Exam Number _______________

HAMLINE UNIVERSITY SCHOOL OF LAW

Date of Examination: Monday, December 11

Professor J. Pielemeier

Fall 2000

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 seven (7) 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 materials permitted: Casebook only (may be annotated).

SPECIAL INSTRUCTIONS:

a.This examaination consists of five questions (with question I actually containing five multiple choice questions). There are suggested amounts of time for each question. These suggested times total 170 minutes, which leaves you an extra 10 minutes to allocate as you see fit.

b.Except for Question I, an answer containing only your conclusions will receive little credit. Taking into account the amount of suggested times, discuss all issues reasonably raised by each question, even though your resolution of one issue may seem to render the others moot.

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

QUESTION I (20 minutes)

For each of the following five multiple choice questions, write, in your examination booklet, the single answer that you consider the most accurate answer, based on the materials studied in this course. You may, but need not, write up to three sentences explaining any answer, which may warrant partial credit if your choice is incorrect.

1 A brought proceedings in State X for workers’ compensation benefits arising from injuries received in State Y in connection with his State X based employment. The State X proceedings determined that A’s injuries left him permanently partially disabled and awarded him a lump sum payment of $50,000 under State X law. Assume that State X’s workers’ compensation law does not contain unmistakeable language precluding a subsequent workers’ compensation award in another state.

A then initiated proceedings for workers’ compensation benefits, arising out of the same injury, in State Y, which provides for higher compensation awards. A also hoped that the State Y proceedings would determine that he was permanently totally disabled, rather than permanently partially disabled as had been determined in the State X proceedings.

A.State Y may not entertain A’s claim because his employer is entitled to rely on State X’s determination for full faith and credit purposes.

B.State Y can entertain A’s claim for an increased compensation award, but A may not relitigate the extent of his disability.

C.State Y can entertain A’s claim and make its own ruling as to the extent of A’s disability and the appropriate amount of compensation.

D.State Y can entertain A’s claim but may grant additional compensation only if it finds that A was more disabled than State X’s proceedings determined.

2.A, who is not an American Indian, was driving on a State road within the borders of an Indian Reservation when he was involved in a collision with a car driven by B, an American Indian who was an enrolled member of the Reservation’s Tribe. B wishes to sue A in the Reservation’s Tribal Court.

A.The Tribal Court would have jurisdiction because the accident was within the Reservation borders.

B.The Tribal Court would lack jurisdiction because it cannot assert jurisdiction over claims against non-Indians.

C.The Tribal Court would lack jurisdiction because the highway is the equivalent of fee land and the interests of the Tribe are not sufficiently implicated.

D.The Tribal Court would have jurisdiction because the accident was within the Reservation borders and involved a member of the Tribe.

3.A principle reflected by Ferens v. John Deere Co. (page 724 of your casebook) is that in a diversity action transferred from a federal court in one state to a federal court in another state, the transferee court should apply the choice of law rules that would have been applied by the courts of the state in which the transferor court was sitting. This principle:

A.Should be applied even if the transferee court determines that the courts of the state where the transferor court was sitting would have dismissed the action for lack of personal jurisdiction or on forum non conveniens grounds.

B.Should not be applied if the transferee court determines that the courts of the state where the transferor court was sitting would have dismissed the action for lack of personal jurisdiction or on forum non conveniens grounds.

(Yes, there are only two choices for this question.)

4.Under the Federal Torts Claims Act, the liability of the United States for an injury is to be determined “in accordance with the law of the place where the act or omission occurred.” This language has been construed as mandating:

A.Application of the substantive law of the state where the act or omission occurred.

B.Application of the choice of law doctrines of the state where the act or omission occurred.

C.Application of the substantive law of the state where the injury occurred.

D.Application of the choice of law doctrines of the state where the injury occurred.

5.A statute of State X provides that all claims against State X must be brought in courts in State X, and not elsewhere. A governmental employee of State X was driving a car owned by State X in State Y when he was involved in an accident there, injuring citizens of State Y. The citizens of State Y sued State X in a court in State Y for their injuries resulting from the accident. State X moves to dismiss based on the State X statute.

A.State Y cannot refuse to hear the claim because to do so would improperly discriminate against claims against non-resident defendants, violating full faith and credit principles.

B.State Y must dismiss the claim because of the State X statute.

C.State Y may dismiss the claim in deference to the State X statute.

D.State Y can hear the claim, but it must recognize any defenses based on sovereign immunity that exist under the laws of State X.

