It's important to note that you **DO NOT** need to do a minimum contacts analysis when dealing with transient jurisdiction, so the transient jurisdiction analysis stays the same. vi. The reason is that transient jurisdiction is a historical legal tradition, and most states still embrace it meaning it clearly satisfies traditional notions of fair play and substantial justice and this, the Due Process Clause is satisfied. X. **Key Things to Note** s. Physical presence is not the only basis for personal jurisdiction. t. A national forum also has jurisdiction over its citizens and a state forum over its domiciles. The Modern Approach ------------------- I. **Modern Rules** a. A forum has jurisdiction over: i. Natural Persons 1. **present** in the forum 2. **domiciled** in the forum while away ii. Artificial Persons 3. that has officers or assets **present** in the forum 4. incorporated in the forum (corporate **domicile**) iii. Any person who **consents** to jurisdiction II. **Long Arm Statutes** b. A **Long Arm Statute** is a statute that allows a forum state to exercise personal jurisdiction over a non-resident defendant as long as the non-resident defendant has certain contacts with the forum state. c. After ***International Shoe***, courts used long arm statutes to expand their jurisdiction towards foreign defendants. d. There are 2 types of long arm statutes: iv. **Laundry List Statutes** → they specify particular acts or injuries that will lead to jurisdiction over a foreign person who has notice. v. **Maximalist Statutes** → they simply lead to jurisdiction over a non-resident defendant as long as the U.S Constitution allows it. This type of long arm statute is the most common. III. **Split in Applying the Minimum Contacts Test** e. **Expansive Reasoning[:]** vi. The expansive reasoning stems from ***International Shoe*** and ***McGee*.** 5. ***International Shoe*** created the minimum contacts test and made it a requirement in order to satisfy traditional notions of fair play and substantial justice which is important to satisfy because that is what is required to meet the Due Process requirement of the U.S Constitution. 6. ***McGee*** held that a forum may obtain personal jurisdiction over a company, even though it doesn't have a physical presence in the forum state, if that company has a "substantial connection" to that state. f. **Limited Reasoning:** vii. Then, there's the limited reasoning of the minimum contacts test which stems from ***Hanson***. 7. ***Hanson*** held that a forum state has personal jurisdiction over a company if the company "purposefully availed" itself of the privilege of conducting activities in the forum state. g. In short, there are 2 ways to apply the minimum contacts test, through the expansive reasoning and limited reasoning. h. However, each use the minimum contacts test, just in different ways. i. On the exam, the exam will make clear whether to use the expansive reasoning approach from *International Shoe* and *McGee* or the limited reasoning approach from *Hanson*. IV. **Conflicting Lines of Precedent** j. Following ***McGee**:* viii. ***Burger King v. Rudzewicz*** (U.S. 1985) 8. Burger King is a Florida Company and the franchise agreement expressly provided that any disputes would be governed by Florida law. 9. The court reasoned that the franchisees had purposefully availed themselves of Florida law by agreeing to these franchise contracts making it likely that they would be sued there by soliciting and obtaining these franchises 20 years long from burger king. 10. The court also reasoned that jurisdiction was reasonable. a. Justice Brannan wrote for the court by saying that the standard that a defendant challenging the reasonableness of jurisdiction must show not merely that the forum is inconvenient but that it is so gravely difficult and inconvenient that a party unfairly is at a severe disadvantage in comparison to his opponent. 11. Brennan also announced what appeared to be a bright line rule that a defendant whose derived commercial benefit from his affiliation with a person in the forum may not defeat jurisdiction in the forum merely because the plaintiff in the forum has greater wealth and resources. 