U.S. Conflict-of-Laws Doctrine and Forum Shopping, International and Domestic (Revisited)

Transcription

1 U.S. Conflict-of-Laws Doctrine and Forum Shopping, International and Domestic (Revisited) RALPH U. WHITTEN SUMMARY I. INTRODUCTION II. III. PROFESSOR JUENGER S ASSESSMENT OF THE EFFECT OF CONFLICTS DOCTRINE ON FORUM SHOPPING AND WHAT SUBSEQUENT RESEARCH REVEALS ABOUT HIS CONCLUSIONS A. Professor Juenger s Conclusions B. The Subsequent Research C. International Forum Shopping D. Reforms to Eliminate Forum Shopping THE LEX FORI APPROACH AND INTERSTATE AND INTERNATIONAL FORUM SHOPPING A. The Nature and Extent of Lex Fori Systems in the United States B. Kentucky C. Nevada D. Michigan E. Evaluation of the Existing Lex Fori Systems IV. A NATIONAL DEFAULT LEX FORI RULE V. CONCLUSION I. INTRODUCTION It is a great honor to participate in a conflict-of-laws symposium dedicated to the memory of Friedrich Juenger. During his long and illustrious career, Professor Juenger had occasion to comment on every imaginable issue in conflicts and comparative law. His commentary is rightly considered essential reading for students and scholars of both subjects. His work has attained classical status in the fields in which he labored, and it will surely retain that status in perpetuity. Those of us who have had the opportunity not only to read his rich contributions to the conflicts and comparative law literature, but also to hear him speak on the many subjects of which he was a master, are truly fortunate. Professor Juenger s extensive contributions to conflicts-of-law literature have made my task in this symposium considerably easier. I have been asked to address the effect of Professor of Law, Creighton University; B.B.A. 1966, University of Texas; J.D. 1969, University of Texas School of Law; L.L.M. 1972, Harvard University. 559

2 560 TEXAS INTERNATIONAL LAW JOURNAL [VOL. 37:559 U.S. conflict-of-laws doctrine on international forum shopping. In 1989, Professor Juenger wrote an article for the Tulane Law Review entitled Forum Shopping, Domestic and International. 1 In that article, he surveyed the elements that contribute to international and domestic forum shopping, including conflict-of-laws doctrine, and astutely evaluated the relative effect of each element. The judgment I reach in this article is that his assessment of the effect of conflict-of-laws doctrine on both domestic and international forum shopping was correct in 1989 and remains correct today. Indeed, the information accumulated since Professor Juenger wrote his article tends to confirm the conclusions that he reached. In a nutshell, the conclusion of his article, insofar as the contribution of conflict-of-laws doctrine to forum shopping is concerned, is that choice-of-law doctrine contributes somewhat to the litigants selection of the location of suit, but that it is more often subordinated to other factors that influence the choice of forum. 2 Since Professor Juenger wrote his 1989 article, we have accumulated additional empirical data on the effect of choice-of-law doctrine on forum shopping that supports his conclusion. 3 In addition, a significant scholarly consensus agrees that conflict-of-laws doctrine is not the most important factor in forum shopping, especially in the context of domestic litigation. 4 Although Professor Juenger s conclusions applied to both domestic and international forum shopping, I will argue that modern U.S. conflict-of-laws doctrine offers somewhat greater incentives to forum shop for U.S. courts over foreign courts than it does to shop between different U.S. courts. Properly understood, I believe that the empirical work done since Professor Juenger s article was published also tends to support this conclusion. Even so, however, it is unclear to what extent international forum shopping is intensified by U.S. conflict-of-laws systems, as opposed to the other factors that make U.S. courts attractive to foreign litigants, because no empirical studies have been done directly on the question of international forum shopping. 5 Both the empirical evidence and the existing scholarly consensus developed since Professor Juenger s article indicate that there is a strong tendency under all modern conflicts systems to apply forum law. Therefore, it is also interesting to examine whether forum shopping would be affected if all U.S. states shifted to a lex fori system for determining the applicable law. In effect, a state applying a lex fori system abandons a conflict-of-laws approach to the determination of the applicable law in multistate and multinational cases and simply applies its own law whenever it is constitutional for it to do so. 6 An examination of the lex fori systems existing in the United States will, I believe, demonstrate that adoption of a lex fori approach would not appreciably affect forum shopping at the interstate or international level. To the extent that conflict-of-laws methodology is designed to eliminate forum shopping, therefore, a reform of U.S. conflicts law that would result in all states applying their own law to multistate and multinational disputes would not exacerbate existing forum-shopping woes. Moreover, this reform might offer additional advantages in the form of greater honesty in judicial opinions and elimination of the transaction costs of administering complex modern conflicts systems. However, it is also true that universal, or 1. Friedrich K. Juenger, Forum Shopping, Domestic and International, 63 TUL. L. REV. 553 (1989) [hereinafter Juenger, Forum Shopping]. 2. See infra Section II.A and text accompanying notes 7 16 (discussing Juenger s conclusions). 3. See infra Section II.B and text accompanying notes (discussing empirical work done after Juenger s article and the reasons it supports his conclusions). 4. See infra Section II.B and text accompanying notes (discussing the consensus). 5. See infra Section II.C and text accompanying notes 46, 50 (discussing the different incentives bearing on domestic and international forum shopping). 6. See infra Section III.A D and text accompanying notes (discussing the lex fori systems in the United States).