QUESTION II (20 minutes)

In most states, parties litigating rights involving real property may file, in the county courthouse where the real property is located, a “notice of lis pendens.” The purpose of such a notice is to notify prospective purchasers and creditors that there is an action pending that may effect the property, and to prevent frustration of the rights asserted in the litigation that might otherwise result from sale or encumbrance of the property. The notice of lis pendens does not, in itself, create any rights in the property. However, if the rights asserted in the litigation are ultimately established, and are reflected in a judgment that is recorded in the county where the real property exists, all interests in the property that were obtained after the filing of the notice of lis pendens will be subject to the rights established by the judgment.

Smith, a citizen of state X, thought he had a deal with Jones, also a citizen of state X, to purchase some real property owned by Jones in state Y. When Jones refused to convey, Smith sued Jones in state X for specific performance of the contract to convey the property. State Y has a lis pendens statute, providing that “a party to an action involving title to real property may file in the office of the recorder of the county in which the property is situated a notice of the pendency of the action or defense.” Pursuant to this statute, when Smith commenced the action for specific performance in state X, he also filed a notice of lis pendens reflecting the pendency of this action in the recorder’s office in the county in state Y where the property was located.

Shortly after this was done, Jones brought an action in state Y to have the notice of lis pendens removed from the property records, asserting that the court in which the state X action was pending had no jurisdiction over the real property in state Y. Discuss how this action should be resolved.

QUESTION III (40 minutes)

State X and State Y border each other. ABC Car Rental, Inc. (“ABC”), is a State X corporation with its principal place of business in State X. It rents cars from its places of business in both State X and State Y.

Ben Baker, a domiciliary of State Y rented a car from ABC at one of its places of business in State Y, 150 miles from the State X border. Baker planned to drive the car to Bakerville, a town in State Y that was just across the border from State X. When the ABC agent asked him for a telephone number where he could be reached, he gave the number of the home of his brother, Chad Baker, in Bakerville where he would be staying, which had an area code of 473. All telephones with this area code were in State Y.

After arriving in Bakerville, Ben, with Chad as his passenger, drove the car into State X, where Ben negligently drove into a ditch, causing severe injuries to Chad. These injuries required extensive hospitalization and rehabilitation and left Chad permanently disabled.

After an investigation, Ben’s auto liability insurance company paid Chad $100,000, which was the upper limit of liability under Ben’s policy. This amount covered most of Chad’s hospitalization and rehabilitation expenses, but he is likely to be destitute and have to rely on welfare benefits if he cannot obtain any further recovery. Chad has come to your office for any advice you may have.

Under the law of State X, lessors of cars are vicariously liable for injuries negligently inflicted by those driving a car pursuant to a rental agreement. Under the law of State Y, however, there is no such vicarious liability. Thus, Chad would have a viable claim against ABC if State X law applies, but not if State Y law applies.

Your preliminary investigation also revealed the following. The rental car Ben was driving was registered in State Y and ABC’s insurance for it was purchased at State Y’s insurance rates, which are significantly lower than State X’s insurance rates for a similar rental vehicle. The rental contract between ABC and Ben contained no choice of law clause. You have also determined that State X’s law is clearly the minority view in the United States, and that during the preceding year, State Y’s legislature defeated, by a 2-1 margin, a proposal to adopt a law similar to that of State X.

State Y’s courts apply the traditional territorialist approach to choice of law issues. State X’s courts apply the Better Rule approach. Based on your understanding of these approaches and cases applying them, where would you recommend that Chad file suit. Explain the reasoning leading to your conclusion.

QUESTION IV (60 minutes)

State X and State Y border each other. Myers, a domiciliary of State X, frequently drove in State Y on shopping trips. She was on such a trip, driving her automobile on a four lane divided highway in State Y when Rogers, also a domiciliary of State X and driving on the same road, passed Myers and quickly moved back into the lane in front of her. This startled Myers, who lost control of her car and crossed the median into oncoming traffic. Myers’ auto collided with an oncoming auto driven by Evans, a citizen of State Y. Both Myers and Evans were seriously injured in the accident. Rogers was not hurt. The automobiles of all three drivers were registered and insured in their home states.

Evans brought suit against both Myers and Rogers in State X, alleging that their negligence caused her injuries and seeking damages. Myers asserted a crossclaim against Rogers, asserting that Rogers’ negligence caused her injuries and seeking damages against Rogers. The case was tried before a jury, which found that Myers’ comparative fault was 60% and that Rogers’ comparative fault was 40% (and that Evans was not at fault at all). The jury also determined that Evans’ damages were $1,500,000, and that Myers’ damages were $500,000.