12. Brennan also famously mentioned what he believes are the 5 most relevant to reasonableness and his sliding scale of reasonableness but not justice other than Brennan adopted this approach. k. Following ***Hanson**:* ix. ***Kulko v. Superior Court of California*** (U.S. 1978) 13. A parent's sending a child to live in a state doesn't create minimum contacts sufficient to justify that state's exercise of personal jurisdiction over that parent. x. ***Asahi Metal Indus. v. Superior Court*** (U.S. 1987) 14. **Stream of Commerce:** if a company sells a product in many different places and that product causes harm in a specific place, that place can hold the company responsible for the harm V. **Purposeful Availment for Limited Reasoning Approach of the Minimum Contacts Test** l. **Purposeful Availment** is when defendant who receives commercial benefit from his affiliation with the plaintiff in the forum state cannot object to jurisdiction in the forum state simply because the plaintiff in the forum state has greater wealth and resources. xi. To validly object to personal jurisdiction in the forum state in this situation, you must show that it would be so gravely difficult and inconvenient to the point that it puts you at a severe disadvantage in comparison to your opponent. m. In ***McIntyre***, the court held that "purposeful availment" can be shown in various ways. xii. First, general jurisdiction may exist if a defendant 15. \(1) consents to litigating in a particular state, 16. \(2) accepts service of process there, 17. \(3) incorporates there, or 18. \(4) has a principal place of business there. xiii. Second, specific jurisdiction generally exists if the defendant has targeted the state for business such as with sales people or with advertisements. Jurisdiction Over Things ------------------------ I. **Three Types of Jurisdiction Over Beings** a. **In Personam (personal jurisdiction)---**a case or controversy that settles the rights of persons in their capacity as persons. b. **In rem**---a case or controversy about rights in things. c. **Quasi in rem**---a case or controversy that settles only the rights of the parties with respect to the thing. II. **How Did Quasi In Rem Threaten Other Types of Jurisdiction?** d. The 3 types of jurisdictions over beings worked for most of our history but as international commerce increased, courts began to extend their jurisdiction by bending the concept of quasi in rem. e. Some courts would use quasi in rem to gain jurisdiction over a case even though the case was in fact in personam just as an excuse to adjudicate the case. i. An example is an attachment lien or pre-judgement lien which courts would use to use an excuse to exercise jurisdiction over the case. III. **Does Quasi In Rem Jurisdiction Provide for Personal Jurisdiction Over Debtors?** f. No, quasi in rem jurisdiction over the thing does not give your personal jurisdiction (in personam jurisdiction) over the debtor. ii. However, personal jurisdiction (in personam jurisdiction) over the debtor must give the court quasi in rem jurisdiction over the debtor's assets. g. Quasi in rem doesn't give you in personam but in personam gives you in quasi in rem. Just to be super clear, in personam jurisdiction over a debtor entails quasi in rem jurisdiction over the assets of the debtor. IV. ***Combs v. Combs*** h. In order to exercise jurisdiction in rem over a thing to which a debt is attached does not give a court jurisdiction to adjudicate the foreign debt in personam. i. In other words, in rem or quasi in rem jurisdiction over security for a debt does not also lead to jurisdiction over the merits of the underlying debt obligation, because that is in personam. V. **Harris v. Balk**: In personam jurisdiction over a debtor entails quasi in rem jurisdiction over the assets of the debtor. j. Limitations: iii. ***Sniadach v. Family Finance Corp.*** 1. *Sniadach* places a limitation on *Harris* in that it holds that certain kinds of property, especially wages, cannot be seized without due process protections. This ruling makes clear that garnishments or other pre-judgment remedies must provide the debtor with notice and an opportunity to contest the action before it occurs, something that was not required in *Harris v. Balk*. iv. ***Connecticut v. Doehr*** 2. *Doehr* extended the reasoning in *Sniadach*, clarifying that pre-judgment attachment of property (including real property) cannot occur without due process protections. This ruling reinforces the principle that pre-judgment remedies must be subject to constitutional scrutiny, and it limits the broad reach of *Harris v. Balk* by imposing stronger due process constraints on property attachments. v. ***Grupo Mexicano v. Alliance Bond Fund*** 3. *Grupo Mexicano* limits *Harris* by emphasizing that a court cannot arbitrarily or preemptively freeze assets without a final judgment in hand. This is a stronger due process safeguard against overreach, especially in situations where a defendant might be deprived of their property without the full process of law being followed, including a final judgment. VI. ***Shaffer v. Heitner*:** All assertions of jurisdiction must be evaluated under the International Shoe standard. k. Delaware's quasi in rem jurisdiction over the securities did not give it jurisdiction