Also known as: real conflict · false conflict · choice of law
Written by attorneys — see sources below.
A multistate dispute in which the policies of two or more states genuinely conflict so that each state has a legitimate interest in having its own law applied to resolve the issue.
Raymond Ramos, a resident of State X, sued Redline Automotive in federal court in State Y for breach of a supply contract performed partly in both states. State X law protected buyers with a broad warranty while State Y law limited remedies to repair costs. The federal court applied State Y choice of law rules to decide which substantive law governed the warranty claim.
Rebecca Ross purchased waterfront property in State B from Riverfront Developments under an agreement formed in State A. A neighbor asserted a prescriptive easement based on long use entirely within State B. The court weighed the most significant relationship factors to determine whether State A or State B law governed the easement claim.
Roger Ramirez executed a will before a Swiss notary while maintaining an apartment lease in Basel. He later moved to State B where stricter attestation rules applied. The probate court considered whether Swiss law or State B law at death validated the instrument under the available choice of law options.
Rajesh Rao sued in federal court sitting in State A to enforce an equitable claim arising from events in State B and State C. Each state maintained different rules on the availability of the remedy. The court followed the choice of law rules of its forum state to select the governing substantive law.
In May 1930 the Van Sweringen Corporation issued $30,000,000 in notes under an indenture naming Guaranty Trust Co. of New York as trustee with power to enforce noteholders' rights. In October 1930 Guaranty and other banks advanced large sums to companies affiliated with the Corporation and controlled by the Van Sweringens. When the Corporation could not meet its obligations, Guaranty participated in an exchange plan under which noteholders could surrender their notes for cash equal to 50 percent of face value plus twenty shares of Van Sweringen stock per $1,000 note; the offer remained open until December 15, 1931. In 1934 respondent York received $6,000 of the notes as a gift from a donor who had not accepted the exchange offer. In April 1940 three accepting noteholders filed the Hackner suit in federal court charging Guaranty with fraud and misrepresentation in connection with the exchange. York's motion to intervene was denied, and summary judgment for Guaranty was affirmed on appeal. On January 22, 1942, after her exclusion from the Hackner litigation, York filed the present class action in the United States District Court for the Southern District of New York on behalf of non-accepting noteholders. The complaint, resting exclusively on diversity of citizenship, alleged that Guaranty had breached its trust by failing to protect noteholders' interests when it assented to the exchange offer and by failing to disclose its own self-interest. The district court granted Guaranty's motion for summary judgment on the authority of the Hackner decision. The Circuit Court of Appeals reversed, holding that a federal court sitting in equity is not required to apply the New York statute of limitations that would govern an identical suit in the New York state courts. The Supreme Court granted certiorari.
View caseRicardo Rojas, insured by a company based in State A, sought coverage for losses occurring in State B. State A law favored broad coverage while State B law imposed strict notice requirements. The court evaluated whether the policies of each state created a genuine conflict requiring selection of one rule.
In the late 1970s, ISO, an association of approximately 1,400 domestic property and casualty insurers that serves as the almost exclusive source of support services for CGL insurance in the United States, began revising its 1973 standard CGL policy form. The 1973 form provided occurrence-based coverage for sudden and accidental pollution and did not cap defense costs. Primary insurers including Hartford Fire Insurance Company, Allstate Insurance Company, Aetna Casualty and Surety Company, and CIGNA Corporation sought four changes: a shift to claims-made coverage with a retroactive date, elimination of pollution coverage, and a legal defense cost cap. After ISO proposed 1984 forms that omitted some of these changes, Hartford persuaded General Reinsurance Corporation, the largest American reinsurer, to procure the modifications or derail the program. The Reinsurance Association of America agreed to boycott the 1984 forms unless the changes were added, and domestic and London reinsurers informed ISO they would withhold reinsurance until the forms were altered. ISO then withdrew the 1984 forms and adopted 1986 forms containing a retroactive date and pollution exclusion; it later withdrew support services for the 1973 form. Separate agreements among London reinsurers required primary insurers to switch to claims-made policies and excluded pollution coverage from reinsurance contracts covering North American risks. Nineteen states and many private plaintiffs filed 36 complaints alleging that these actions violated section 1 of the Sherman Act. The cases were consolidated in the Northern District of California. The District Court granted motions to dismiss in 1989, holding the conduct fell within McCarran-Ferguson immunity and applying international comity to the foreign defendants. The Ninth Circuit reversed in 1991. The Supreme Court granted certiorari in 1992.
View caseRoland Rhodes, a seaman injured aboard a vessel, brought claims in federal court. The vessel flew a foreign flag and the injury occurred in a U.S. port. The court assessed whether U.S. maritime law or foreign law applied by examining the contacts and policies of the interested jurisdictions.
In 1987, William Robert Miller, a resident of Mississippi, moved to Pennsylvania to seek employment. He was hired by American Dredging Company, a Pennsylvania corporation with its principal place of business in New Jersey, to work as a seaman aboard the MV John R., a tug operating on the Delaware River. During the course of that employment Miller was injured. After receiving medical treatment in Pennsylvania and New York, he returned to Mississippi where he continued to be treated by local physicians. On December 1, 1989, Miller filed this action in the Civil District Court for the Parish of Orleans, Louisiana. He sought relief under the Jones Act, which authorizes a seaman who suffers personal injury in the course of his employment to bring an action for damages at law. State and federal courts have concurrent jurisdiction over such claims. Miller also requested relief under general maritime law for unseaworthiness, for wages, and for maintenance and cure. The trial court granted American Dredging Company's motion to dismiss the action under the doctrine of forum non conveniens, holding that it was bound to apply that doctrine by federal maritime law. The Louisiana Court of Appeal for the Fourth District affirmed. The Supreme Court of Louisiana reversed, holding that Article 123(C) of the Louisiana Code of Civil Procedure, which renders the doctrine of forum non conveniens unavailable in Jones Act and maritime law cases brought in Louisiana state courts, is not preempted by federal maritime law. American Dredging Company filed a petition for a writ of certiorari, which the United States Supreme Court granted.
View caseA real conflict exists when two or more states each have a legitimate interest in applying their own law because the policies underlying those laws would be advanced by application to the facts. A false conflict arises when only one state has such an interest or when the laws do not actually differ in outcome. The distinction guides whether further choice of law analysis is needed.
In real conflicts over interests in things, courts evaluate the relationship of each state to the thing and the parties under the principles of section 6. Protection of justified expectations receives special weight in property transactions. The situs state often has the strongest interest when the dispute concerns physical use or servitudes.
Yes. A federal court sitting in diversity must apply the choice of law rules of the state in which it sits when a real conflict requires selection among competing state laws. Those state choice of law rules are treated as substantive under Erie.
…center of gravity' of the controversy, or the most convenient location for litigation. The issue is personal jurisdiction, not choice of law. It is resolved in this case by considering the acts of the [appellants]." Hanson v. Denckla , 357 U. S. 235, 254 (1958). Appellee suggests that by accepting positions as officers or…