3 2002] U.S. CONFLICT-OF-LAWS DOCTRINE AND FORUM SHOPPING 561 even extensive, adoption of lex fori systems by the states is unlikely in present circumstances. A final question is whether national legislation on conflict of laws and related matters can alleviate the adverse effects of interstate and international forum shopping. An examination of the possible ways in which forum shopping might be addressed at the federal level will show that national legislation could diminish forum shopping. Indeed, national legislation offers the only realistic hope of significantly diminishing forum-shopping incentives. The prospect for national legislation, however, is dim for precisely the same reasons that conflict-of-laws doctrine is in disarray in the United States today: the policy choices about which law should control multistate and multinational transactions are both difficult and controversial, making effective legislation politically improbable. Regardless, it may be possible for national legislation to address forum shopping and related matters in a piecemeal, evolutionary fashion. Under this approach, it is interesting to inquire whether Congress would have the power to mandate or at least encourage adoption of lex fori systems in the states. These systems could act as default systems that would operate within the gaps left by selective adoption of national substantive rules, national conflict-of-laws rules, national forum restriction rules, and national judgment enforcing rules in multistate and multinational cases. Section II of this article will explore Professor Juenger s assessment of the effect of conflict-of-laws doctrine on domestic and international forum shopping. In addition to describing Professor Juenger s view on the relative contribution of conflicts doctrine and other elements of our litigation system to forum shopping, Section II will examine how his judgments have withstood the test of time, including how empirical investigations of U.S. conflicts law that were published after Professor Juenger wrote his 1989 article have affected his conclusions. Section III will then examine whether the adoption of a lex fori approach to determining the applicable law will affect forum-shopping incentives or offer other benefits in comparison to existing choice-of-law systems. Several U.S. states have adopted a partial lex fori approach to the determination of the applicable law in multistate cases, and these states will provide the backdrop by which to examine the lex fori approach in general. Section IV will examine whether national legislation would represent a solution to forum shopping as well as other problems in interstate and international litigation conducted in the United States. Section V will conclude with observations on the prospects for improvement in the conflict-of-laws enterprise in the United States. II. PROFESSOR JUENGER S ASSESSMENT OF THE EFFECT OF CONFLICTS DOCTRINE ON FORUM SHOPPING AND WHAT SUBSEQUENT RESEARCH A. Professor Juenger s Conclusions REVEALS ABOUT HIS CONCLUSIONS One central point in Professor Juenger s 1989 article is that we lack empirical knowledge about the weight that litigants give to any of the numerous incentives to forum shop in the United States. 7 Although his article did not supply the missing empirical work on forum shopping, it did assert that a number of features of our litigation system contributed to the ability of litigants to choose a forum in order to obtain a favorable outcome on the merits. He observed that, in addition to choice-of-law doctrine, principles 7. Juenger states: I am not aware of any American in-depth study, empirical or otherwise, that focuses on [forum shopping]. Juenger, Forum Shopping, supra note 1, at

4 562 TEXAS INTERNATIONAL LAW JOURNAL [VOL. 37:559 of personal jurisdiction, 8 rules governing judgment recognition, 9 and the availability of sympathetic juries 10 are features of the U.S. litigation system that encourage interstate forum shopping. 11 Additionally, in international litigation, plaintiffs prefer U.S. courts because of the legality of contingency fees in the United States 12 and the broader discovery available under U.S. procedural rules modeled after the Federal Rules of Civil Procedure. 13 Nor are forum-shopping mechanisms limited to plaintiffs. As Professor Juenger observed, the inhospitable attitude toward aliens 14 embodied in the U.S. Supreme Court s forum non conveniens jurisprudence has given defendants in products liability and other actions a method of engaging in reverse forum shopping in the international context. 15 Professor Juenger s conclusion was that, while favorable conflict-of-laws rules and the correspondingly favorable substantive law that follows them sometimes influence both domestic and international litigants to forum shop for particular U.S. courts, other factors dominate the selection of forum in most cases. 16 B. The Subsequent Research Since Professor Juenger wrote, limited empirical studies of U.S. conflicts law have been performed. These studies have indirectly confirmed Professor Juenger s judgment about the contribution of conflict-of-laws doctrine to forum shopping, at least in the domestic context. In 1992, Professor (now Dean) Patrick Borchers studied the operation of U.S. conflict-of-laws systems in tort cases. 17 His study concluded that the vested rights Id. at Id. at See id. at See id. at See id. at Juenger, Forum Shopping, supra note 1, at Professor Juenger also observes that the ability to frame a tort action, such as one arising out of an airline disaster, as a products liability action in the United States has influenced forum shopping for U.S. courts in some cases because it has enabled plaintiffs to avoid damage limits under the Warsaw Convention. See id. at In addition, Professor Weintraub has observed that [o]f all the attractions of a United States forum, the most important is... trial by jury. Russell J. Weintraub, International Litigation and Forum Non Conveniens, 29 TEX. INT L L.J. 321, 323 (1994) [hereinafter Weintraub, International Litigation]. 14. Juenger, Forum Shopping, supra note 1, at See id. at (discussing the Court s decision in Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981), and lower federal court decisions dismissing actions arising out of the Bophal disaster); see also David W. Robertson, The Federal Doctrine of Forum Non Conveniens: An Object Lesson in Uncontrolled Discretion, 29 TEX. INT L L.J. 353 (1994); Linda J. Silberman, Developments in Jurisdiction and Forum Non Conveniens in International Litigation: Thoughts on Reform and a Proposal for a Uniform Standard, 28 TEX. INT L L.J. 501 (1993); Weintraub, International Litigation, supra note 13; Russell J. Weintraub, Response to Professor Robertson, 29 TEX. INT L L.J. 381 (1994). Of course, not all American courts agree with the approach in Piper Aircraft. See, e.g., Ison v. E.I. DuPont De Nemours & Co., 729 A.2d 832, 835 (Del. 1999) ( The fact that plaintiffs are foreign nationals does not deprive them of the presumption that their choice of forum should be respected.... ). A tool that is less often but nevertheless sometimes effective is the injunction against foreign litigation. For a discussion of this device, see LUTHER L. MCDOUGAL III ET AL., AMERICAN CONFLICTS LAW 49 (5th ed. 2001); LARRY L. TEPLY & RALPH U. WHITTEN, CIVIL PROCEDURE (2d ed. 2000); Andreas F. Lowenfeld, Forum Shopping, Antisuit Injunctions, Negative Declarations, and Related Tools of International Litigation, 91 AM. J. INT L L. 314 (1997). 16. See Juenger, Forum Shopping, supra note 1, at See Patrick J. Borchers, The Choice-of-Law Revolution: An Empirical Study, 49 WASH. & LEE L. REV. 357 (1992) [hereinafter Borchers, Empirical Study]; see also Patrick J. Borchers, Empiricism and Theory in Conflicts Law, 75 IND. L.J. 509 (2000) (arguing that empiricism must be seen as part of any theoretical project to evaluate conflicts law); William M. Richman & William L. Reynolds, Prologomenon to an Empirical Restatement of Conflicts, 75 IND. L.J. 417, (2000) (discussing inter alia the new empirical scholarship and its implications for a possible Restatement (Third) of Conflicts of Law).