over the shareholder derivative suit. VII. **Rule for In Rem Jurisdictions Satisfying the Traditional Notions of Fair Play and Substantial Justice Requirement of the Minimum Contacts Test** l. In rem jurisdiction can be a sufficient minimum contact to satisfy the requirement of traditional notions of fair play and substantial justice (so Due Process is met). Limitations I: Judicial Incompetence ------------------------------------ I. **No Competence, No Valid Judgment** a. **Judicial Competence** is the legal capacity of a court to resolve a case or controversy b. A court **MUST** have competence over a case or controversy before it can act in any case or controversy. c. If a court renders judgment without competence, the judgment is invalid. II. **Comity and Judicial Incompetence** d. Full faith and credit does not prevent a collateral inquiry into the jurisdiction. So, the forum 2 court is competent to examine the jurisdiction of the forum 1 court which entered the judgment. Also, the rule of absolute verity of a jurisdictional finding has no extra territorial force because sovereigns have no power outside their authority, remember that under the territoriality and comity theory, rights travel only as a matter of comity. So here is Joseph Story's doctrine of territoriality and comity theory at play in a judicial competence case: Each court must examine the jurisdiction of the foreign judgement because each court exercises only the sovereign powers of its own forum. e. However, there are two exceptions to the rules I just mentioned: i. \(1) If you have the right to appeal from the forum 1 judgment and you decide not to appeal, then you may not attack collaterally in forum 2 the competence of the forum 1 court and ii. \(2) If you do choose to appeal in forum 1, and you exhaust your appeals and you lose on appeal, the judgement then passes into absolute verity there as well. iii. So once the forum 1 decision is finalized, then there is only 3 ways to attack the finality: 1. \(1) if the judgment is not final in fact 2. \(2) if the court lacked jurisdiction or 3. \(3) if the decision has been fraudulently obtained III. ***Thompson v. Whitman***: Jurisdictional allegations contained in the record of a foreign state court's judgment are subject to collateral attack in another action brought in another state challenging the foreign state court's jurisdiction. IV. **Two Limitations on the *Thompson* Rule** f. ***Aldrich v. Aldrich***: If you have the right to appeal from the F-1 judgment and don't, then you may not attack collaterally in F-2. g. ***Durfee v. Duke***: If you do appeal in F-1, exhaust your appeals, and lose on appeal, then judgment passes into absolute verity. V. **Differentiating Judicial Competence from Due Process of Law** h. These are two different concepts that have different analyses. i. Even if a court has judicial competence to adjudicate the case, it cannot exercise jurisdiction to deprive any person of life, liberty, or property without Due Process of law. iv. Meaning, the Due Process clause acts as a second independent limitation on jurisdictional power, the first being judicial competence being necessary. j. ***Mullane v. Central Hanover Bank*** v. The classical requirement for in personam jurisdiction was personal service over a physically present person **BUT** the state has an interest in settling trusts, and we do not impose impossible obstacles to achieving that interest. vi. The new standard is to "balance" the interest of persons against the interests of states. vii. Personal service is no longer required. viii. A right to be heard must entail a right to receive information about the matter pending ix. The constructive notice by publication was not adequate to satisfy due process rights of beneficiaries. VI. **Notice via Publication** k. Publication notice is **usually insufficient** to satisfy the Due Process clause. l. The Due Process clause requires that an individual receive notice before they can be deprived of life, liberty, or property in a judicial proceeding. x. So, notice must be reasonably calculated to inform interested parties of the legal proceeding and give them a chance to object. m. A filing party must act as if it actually wants the other side to find out about the action. xi. This means that the notice must be reasonably certain to inform those affected and give them time to make an appearance. xii. Or if an appearance would be impossible, the form of notice that is used must not be substantially less likely to be effective than other options. n. This rule is less strict than the classical approach. xiii. Keep in mind that the classical requirement for personal jurisdiction was personal service over a physically present person but now it's