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Civil Procedure Fall 2014

Introduction to Choice of Law, Vertical and Horizontal

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This note introduces you to choice of vertical (the Erie doctrine) and horizontal choice of law. I should warn you that along with the "arising under" material and preclusion, I think this is the most intellectually challenging aspect of the course. Therefore, do not be surprised if you find this hard... it is hard!

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You may want to delay reading the portions on horizontal choice of law till we actually get there in the course.

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Consider this hypo:

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Hypo 9-1: John Gage (residing in Boston, MA) sues Diana Murphy (residing in LA, CA) for $1,000,000 for breaching a contract that they made in California - Murphy offered Gage 1 million dollars for "one night with your husband" to be enjoyed in Boston. Gage agreed, Murphy has her night of passion, but Murphy did not pay. Murphy has a defense that the loan violated California law against the enforceability of meretricious contracts, but under Massachusetts law such contracts are enforceable. Murphy lives in California and visits Massachusetts once a week. In which of the following courts can the suit by brought: the federal court for the District of Massachusetts, the federal court for the Central District of California (covering LA), Massachusetts state court, or the California state court?

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Its answer - relating to SMJ and PJ - does not address a further question: what law will apply in any of the courts in which it can be brought?

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In fact, there are two sets of questions. First, assume the case is brought in federal court. Will the federal court apply federal law or state law? In fact, as we will see, to some elements of the case the court will apply federal law and to some state law; sorting out which is the function of vertical choice of law, more commonly known as the Erie doctrine.

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Second, suppose he can sue in Massachusetts state court. Will that court apply Massachusetts or California law? This is a question of horizontal choice of law. This is an extremely complex subject, of which I will only give you a small taste in this course - it is covered in more depth in some of the 1L international courses and Prof. Singer teaches an upper year course devoted to the subject.

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Indeed, life gets more complicated. Suppose he sues in Massachusetts federal court. Now we have both a vertical and horizontal choice of law question combined. On what issues will the court apply state law rather than federal law? As to those issues does it apply Massachusetts or California state law?

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We will try to take these issues one-by-one.

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I. Vertical Choice of Law, more commonly known as the "Erie" doctrine

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In this portion of the course, there are a few main questions we will try to answer:

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How much of this issue is controlled by the U.S. Constitution?

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How do you determine which issues to apply state law to and which issues to apply federal law to (we will spend most of our time on this, there is a progression of cases from Erie on)?

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NOTE: I will save the Supreme Court's most recent Erie case, Shady Grove, for later in the course if we get to class actions because it will be incomprehensible wihtout understanding a little about class action law.

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If a federal court determines it needs to apply state law on an issue of a particular state - say Massachusetts - how does it determine what the law of that state is?

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II. Horizontal Choice of Law

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Much of the common law first year subjects (contract, property, torts) are devoted to teaching you about the conflicting case law on particular subjects between different states. In torts, does the state recognize negligent infliction of emotional distress as a tort? Does the breach of a contract get you consequential damages (Hadley v. Baxendale)? Therefore, states frequently disagree. As a result, it will be important to know which state's law to apply.

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The early approach to this issue in the U.S. was encapsulated in the Restatement (First) on Conflicts of Law (1953) approach. It had different rules for different common law subjects, but for torts the rule was: look to law of the place of the wrong. What does that mean? "The place of the wrong is the state where the last event necessary to make an actor liable for an alleged tort takes place." At the same time, the Restatement instructs that: "All matters of procedure are governed by the law of the forum."

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We will use the Alabama Great Southern Railroad Co. v. Carroll case to understand how this Restatement (First) approach worked. We will also use it to explore the approach's theoretical underpinnings, and understand why many became disenchanted with the approach (though it is still in place in some states).

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We will then explore the more modern, interest-balancing approach to choice of law encapsulated in the Restatement (Second) on Conflicts of Law. The case we will use to show the operation of this approach is Schultz v. Boy Scouts of America. I warn you the case is extremely complex. I use it in part because of the complexity, to show you how much more standard-like the Restatement (Second) approach is. I do not, however, expect you to master the Restatement (Second) approach. That is what the upper-year course is for.

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Instead I just want you to get a feel for it, and its benefits and drawbacks over the Restatement (First) approach.