5 2002] U.S. CONFLICT-OF-LAWS DOCTRINE AND FORUM SHOPPING 563 approach of the First Restatement was the most evenhanded of the U.S. conflict-of-laws approaches in that it did not favor the selection of forum law, pro-recovery rules or local parties. 19 With regard to modern conflicts systems, 20 Dean Borchers concluded that, the new approaches are not, by and large, distinguishable from each other. 21 Although the modern systems tend to favor the application of forum law, 22 Dean Borchers also found that they all tended to favor the application of the law that produced recovery and benefited local parties. 23 Dean Borchers concluded: [O]ne thing is clear:... Courts do not take the new approaches seriously. Because all of the competitors to the First Restatement start from different analytical premises, if courts were faithful to their tenets they would inevitably generate different result patterns. Yet in practice the outcomes are largely indistinguishable. [T]he reason... that all of the modern approaches perform nearly identically in practice is that none of them is much of a check on judicial discretion. No other hypothesis can account for the similarity in result patterns. If the new theories actually curtailed judicial discretion, their differing analytical foundations ought to produce quite different result patterns. 24 Dean Borchers disapproved of the failure of judges applying modern conflicts systems to give honest reasons for their decisions because of the discernable negative effects of the judicial dishonesty such as the difficulty that dishonesty causes for lawyers trying to advise their clients. 25 The alternatives are to retreat to a regime of reasonably hard and fast rules such as the First Restatement or remain in the shadowy netherworld in which most of U.S. conflicts now dwells, in which substantive preferences are always just out of sight. 26 Dean Borchers s analysis confirmed another empirical study by Professor Michael Solimine. 27 Like Dean Borchers, Professor Solimine s research concluded that tort plaintiffs in lex loci [First Restatement system] courts fared worse than their counterparts in non-lex loci [modern conflicts] tribunals. 28 In addition, Professor Solimine found that courts that followed modern conflicts systems applied forum law in a substantially higher percentage of cases than courts that follow the First Restatement. 29 Professor Solimine concluded that there is theoretical and empirical support for the proposition that modern 18. Borchers, Empirical Study, supra note 17, at 357. For a discussion of the First Restatement approach, including the conventional criticisms of the approach, see Ralph U. Whitten, Curing the Deficiencies of the Conflicts Revolution: A Proposal for National Legislation on Choice of Law, Jurisdiction, and Judgments, 37 WILLAMETTE L. REV. 259, (2001) [hereinafter Whitten, Curing Conflicts Deficiencies]. 19. Borchers, Empirical Study, supra note 17, at For a summary and critique of modern conflicts systems, see Whitten, Curing Conflicts Deficiencies, supra note 18, at Borchers, Empirical Study, supra note 17, at See id. at 374, Id. at Id. at Id. at Id. at 383. Borchers expresses a preference for admitting that results have been and are the guiding light in multistate tort cases. Id. 27. Borchers, Empirical Study, supra note 17, at ; Michael E. Solimine, An Economic and Empirical Analysis of Choice of Law, 24 GA. L. REV. 49 (1989). 28. Solimine, supra note 27, at Id. at 87.