all about state interests so now the rule has changed to the one above which is now the modern approach. VII. **Serving Foreign Defendants** o. In ***Schlunk***, if we were to follow the classical legal approach, Volkswagen would be subject to the jurisdiction of the Illinois courts in so far as they're agents, Volkswagen of America, wholly owned subsidiary of Volkswagen of Germany is within their forum. xiv. **BUT** there's a separate issue as to whether the Hague convention requires Schlunk to serve Volkswagen of Germany in Germany. p. The court says that, if the internal law of the forum requires transmittal abroad, then the Hague applies. xv. If it doesn't, then no. q. Foreign nationals are excluded for the protection of the Due Process clause but either personal service or abroad or substituted service can satisfy ***Mullane*** and that's what we have here. r. The separate issue that is being discussed is in regard to whether they received Due Process of law. xvi. How do you satisfy due process in an international setting? 4. Hague convention. 5. **BUT** the Hague Convention doesn't tell you when to go to Hague. a. So, if Illinois says you can use some other process, then you can use that other internal process Limitations II: Contracts & Wrongs ---------------------------------- I. **Two Contractual Limitations on Jurisdiction** a. The basic idea is that parties may attempt to alter the jurisdiction of their case through their contract. b. They can either give a court jurisdiction through the contract or they can remove jurisdiction from a court through the contract. c. Parties can do this through these 2 ways: [ ] i. **Prorogation:** Gives a court jurisdiction that wouldn't have had it otherwise. So, you're giving the court something they wouldn't have otherwise had. ii. **Derogation:** Removes jurisdiction from a court that would have had it otherwise. So, you're taking away from the court something they would have had if you didn't take it away from them. II. **Reminders for Prorogation and Derogation** d. Derogation logically entails prorogation (so to derogate means to prorogate). You cannot take jurisdiction away from a court without conferring it on some other court. That's obvious because someone has to have jurisdiction. However, it doesn't work the other way around. Prorogation does **[not]** logically entail derogation. That's because you can confer jurisdiction on a forum that would not otherwise have it, and the original forum that does have jurisdiction may still retain that jurisdiction. e. Yet, things are different under EU law because under EU law, prorogation legally entails derogation. The key word is legally. Prorogation doesn't logically entail derogation, but it does legally entail it under EU law. So, in the EU, if you prorogue jurisdiction on some other forum, the original forum which would otherwise have the jurisdiction, no longer has it. You can think of this as the opposite of the US rule. It's backwards in the EU. f. Note that 4 U.S states have adopted the Model Choice of Forum Act, under which the prorogation of a chosen forum **[does]** legally entail derogation from the original forum (so they follow the EU rule). However, the Act has 5 exceptions to this rule. The most expansive of those exceptions is that if it would be unfair or unreasonable to enforce the choice of forum clause. Now these standards of course vest wide discretion in courts to determine what is unjust or unreasonable so keep that in mind for any future analysis. III. **Forum Selection Clause:** It's a clause in a contract that entails which court will have jurisdiction just in case a lawsuit ends up occurring. It allows you to choose your own forum. IV. **Forum Selection Clauses in International Disputes** g. The case that talks about this issue is ***Breman**.* h. The new rule from this case is that forum selection clauses are prima facie enforceable unless enforcement would be unreasonable. i. In the case, the forum selection clause wasn't unreasonable because any troublesome effects of the clause was contemplated at the time the contract was signed. j. Note that the international character of the dispute is really important here. iii. ***Breman*** and the note cases that follow are all international disputes. iv. The ***Breman*** rule does **[not]** apply straightforwardly to interstate disputes, even interstate disputes sounding in admiralty because the supremacy clause of the US Constitution makes congressional enactments supreme even over choice of forum clauses and private contracts. V. **Forum Selection Clauses in Interstate Disputes** k. The case that talks about this issue is ***Schute***. l. The court says that we generally enforce contracts of adhesion (which this one was) as