HAMLINE UNIVERSITY SCHOOL OF LAW

Date of Examination: Thursday, May 13

Professor J. Pielemeier

Spring 1999

FINAL EXAMINATION--CONFLICT OF LAWS

CODE OF CONDUCT

Violations of the Code of Conduct include: (1) unauthorized conversation among students concerning the examination; (2) giving, receiving, or soliciting unauthorized aid; (3) using materials which are not specifically permitted by the written examination instructions; (4) exceeding the examination time limit; or (5) any other dishonest conduct in connection with the examination.

INSTRUCTIONS

1. This examination consists of five (5) pages in addition to this cover page. Please ensure that you are not missing any pages.

2. The time allowed for this examination is three (3) hours.

3. Outside material permitted: Casebook (may be annotated).

SPECIAL INSTRUCTIONS:

a. This examination consists of six questions. There are suggested amounts of time for each question, which total three hours, which is the total amount of time permitted for the exam.

b. Taking into account the amount of suggested times, unless otherwise directed, discuss all issues reasonably raised by each question, even though your resolution of one issue may render the others moot.

c. Unless otherwise indicated, assume that a “state” or “F-1, etc., is one of the United States.

Question I

(Ten minutes)

Briefly discuss whether the Supreme Court’s decision in Thomas v. Washington Gas Light Co. (Page 823 of your casebook) supports the following proposition: An injured plaintiff who recovers a judgment in a court in a state that does not permit punitive damages may sue the defendant again on the same claim in a court in another state that permits punitive damages and recover punitive damages there.

Question II

(Ten minutes)

The state of California has a statute that provides: “The parties to any contract ...may agree that the law of this state shall govern their rights and liabilities and duties in whole or in part, whether or not the contract ...bears a reasonable relation to this state.” A, from Wisconsin, and B, from Minnesota, enter a contract to be performed wholly within those states. Their contract includes a choice of law clause providing that California law shall apply in resolving any and all disputes arising out of the contract. Discuss whether, as a general proposition, Minnesota and Wisconsin courts should honor that clause in a suit between A and B arising out of the contract.

Question III

(Twenty Minutes)

In Sun Oil Co v. Wortman (page 426 of your casebook), the U.S. Supreme Court held that it is constitutionally permissible for states to apply their own statutes of limitation in actions filed in their courts (at least if the statutes of limitation of all concerned states were “procedural”), regardless of whether the underlying claim had any connection with the state.

Assume A and B, each from state X, are involved in an accident in state X. State X’s statute of limitation for claims such as A’s is 2 years. The statute of limitations of state Y, which borders state X, is three years. Assume A does not get around to bringing an action against B until more than two years after the accident. A therefore files her claim in state Y (assume state Y can assert personal jurisdiction over B).

Notwithstanding the holding in Sun Oil, discuss whether state Y, if it focuses on state interests and the policies underlying statutes of limitation, should apply its statute of limitation permitting the claim or whether it should apply state X’s statute of limitations and dismiss A’s suit. (Assume the statutes of limitation of both states would be deemed “procedural” under traditional conflicts rules.)

Question IV

(20 minutes)

A (a Canadian citizen) sued B (a Kansas corporation with its principal place of business in Kansas) in a Canadian court and recovered a judgment of $4,000,000, including punitive damages of $3,000,000.

Unable to collect the judgment in Canada, A brought an action against B on the Canadian judgment in Iowa. B resisted the Iowa action on the ground that the claim sued on in Canada violated Iowa’s public policy. The Iowa court rejected B’s argument, and entered an Iowa judgment for $4,000,000.

Unable to collect the full judgment on B’s assets in Iowa, A then brought an action against B on the Iowa judgment in Kansas. Kansas law did not permit recovery for the sort of claim sued on in Canada, and the Kansas Constitution prohibits any award of punitive damages.

B argued that the Kansas courts need not give full faith and credit to the Iowa judgment because the underlying claim in Canada and the award of punitive damages were contrary to the public policy of Kansas, and that the Kansas courts lacked power to award punitive damages. B did not challenge the jurisdiction of either the Canadian or Iowa courts to render their judgments.

The Kansas courts declined to recognize the Iowa judgment, agreeing with B’s arguments and further stating, “If we were required to recognize the Iowa judgment, that would open up ?back- door’ ways to enforce foreign country judgments that violate our public policy.”

Discuss the propriety of the Kansas courts decision.

Question V

(60 minutes)

State X and State Y border each other. Mary Adams was driving on a highway in her home state of X when she was involved in a collision with a car driven by John Carter, a 19 year old college student. Carter, who lived and went to school in state Y, had borrowed the car he was driving from a friend’s father, Larry Baker, who also lived in state Y. Adams was seriously injured in the accident, and has asked you to represent her in an attempt to recover damages for her injuries.