6 564 TEXAS INTERNATIONAL LAW JOURNAL [VOL. 37:559 choice of law theories inevitably tend to hold against defendants in general and out-of-state defendants in particular. 30 Although somewhat counterintuitive, I believe that Professor Solomine s and Dean Borchers s empirical studies indirectly support Professor Juenger s judgment that U.S. conflicts law is not the dominant incentive in domestic forum shopping. The malleable nature of modern conflicts doctrine often makes it impractical for plaintiffs to base decisions about where to litigate on a determination of what law a court will select to govern the action. Although one may be assured that domestic plaintiffs will not choose a forum in which the conflicts system would select an applicable substantive law that would clearly preclude recovery, the fluid nature of modern U.S. conflicts systems usually do not allow litigants to predict either a favorable or unfavorable decision with certainty. However, the strong pro-recovery bias of courts that apply one of the modern U.S. conflicts doctrines gives plaintiffs a degree of security that conflicts decisions in those states will not thwart recovery. The result is to make non-choice-of-law factors, such as sympathetic juries, more important in a plaintiff s selection of a forum than choice-of-law doctrine, at least when the plaintiff is able to choose a forum from among multiple modern systems or when the plaintiff has a choice between a modern system and a First Restatement system. Thus, by failing to provide a context in which selection of the applicable law is clear, uniform, and neutral as between plaintiffs and defendants, modern U.S. conflicts doctrine encourages plaintiffs to practice forum shopping on the basis of other factors, the operation of which they can predict with greater certainty. When plaintiffs see conflicts doctrine existing in many states that is not clearly contrary to their substantive interests, that they detect is malleable, and that tends generally to be pro-recovery, they naturally tend to select from among the states with known non-conflicts, pro-recovery tendencies. 31 Because modern pro-forum, pro-recovery conflicts systems substantially outnumber First Restatement systems, 32 plaintiffs have a large number of favorable fora from which to choose in terms of choice-of-law doctrine and will naturally choose among these favorable fora on the basis of non-choice-of-law factors that will produce a recovery. Although Dean Borchers s and Professor Solimine s studies are the only existing empirical works that directly investigate the operation of U.S. conflicts doctrine, empirical work in another area also supports Professor Juenger s conclusions about the influence of conflicts doctrine on domestic forum shopping. In 1995, Professors Kevin Clermont and Theodore Eisenberg studied transfer of venue in federal courts [f]or the convenience of parties and witnesses, in the interest of justice under 28 U.S.C. Section 1404(a). 33 The Clermont-Eisenberg study found that when cases were transferred from one federal court to another under Section 1404(a), the plaintiffs rate of winning dropped from fifty-eight 30. Id. at 89. Professor Solimine suggested that the pro-recovery nature of modern conflicts systems might be the result of courts using conflicts doctrine to achieve the goal of the pro-recovery nature of much of modern tort law. Id. 31. This suggests that another useful empirical inquiry might be into plaintiff forum-shopping between modern conflicts jurisdictions and First Restatement jurisdictions. Based on Professor Solimine s and Dean Borchers s studies, one would expect conflicts doctrine to make a more important difference in the plaintiff s choice of a forum when a First Restatement jurisdiction would select an applicable law that would preclude recovery and a modern conflicts jurisdiction is available as an alternative forum. Under such circumstances, one might expect litigants to select the modern conflicts jurisdiction, even if it is not clear how it would decide the conflicts question. 32. See Symeon C. Symeonides, Choice of Law in the American Courts in 2000: As the Century Turns, 49 AM. J. COMP. L. 1, 13 (2001) (listing thirteen states that use the traditional system in torts cases, contract cases, or both; three states that use a lex fori system in torts but a modern system in contracts cases; and the remaining states that use one of the modern conflicts systems). 33. Kevin M. Clermont & Theodore Eisenberg, Exorcising the Evil of Forum Shopping, 80 CORNELL L. REV. 1507, 1509 n.4 (1995).

7 2002] U.S. CONFLICT-OF-LAWS DOCTRINE AND FORUM SHOPPING 565 percent to twenty-nine percent. 34 This effect remained constant across substantively different lines of cases. 35 Professors Clermont and Eisenberg concluded that plaintiffs are forum shopping in the Section 1404(a) cases, 36 but that courts are transferring cases to more just courts, so that the decrease in the [plaintiffs ] win rate reflects the fact that courts are stripping plaintiffs of unjust forum advantages. 37 They state: [T]he plaintiff initially chooses the forum by filing suit. If the choice is too favorable to tolerate, the defendant moves for transfer. A relatively objective judge then chooses the forum, ordering transfer if it is in the interest of justice. The court considers many factors, with matters of convenience dominating; the balance must tilt decidedly toward transfer in order to overcome... the plaintiff s choice of forum. So, while the court will not transfer merely to shift the inconvenience from the defendant to the plaintiff, the court will transfer when the balance of inconveniences is really lopsided. If transfer occurs, the plaintiff s chance of winning declines through a variety of changed circumstances, such as a possibly less favorable set of local biases in the new forum. The dominant influence, however, is probably the shifted balance of inconveniences. Upon transfer, the plaintiff s cost of litigating will rise, while the defendant s cost will fall; the quantity of litigation units that the plaintiff will purchase relative to the defendant will fall commensurately; and so the win rate will decline. 