long as the parties had notice and an opportunity to reject the terms after they were given notice. m. This holding left open the question of whether a forum selection clause in an adhesion contract would still be enforced if the parties did not in fact agree to the terms. v. And this problem here is a question of fact. vi. If the purchaser had no notice of the terms, or had no meaningful opportunity to reject the terms, then there was no meeting of the minds and therefore no enforceable contract. VI. **The Terms in the Box Problem** n. It's a problem that has arisen due to the age of international digital trade. o. For example, when you purchase software application for an electronic device, you're often asked to accept the terms of service after you've already made the purchase. If you're deemed to have accepted those terms by making the purchase, then there is no contract at common law because you did not know the terms when you purchased. vii. **BUT** you might be deemed to have accepted the terms if they're shown to you after the purchase but before you begin using the product because you had notice of the terms prior to use and an opportunity to reject the terms. viii. You've already paid your money at this point, the consideration preceded the notice, and those terms would not have been enforceable at common law. p. Courts now routinely enforce contractual terms without an actual meeting of the minds where notice is given after the actual contracting, as long as there's an opportunity before the contracting parties to get out of the contract after the fact. VII. **Unenforceable Forum Selection Clauses** q. Obviously, you can obtain general jurisdiction in the corporate defendant's domicile and there's specific jurisdiction in the place of injury or contracting. But is there specific jurisdiction in the claimant's domicile? r. The courts here have adopted 2 different tests: ix. First, the traditional rule is **the "arising out" of test**. If the cause of action arose out of actions or omissions in a forum, then that forum has jurisdiction. 1. This rule is much like the vested rights approach to choice of law applied to jurisdiction. 2. The cause of action vests in the place where the actions occurred that gave rise to the cause of action which is usually going to be the place of wrongdoing. x. The second test is much more lenient. It gives more latitude for a forum to find jurisdiction. This is known as **the "but for arising out of" test**. 3. Under this test, any act or omission that is a but for cause of action is sufficient. 4. Even if it's just that the claimant lives in the forum and decided to take the cruise or engage the contract while domiciled there. 5. So, the cause of action doesn't need to vest in the place of wrongdoing under this test. Jurisdiction may lie in any place that is connected to the dispute. VIII. **How to Enforce a Valid Forum Selection Clause *(Atlantic Marine Construction)*** s. You can either file a motion to dismiss or a motion to transfer venue, or some other procedural mechanism to get the case out of the form where it currently sits. t. However, the burden of proof issue is unique regarding this issue. xi. That's because the party which is opposing transfer is going to bear the burden of proof and persuasion, even though the party seeking transfer is the moving party. xii. So, it's the backwards of the general rule. u. The presence of a valid forum selection clause therefore adjusts the analysis in these three following ways: xiii. First, as the party defying the forum selection (which is the plaintiff in these cases), the **plaintiff bears the burden** of proving that the transfer is unwarranted. By agreeing to the forum selection clause in the contract, the plaintiff made its forum selection in advance. xiv. Second, the court must consider only private interests of the parties that weigh in favor of the forum selection clause in the contract, because by agreeing to the forum selection clause, the **parties waived any challenges on grounds of their own convenience**. In regard to what counts as "private interests", the court looks at what is in the best interests of both of the parties xv. And then third, the transfer of venue will not carry with it the choice of law rules of the forum chosen by the plaintiff who flouted his contractual obligations to file in the selected forum. 6. So, if the plaintiff breaches their contractual obligations by filing a case in a specific location that disregards the forum selection clause, that changing of the venue won\'t automatically bring along the legal rules of that chosen location. In simpler terms, moving the case to a different location doesn\'t mean adopting the legal rules of the original chosen place wh