After investigating the matter, you have come to the conclusion that you could probably persuade a jury that Carter negligently caused the accident and that Adams was not at fault. It also appears, however, that Carter had no insurance and that his assets appear so minimal that it would not be worth the effort to bring an action against him.

As a possible “solution” to this problem, your legal research has determined that under the law of state Y, the owner of an automobile may be held liable for its negligent operation by persons driving with the permission of the owner. Under the law of state X, such owners would not be liable unless they “negligently entrusted” their auto to the driver--you doubt you’d have success in proving such negligent entrustment.

Because it appears that Baker has substantial insurance, as well as other assets, you have decided to bring suit against him on behalf of Adams, asserting liability on the basis of state Y’s law noted in the preceding paragraph. You have decided to bring the case in state Y (you live in a border area, where the accident happened, and are licensed to practice in both states) because you read state X’s traditional conflicts caselaw as leading almost certainly to its application of state X law, and your hope that state Y’s courts will apply state Y law on the issue of owner liability.

An additional legal issue that concerns you stems from the fact that Adams was not wearing a seat belt at the time of the accident. Her treating physician, as well as another physician you hired to go over her medical file, have given the opinion that her injuries would have been substantially reduced, perhaps to the point of being inconsequential, had she been wearing a seat belt.

State Y law includes a “Seat Belt Defense,” whereby a defendant in an action resulting from an auto accident is not liable for any injuries that probably would have been prevented had the plaintiff been wearing a seat belt. In contrast, the law of state X does not include such a defense, and a plaintiff’s failure to wear a seat belt has no bearing on the extent of a defendant’s liability.

You anticipate that should you sue, Carter’s attorney will argue that state X’s law should be applied on the issue of owner liability, and that state Y law should apply on the existence of the “Seat Belt Defense.”

The Supreme Court of state Y recently abandoned the use of traditional territorialist Conflict of Laws rules in tort cases, announcing it was adopting interest analysis and that it would consider arguments based on principles applied and precedent from other states that have adopted interest analysis, including New York. It also stated, however, that it was not inclined include Comparative Impairment in its methodology, so you need not go into that in your analysis of this question.

Taking into account and noting arguments you think Carter’s attorney might reasonably make to the contrary, discuss how you would try to persuade state Y’s courts to apply state Y law on the issue of owner liability, and state X’s law on the existence of a “Seat Belt Defense.” After discussing each of these issues, give a brief evaluation of your likelihood of success.

Question VI

(60 Minutes)

John Rogers, a citizen of State A, was employed in Management at the State A headquarters of Sherman, Inc. (A State A corporation with its principal place of business in State A) for ten years. He then voluntarily left the company to work for Torbo, Inc. (a State B corporation with its principal place of business in State B) in its main State B offices. When he took the Turbo job, Rogers moved to State B.

Rogers’ employment contract with Sherman, which was made in State A, had included a “Management Incentive Plan” (MIP). The MIP provided that an ex-employee who met all the conditions of the plan would receive a number of shares of Sherman stock in each of the ten years following termination of employment. One of the conditions of the MIP was that the employee refrain from engaging in employment with a competitor of Sherman. If Sherman determined that a former employee had accepted employment with a competitor, all of the employee’s rights to stock under the MIP were forfeited.

When Rogers gave his notice that he was going to work for Torbo in State B, Sherman notified him that Turbo was a competitor and that he would receive no stock payments under the MIP.

When the first stock payment would have become due, Rogers sued Sherman for the stock in a State B court. Personal jurisdiction was premised on the existence of a ten person office Sherman maintained in State B. (You need not discuss whether personal jurisdiction was constitutionally permissible.) (For what it’s worth, this office existed in State B when Rogers signed his employment contract with Sherman.)

Sherman moved for summary judgment, based on the uncontested fact that Turbo was a competitor of Sherman. Under State A law, forfeiture clauses such as those in Rogers’ contract are valid. (The State A cases so holding stress State A’s policy favoring freedom to contract.) State B’s law, however, invalidates such clauses. (The State B cases so holding stress State B’s policy favoring freedom of employment.) Thus, if State A law were applied, Sherman’s motion would be granted, but if State B law were applied, it would be denied.

Assume that the law of forty states on the validity of such forfeiture clauses is consistent with that of State A. Assume that ten states, including State B, have determined that such clauses are invalid, all within the past 15 years. Finally, assume that State B law on this point is pursuant to a State B statute.

Assume State B has adopted the Better Rule approach to resolving Conflict of Laws issues, and will consider principles applied and precedent from other states that have adopted that approach. Discuss (1) which state’s law should be applied pursuant to State B’s application of the Better Rule approach; and (2) whether, if State B decides application of State B law is appropriate under its approach, application of State B law is constitutionally permissible.