38 The enhanced success rate for defendants in Section 1404(a) transfer cases found by Professors Clermont and Eisenberg cannot be a byproduct of different conflict-of-laws doctrines operating in the transferor and transferee forums because the Supreme Court has held that the applicable law must remain the same before and after transfer under Section 1404(a). In Van Dusen v. Barrack, the Court held that, after a transfer granted on the 34. Id. at Id. 36. Id. at 1507, Id. at Id. at Historical investigations of American litigation also tend to confirm that factors other than the law applicable to cases influence forum-shopping decisions. For example, Professor Purcell has examined the history of federal diversity litigation in the late nineteenth and early twentieth centuries. One of the most important factors leading corporations to remove cases to federal court was the geographical burdens that removal placed on plaintiffs. In many cases, plaintiffs filed suit in state courts near their homes and the corporate defendants they sued removed the cases to federal courts, which were far fewer in number and tended to be located in urban areas. This caused greater inconvenience and expense to the plaintiffs, with a corresponding tendency to encourage settlements on terms favorable to the defendants. See EDWARD A. PURCELL, JR., LITIGATION AND INEQUALITY: FEDERAL DIVERSITY LITIGATION IN INDUSTRIAL AMERICA, , at 52 (1992). Other structural and procedural characteristics also favored corporate interests in diversity litigation. See id. at During this same period, federal courts applied general law to many cases, which tended also to favor corporate interests. See id. at However, the influence of this general federal common law varied by time and subject-matter and was only one of several factors that contributed to the same result. For, throughout those years, the burdens of distance, delay, and procedural complexity also fell heavily on large numbers of plaintiffs. Id. at ; see also EDWARD A. PURCELL, JR., BRANDEIS AND THE PROGRESSIVE CONSTITUTION: ERIE, THE JUDICIAL POWER, AND THE POLITICS OF THE FEDERAL COURTS IN TWENTIETH-CENTURY AMERICA , (2000) (discussing interstate forum shopping and the attempt by Justice Brandeis to develop constitutional limitations on choice of law in order to retard forum shopping). One other recent scholarly study may offer a fruitful line of future inquiry into the matters discussed in the text. Professors Hoffman and Rowley recently studied the operation of the doctrine of forum non conveniens in federal statutory cases and found substantial support in the case law for refusal to dismiss on forum non conveniens grounds when an initial choice-of-law analysis determined that federal statutory law would be applicable to the case. See Lonny Sheinkopf Hoffman & Keith Rowley, Forum Non Conveniens in Federal Statutory Cases, 49 EMORY L.J (2000). This may reflect the same kind of pro-forum law bias discussed earlier in the text. However, in the absence of further study to determine whether the federal statutory law was pro-recovery or not, the research cannot cast significant additional light on the proposition being examined here.

8 566 TEXAS INTERNATIONAL LAW JOURNAL [VOL. 37:559 defendant s motion under Section 1404(a), the transferee district court must apply the same substantive law that would have been applied by the transferor court. 39 In Ferens v. John Deere Co., the Court held that the Van Dusen rule also applied after transfers under Section 1404(a) on the plaintiff s motion. 40 Ferens also made clear in dicta that the Van Dusen rule would be applied in transfers under Section 1404(a) when: (1) both plaintiff and defendant move for transfer; (2) a district court grants a transfer on its own motion; (3) the plaintiff moves for transfer after the defendant removes an action from state to federal court; (4) only one of several plaintiffs moves for transfer; or (5) through no fault of the plaintiff, circumstances change, making a once desirable forum inconvenient. 41 Thus, while choiceof-law doctrine might conceivably influence the plaintiff to file suit in the initial forum, the altered win rate after transfer cannot be explained by an altered choice of law in the transferee forum. Moreover, the combination of the Clermont-Eisenberg results and those of the Borchers-Solimine studies indicate that the factors influencing choice of forum have less to do with choice-of-law doctrine than with other litigation factors. Indeed, the substantially altered plaintiffs win rate after transfer found by Clermont and Eisenberg suggests that nonchoice-of-law factors bear quite heavily on whether plaintiffs win or lose in the new forum. This, in turn, makes it less likely that plaintiffs will select the place of suit based on the choice of law if they have a choice of forums in which the choice-of-law doctrine is not clearly against them. Unless one assumes that litigants and counsel are unable to detect the factors that bear most heavily on whether they win or lose an action, which does not seem likely, the available empirical evidence is compelling that choice-of-law doctrine is not, in the majority of cases, the most important factor in domestic forum selection. Beyond the limited empirical evidence discussed above, a number of commentators have observed a pronounced tendency by courts that employ modern conflict-of-laws systems to select forum law. 42 This tendency is logical because modern conflicts systems all tend to employ the forum state s interests as one factor in the choice-of-law decision, though it is universally employed as a non-exclusive factor. 43 In addition, in some substantive areas, the laws of the several states may be identical or quite similar. 44 If this is so, a plaintiff may be confronted with alternative forums that have laws favorable to him and that he feels confident (based on the modern conflicts tendencies described above) will apply their own law to the case. Under these circumstances, it will be natural for the plaintiff to select the location of suit based on criteria other than the alternative states choice-of-law doctrines, eliminating from the range of acceptable fora only those places that he knows with certainty would apply unfavorable law to his claim Van Dusen v. Barrack, 376 U.S. 612 (1964). 