You are a law clerk to the judge in the case. Knowing that you took Conflict of Laws, the judge has asked for a memo on two choice of law issues that are raised by the above facts. Assume that the parties raised these issues in a timely manner. Also assume State X uses Interest Analysis to resolve choice of law issues, and will consider principles and cases from other jurisdictions using Interest Analysis, including New York. It has rejected, however, the use of Comparative Impairment.

The first issue stems from the fact that State X applies principles of pure comparative fault. Under State X law, plaintiffs can recover damages from defendants proportionate to the defendant’s share of fault, even if the plaintiff’s fault is greater than that of the defendant. If State X law is applicable on this issue Myers should receive a judgment against Rogers in the amount of $200,000 (Forty percent of Myers’ damages of $500,000).

State Y also applies principles of comparative fault, but under its law, plaintiffs can recover against defendants only if their fault was not greater than that of the defendant. A State Y case (which was not a conflicts case) discussing this rule states that it reflects a policy that “those who are most at fault in an accident, causing injury in our state, should not be entitled to recover from those who are less responsible.” If State Y law is applicable, Myers should recover nothing from Rogers, because her comparative fault was determined to be greater than that of Rogers.

The second issue stems from the two States’ rules on joint and several liability, and the fact that the parties have informed the court that Myers has liability insurance coverage of only $300,000, while Rogers has liability insurance coverage of $2,000,000. Neither Myers nor Rogers have substantial other assets from which to collect a judgment.

Under State X law on joint and several liability, plaintiffs can recover 100% of their damages from any defendant found to be liable to them, regardless of the defendant’s degree of fault. Thus, under State X law, Evans would receive a judgment against both Myers and Rogers for her $1,500,000 damages, and could recover it from the assets (including liability insurance coverage) of either or both.

Under State Y law, however, a defendant can be required to pay the total amount of a plaintiff’s damages only if the defendant is found to be 60% or more at fault. Otherwise, a judgment may only be rendered against defendants proportionate to their degree of fault. Because Rogers was found to be only 40% at fault, under State Y law, Evans’ judgment against Rogers would be limited to $600,000 (40% of $1,500,000).

Taking into account the amount of time permitted for this question, discuss which State’s law the State X court should apply on each of the two issues. (Again, recalling that State X uses Interest Analysis.)

QUESTION V (30 minutes)

State X and State Y border each other. Mortons, Inc. is incorporated and has its principal place of business in State X. It also has a physical branch office in State Y. Among other lines of business, Mortons buys and sells fine art. In late 1999, Mortons purchased a collection of paintings from a European art dealer, and throughout 1999 and the first half of 2000, re-sold these paintings to individual collectors in both State X and State Y. It sold one of these paintings to Newton, who lived in State X, for $100,000. The sale transaction took place entirely in State X.

In early July, 2000, those who had purchased paintings from this particular collection began to discover that all of the paintings were forgeries, and were almost worthless. When the purchasers demanded refunds from Mortons, it offered compensation in the amounts of the purchase prices. That offer wasn’t good enough for Newton, however. He became extremely angry about what occurred, and has come to you to explore the possibilities of additional compensation.

After preliminary investigation of the facts and legal research, you have determined that the only legal theory under which additional compensation might be warranted is a fraud claim, under which punitive damages can be awarded. Your research has determined that under the law of State X, a plaintiff can recover for fraud only if there is proof the defendant knew, in fact, that the paintings were forgeries when it sold them. Under the law of State Y, however, a plaintiff can recover for fraud by proving that the defendant, acting reasonably, should have known that the paintings were forgeries. You do not think that there is evidence sufficient to establish fraud under the standards required by State X law, but you do think there is sufficient evidence to establish fraud under State Y law. You have also ascertained that a court in State X would apply State X’s law, but you also think you would have a decent chance of persuading courts in State Y to apply State Y law under its “Better Rule” approach.

Assume that Mortons’ physical branch office in State Y would suffice for the permissible exercise of personal jurisdiction over Mortons there. Assume you also anticipate that if you brought suit in State Y, Mortons would argue that it would be unconstitutional for State Y to apply its law to Newton’s fraud claim. Discuss whether this argument by Mortons would be likely to succeed. (Assume that Newton has told you that he would be happy to move to State Y, where two of his adult children now live, “if it would help.”)