40. Ferens v. John Deere Co., 494 U.S. 516 (1990). 41. See id. at See, e.g., Anthony L. Ryan, Principles of Forum Selection, 103 W. VA. L. REV. 167 (2000). One feature of many modern approaches to the conflict of laws is a marked tendency to apply the law of the forum. Id. at 192; Louise Weinberg, Choice of Law and Minimal Scrutiny, 49 U. CHI. L. REV. 440, 467 (1982) (arguing that the tendency of new approaches to choice of law is the application of forum law). In fact, this widelyobserved tendency is actually confirmed by the empirical evidence. See Solimine, supra note 27, at See RESTATEMENT (SECOND) OF CONFLICT OF LAWS 6(2)(b) (1971) (stating the relevant policies of the forum); Whitten, Curing Conflicts Deficiencies, supra note 18, at (discussing the Second Restatement s most-significant-contacts analysis and governmental-interest analysis); Ralph U. Whitten, Improving the Better Law System: Some Impudent Suggestions for Reordering and Reformulating Leflar s Choice-Influencing Considerations, 52 ARK. L. REV. 177, (1999) (discussing the forum s interest factor in Professor Leflar s choice-influencing considerations) [hereinafter Whitten, Better Law System]. 44. See Solimine, supra note 27, at Indeed, Professor Solimine has suggested that courts employing modern conflicts theory in torts cases may simply be implementing the policies supporting modern substantive tort law: Perhaps driven by the prorecovery nature of much of modern tort law, courts seem to be inclined to utilize modern choice-of-law doctrine to

9 2002] U.S. CONFLICT-OF-LAWS DOCTRINE AND FORUM SHOPPING 567 C. International Forum Shopping Viewed as a whole, the scholarly commentary both empirical and non-empirical supports Professor Juenger s judgment that choice-of-law doctrine may contribute somewhat to forum shopping but that it is not the dominant factor bearing on the location of suit in domestic cases. 46 However, there is reason to believe that U.S. conflicts doctrine may contribute more to international forum shopping than it does to domestic forum shopping. If the conclusions drawn above based on the empirical and non-empirical literature are correct, then conflict-of-laws doctrine is subordinated to other forum-selection factors in domestic cases because plaintiffs often have a wide choice of fora within the United States in which they can obtain personal jurisdiction over the defendant and obtain the application of pro-recovery substantive law. The same notion is probably not as often true for foreign plaintiffs who must choose between a court in the United States and a court in a foreign nation. A foreign nation s courts are often more likely to select and apply a substantive law of liability or remedies that is either anti-recovery or that would allow a lower recovery compared to U.S. law, while, statistically speaking, the plaintiff may have a choice of a U.S. court (perhaps multiple U.S. courts) that will apply pro-recovery rules. Although no empirical studies exist that examine the reasons why foreign nationals choose U.S. courts over foreign courts in cases arising out of foreign transactions, the anecdotal evidence is strong that the conclusions drawn in the preceding paragraph are correct. One example given by Professor Juenger himself illustrates the point nicely: his discussion of In re Paris Air Crash of March 3, 1974, a case that involved the crash of a Turkish airliner in France and an action in California against the California manufacturers of the aircraft. 47 Professor Juenger argued that choice of a U.S. defendant was designed to avoid the damage limits of the Warsaw Convention, 48 an international treaty that places limits on liability and available fora under certain circumstances. 49 Nevertheless, the attorneys for the plaintiffs were otherwise unconcerned about the conflict-of-laws doctrine that a California court would apply. The Paris Air Crash case raised a number of potential choice-of-law questions, but they did not overly concern the attorneys who represented the victims relatives. Their efforts were directed primarily to assuring that litigation would proceed in a suitable forum, and most of counsels time and ingenuity was spent on procedural stratagems. The plaintiffs lawyers were acutely aware of the need to avoid application of the Warsaw Convention. By proceeding against the California manufacturers of the airplane and component parts on a products liability theory, they not only circumvented the monetary limitation on recovery achieve the goal of the substantive law.... Id. If true, this would also tend to produce application of the law of the forum in cases in which the forum possesses a modern pro-recovery tort rule. 46. See Ryan, supra note 42, at 200 ( The choice of favorable substantive law is the most dramatic prize for the successful forum-shopper, but there are also many important procedural distinctions among courts. ); Note, Forum Shopping Reconsidered, 103 HARV. L. REV. 1677, 1678 (1990) (listing numerous considerations that may motivate forum shopping including, but not limited to, differing conflict-of-laws rules). But see Mary Garvey Algero, In Defense of Forum Shopping: A Realistic Look at Selecting a Venue, 78 NEB. L. REV. 79, 88 (1999) ( A review of reported cases in which forum shopping has been discussed reveals that the most common motive for forum shopping is selection of the law to be applied to the case. ). 47. In re Paris Air Crash of March 3, 1974, 399 F. Supp. 732 (C.D. Cal. 1975). 48. Convention for the Unification of Certain Rules Relating to International Transportation by Air, opened for signature Oct. 12, 1929, arts. 22(1), 28, 49 Stat. 3000, 137 L.N.T.S. 11, reprinted in 49 U.S.C.A (1994) (adherence of the United States proclaimed Oct. 29, 1934) [hereinafter Warsaw Convention]; FRIEDRICH K. JUENGER, CHOICE OF LAW AND MULTISTATE JUSTICE 49 (1993). 49. Warsaw Convention, supra note 48, art. 41.

10 568 TEXAS INTERNATIONAL LAW JOURNAL [VOL. 37:559 article 22(1) of the Convention imposes, but also the restriction on available fora contained in article 28. Once the actions were pending before a federal judge in Los Angeles, the plaintiffs had gained several strategic advantages. Their cases could now be tried by American attorneys who were air crash litigation experts, and the federal pre-trial discovery rules afforded them a potent device, unmatched by the law of any other country, to extract damning evidence from their opponents. Moreover, Los Angeles juries have a reputation for awarding damages that exceed many times those recoverable abroad. In comparison to the selection of the forum, the significance of the choice-of-law problem paled. In fact, plaintiffs counsel did not even bother to research it until after the complaints had been filed. If the magnitude of the victory is any indication, one may conclude that conflicts rules hardly deter forum shoppers. 50 What the Paris Air Crash example actually shows, of course, is that foreign litigants will not select a foreign forum in which liability is sure to be denied or in which the damages recoverable will be smaller than those recoverable in a viable alternative U.S. forum. Thus, when foreign litigants are faced with the prospect of suing in a foreign nation s court that will apply an unfavorable substantive law of liability or remedies, they will prefer a U.S. court that will apply a favorable (i.e., pro-recovery) choice-of-law approach. As Professor Juenger observes, the plaintiffs attorneys may only be dimly aware of the choice-of-law rules of the U.S. forum selected. I suggest, however, that if they are competent they will at least be generally aware that the U.S. court selected will apply a modern conflicts approach that has the pro-forum, pro-recovery tendencies discussed above. In the absence of a systematic empirical investigation of why foreign litigants select U.S. courts over foreign ones, the proposition advanced in the preceding paragraphs must remain, scientifically speaking, in doubt. Nevertheless, a fair appraisal of the choice-of-law alternatives that foreign litigants confront justifies the conclusion that conflicts doctrine is somewhat more important in their selection of U.S. over foreign courts in the majority of cases than such doctrine is to domestic litigants. Only when they are choosing between different courts within the United States does choice-of-law doctrine diminish significantly as a factor in the selection of a forum. D. Reforms to Eliminate Forum Shopping It remains to be seen whether a change in choice-of-law doctrine within the states could eliminate any incentives that current doctrine provides to forum shop in interstate or international cases. I have elsewhere argued that existing choice-of-laws systems in the United States cannot be administered in a way that solves the current chaos in U.S. conflicts law, even if one of the systems were to be federalized and thus subject to review by the U.S. Supreme Court. 51 This disability includes lex fori systems, even though these systems are not actually choice-of-law systems. 52 However, it is a different question whether the adoption of lex fori systems by every state would increase or decrease forum shopping or would alleviate any of the other problems produced by modern conflicts systems. This question raises an intriguing possibility. The evidence indicates that modern conflict-of- 50. JUENGER, supra note 48, at 48 49; see also Juenger, Forum Shopping, supra note 1, at (discussing the Paris Air Crash case). 51. See Whitten, Curing Conflicts Deficiencies, supra note 18, at See id. at (discussing the limits of lex fori systems).

11 2002] U.S. CONFLICT-OF-LAWS DOCTRINE AND FORUM SHOPPING 569 laws systems in the United States increase incentives to forum shop by only a small amount compared to other litigation factors. U.S. conflict-of-laws methodology, however, may produce other inefficiencies and costs in multistate and multinational litigation. For example, if U.S. courts are really manipulating modern conflicts systems in order to reach pro-forum, pro-recovery, pro-local party recovery, as the empirical studies by Professor Solimine and Dean Borchers suggest, the switch to a pure lex fori system would have the advantage of eliminating dishonest conflict-of-laws decisions. In addition, a switch to lex fori systems throughout the United States would eliminate the need to administer complex choice-of-law systems. This change would benefit litigants, who would no longer have to grapple with the mysteries of such systems in order to brief and argue conflict-of-laws issues. It would also benefit courts by eliminating the need to decide such issues. If these kinds of benefits can be achieved without exacerbating forum shopping, lex fori systems universally adopted by the states might represent a viable alternative to existing choice-oflaw methods. Indeed, a switch to properly constructed lex fori systems would arguably be beneficial even if forum-shopping incentives continued to exist at the same level because the other complexities of modern choice-of-law doctrine could be avoided under a universal lex fori approach. To determine whether the universal or nearly universal adoption of lex fori systems could have a beneficial effect, it will be useful to examine the experience of the several states that have adopted the lex fori approach in the United States. If one of the lex fori systems now in effect achieves the beneficial results described above, that system might be used as a model for other states. Even if the currently existing lex fori systems are unsuitable models, examination of the existing lex fori approaches might suggest modifications to the systems that would offer a better alternative than the current choice-oflaw chaos in the United States. III. THE LEX FORI APPROACH AND INTERSTATE AND INTERNATIONAL FORUM SHOPPING A. The Nature and Extent of Lex Fori Systems in the United States As Professor Juenger has observed, lex fori systems seek to avoid a choice-of-law decision altogether by not posing a choice-of-law question. 53 Although lex fori systems have a significant historical pedigree, 54 only three U.S. states have adopted a lex fori approach, and at this writing, those states have only adopted it for tort cases. 55 However, the empirical and non-empirical evidence discussed in Section II indicates that there is a strong statistical tendency in states using one of the modern conflict-of-laws methodologies to select forum law. 56 As suggested at the end of the preceding section, this tendency raises the intriguing possibility that the universal adoption of lex fori approaches might not worsen forum shopping and may even produce benefits. An examination of the existing lex fori 53. Friedrich K. Juenger, The Need for a Comparative Approach to Choice-of-Law Problems, 73 TUL. L. REV. 1309, 1315 (1999). 54. Id. at The English common law courts once dealt with cases involving foreign facts by assuming that the events transpired in England and applying the law of the forum. Id. There are also other historical examples of the lex fori approach. JUENGER, supra note 48, at 7 (discussing the lex fori approach in ancient Greece). 55. Symeonides, supra note 32, at 13 (listing in Table 1 the states of Kentucky, Michigan, and Nevada as lex fori states in torts). 56. See supra notes and accompanying text (discussing the pro-forum law tendencies of the modern American conflicts systems, i.e., the non-first Restatement systems).

12 570 TEXAS INTERNATIONAL LAW JOURNAL [VOL. 37:559 systems will indicate whether any of those systems provides a useful model for adoption by other states. B. Kentucky Kentucky adopted a lex fori approach in Foster v. Leggett. 57 In Foster, the plaintiff brought a wrongful death action against the defendant-driver in a Kentucky court for the death of a passenger. 58 At the time of the accident that produced the death, the defendant was driving in Ohio. 59 The defendant pleaded the Ohio guest statute in defense. That statute provided that a nonpaying guest could not recover damages for injury or death from the operator of a motor vehicle unless the death was caused by willful or wanton misconduct of the operator, of which there was none on the facts of the case. At the time of the accident, the decedent was domiciled in Kentucky and the defendant was domiciled in Ohio. The defendant had picked up the decedent in Kentucky, and the parties proceeded to Ohio in the defendant s automobile for a one-day excursion from Russell, Kentucky to Columbus, Ohio and back. It was on their journey to Columbus that the fatal accident occurred, allegedly due to the negligence of the defendant. The trial court applied the Ohio guest statute and granted summary judgment for the defendant. 60 On appeal, the Court of Appeals of Kentucky reversed, abandoning the lex loci rule of the First Restatement. 61 The court stated: [W]hen the court has jurisdiction of the parties its primary responsibility is to follow its own substantive law. The basic law is the law of the forum, which should not be displaced without valid reasons. We have not, therefore, tried to adopt a rule, or rules, for all cases of this kind which may come before us. In the case at bar, contacts with Kentucky were numerous and significant. Decedent was a lifelong resident of Kentucky. While appellee was a resident of Ohio, he kept a rented room near his work in Kentucky, stayed in it on the average of two nights per week and all his employment and most of his social relationships were in Kentucky. The fatal journey began in Kentucky and was to have been concluded in Kentucky. So we conclude that the reasons appellee here advances, that the accident occurred in the State of Ohio and that appellee was domiciled and had a residence in that state, are not sufficient in view of the contacts the State of Kentucky had with the parties to justify the displacement of the law of this forum with the law of the State of Ohio....[I]f there are significant contacts not necessarily the most significant contacts with Kentucky, the Kentucky law should be applied. 62 The court s opinion is clearly a rejection of the then-developing most significant contacts test of the Second Restatement. 63 However, other than a listing of the S.W.2d 827 (Ky. 1972). 58. Id. at Id. 60. See id. at (discussing the facts and procedural history of the case). 61. Id. at Id. 63. See Foster v. Leggett, 484 S.W.2d at (Reed, J., with whom Milliken, J. joined, dissenting) (arguing that while the majority s approach had the virtue of simplicity and predictability, it should yield to the

13 2002] U.S. CONFLICT-OF-LAWS DOCTRINE AND FORUM SHOPPING 571 relationships between the parties and events and Kentucky, the court s opinion contains no explanation of how to determine whether the contacts among a state, particular occurrences, and the parties are significant. It is clear that under the governmental interest analysis of Professor Brainerd Currie, 64 both Kentucky and Ohio would have an interest in having their laws applied to the case. 65 This, at least, makes it clear that the existence of contacts with another state that give rise to an interest in applying that state s law will not be a reason to displace forum law in Kentucky when the latter state also has contacts giving rise to interests in applying its own law. 66 Beyond this bare interest analysis, however, it is impossible to determine when the Kentucky Supreme Court will consider a contact with the state significant. This ambiguity in the court s approach poses the danger that litigants will simply substitute objections and arguments about the significance of contacts with the state for the kinds of issues typically raised under traditional conflict-of-laws systems. If so, Kentucky s system will not completely eliminate the transaction costs of complex choice-oflaw arguments that exist in non-lex fori, modern U.S. conflicts systems. Nor will there be meaningful gains in judicial honesty if Kentucky judges approach the question of significant contacts in the same way that U.S. judges usually approach choice-of-law questions. C. Nevada In Motenko v. MGM Dist., Inc., Nevada took a slightly different approach to lex fori. 67 Here the plaintiff s mother slipped on a loose tile in a hotel owned by the defendant and was injured. 68 The plaintiff sued for loss of parental consortium, a claim recognized by Massachusetts, the home of the plaintiff and his mother, but not recognized in Nevada. 69 The Nevada district court applied Nevada law as the lex loci delicti and dismissed the action. The Supreme Court of Nevada affirmed, but rejected the lex loci delicti rule. 70 However, the court also rejected the most significant contacts analysis of the Second Restatement, stating that the test suffers from two defects lack of uniformity and lack of predictability. 71 Instead, the court proposed an approach that would harmonize Nevada s interest in stability in this area and the substantial relationship test. 72 overriding policy considerations embodied in Section 6 of the Second Restatement to achieve more realistic, and therefore more just, results). 64. See Brainerd Currie, Notes on Methods and Objectives in the Conflict of Laws, in SELECTED ESSAYS ON THE CONFLICT OF LAWS 177, (1963) (describing the governmental interest analysis). 65. See EUGENE F. SCOLES ET AL., CONFLICT OF LAWS (3d ed. 2000). Under the assumptions of interest analysis, both Kentucky and Ohio would be interested in applying their law. Id. 66. Cf. id. (according to the Kentucky court, the occurrence of an accident in a given state is enough of a contact for applying forum law but not enough of a contact for applying non-forum law). Subsequent Kentucky decisions have established that Foster does not apply to contract conflicts, which are governed by the most significant contacts analysis of the Second Restatement. See Bonnlander v. Leader Nat l Ins. Co., 949 S.W.2d 618, 620 (Ky. 1997) (rejecting Foster s applicability to an issue concerning whether Indiana or Kentucky law applied to the recovery of uninsured motorist benefits under an insurance contract); see also Wallace Hardware Co., Inc. v. Abrams, 223 F.3d 382, (6th Cir. 2000) (distinguishing Kentucky tort choice-of-law cases from Kentucky contract choice-of-law cases). 67. Motenko v. MGM Dist., Inc., 921 P.2d 933 (Nev. 1996). 68. Id. at Id. 70. Id. at Id. 72. Id.