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  1. There are several distinct choice of law regimes that have emerged, with states falling into one or more in their choice of law analysis. The principal regimes are discussed below.
  2. The “traditional” test: the First Restatement
    1. Under the traditional test of the First Restatement, followed fully in some jurisdictions today (such as Maryland, Virginia, New Mexico, South Carolina, Georgia, Alabama, Wyoming and Kansas), the law that applies depends on the cause of action and on single points of contact.
      1. Torts and Fraud: Torts are governed in nearly all issues by the law of the place of wrong, “the state where the last event necessary to make an actor liable for an alleged tort takes place.” Restatement (First) of Conflict of Laws § 377. In most cases the last event is the event causing injury and so the place of the wrong is effectively the place of injury. Frauds are similarly governed by the place of the wrong, which is where the loss is sustained, not where the fraudulent misrepresentation is made. Id., illus. 4.
      2. Contracts: In contracts, claims regarding the validity (capacity, formalities, consideration and defenses) are governed by the place where the contract was made, where “the principal event necessary to make a contract occurs.” Id. §§ 311 cmt. d, 332 (1934).
      3. Property: Questions concerning interests in land are governed generally by the law of the situs. In the case of movables, the law of the place where the movable was located at the time of the transaction generally applies.
  3. The “significant relationship” test: the Second Restatement
    1. The Second Restatement contains certain sections governing specific causes of action as well as an umbrella “significant relationship” test in Section 6(2). The specific sections governing torts, fraud and contract each refer back to the principles and overriding “significant relationship” test. Some version of the Second Restatement is followed by the majority of States (for example, New York, Delaware, Colorado, Connecticut, Alaska, Arizona, California (contracts only), Idaho, Illinois, Iowa, Maine, Mississippi, Missouri, Montana, Nebraska, South Dakota, Ohio, Texas, Utah, Vermont, and Washington). See Symeon C. Symeonides, Choice of Law in the American Courts in 2006: Twentieth Annual Survey, 54 Am. J. Comp. Law 697, 712 (2006).
    2. The Section 6(2) “Significant relationship” test: Section 6(2) provides that, subject to constitutional limitations, courts must follow the statutory directives of their own state on choice of law. In the absence of any, the factors relevant to the analysis of the applicable law include:
      1. the needs of the interstate and international systems,
      2. the relevant policies of the forum,
      3. the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
      4. the protection of justified expectations,
      5. the basic policies underlying the particular field of law,
      6. certainty, predictability and uniformity of result, and
      7. ease in the determination and application of the law to be applied.
    3. The Second Restatement provides choice of law rules for each cause of action separately, with the analysis reverting to the ”significant relationship” test.
      1. Torts: The rights and liabilities with respect to issues in torts are determined by the local law of the state which, with respect to that issue, has the most significant relationship under the principles stated in Section 6. Second Restatement § 145. Contacts to be taken into account in applying the Section 6 principles are:
        1. the place where the injury occurred,
        2. the place where the conduct causing the injury occurred,
        3. the domicile, residence, nationality, place of incorporation and place of business of the parties, and
        4. the place where the relationship, if any, between the parties is centered.
      2. Fraud: Where the plaintiff’s actions in reliance on the misrepresentation took place in the same state as that in which the misrepresentations were made, that state’s laws will govern unless another state has a more significant relationship under Section 6. Second Restatement § 148.
      3. Where the plaintiff’s actions in reliance took place in whole or in part in a state other than that where the misrepresentations were made, the following contacts will be considered in determining which state has the most significant relationship:
        1. the place where the plaintiff acted in reliance upon the representations,
        2. the place where the plaintiff received the representations,
        3. the place where the defendant made the representations,
        4. the domicile, residence, nationality, place of incorporation and place of business of the parties,
        5. the place where a tangible thing which is the subject of the transaction between the parties was situated at the time, and
        6. the place where the plaintiff is to render performance under a contract which he has been induced to enter by the false representations of the defendant.
      4. Contract: In the first instance, the courts must give effect to the law chosen by the parties. In the absence of any such agreement, the courts are directed to the “significant relationship” test of Section 6. Restatement (Second) of Conflict of Laws § 188. The contacts to take into account in determining those principles are:
        1. the place of contracting,
        2. the place of negotiation of the contract,
        3. the place of performance,
        4. the location of the subject matter of the contract, and
        5. the domicile, residence, nationality, place of incorporation and place of business of the parties.
      5. If the place of negotiating the contract and the place of performance are in the same state, the law of that state will usually apply, except as provided in the sections regarding specific kinds of contracts (e.g. contracts relating to the transfer of interests in land or chattel, life, fire, surety or casualty insurance, contracts of suretyship, repayment of loans, services, or transportation). In those sections, the Restatement directs application of a specific state’s law subject to the “significant relationship” test of Section 6.
    4. New York courts employ, relatively consistently, a version of the “significant relationship” test, applying the law of the state with the greatest concern for the specific issue. Babcock v. Jackson, 12 N.Y.2d 473 (1963).
  4. The “governmental interest analysis” test:
    1. Many states are moving to, or already incorporate, some version of the government interest analysis test which is in some measure incorporated in the “substantial relationship” test of the Second Restatement. California uses this test in determining the law applicable to tort claims.
    2. The law of the forum is presumed to apply unless a party demonstrates otherwise. Washington Mut. Bank v. Superior Court, 15 P.3d 1071, 1080 (2001). The burden of proof is on the proponent of the non-U.S. law to show that it “materially differs” from the forum and that applying the non-U.S. law will further the interest of the non-U.S. jurisdiction. Id. The non-U.S. law is presumed to be the same as the law of the forum absent a showing to the contrary. United States v. Westinghouse Elec. Corp., 648 F.2d 642, 647 n.1 (9th Cir. 1981) Absent the non-U.S. law proponent carrying its burden, the forum law governs. In re Seagate Tech. Sec. Litig., 115 F.R.D. 264, 269 (N.D. Cal. 1987).
    3. The government interest analysis is a three step one. First, the court determines whether the non-U.S. law differs from that of the forum. If not, there is no conflict, and the forum law applies.
      1. The non-U.S. law that is invoked must “materially differ” from the forum law. Garamendi v. Mission Ins. Co., 131 Cal. App. 4th 30, 41, 31 (2005) (absent a showing of “conflicting authority” in the non-U.S. jurisdictions, the forum law applies)
      2. Laws are “materially different” if their application would lead to different results. Costco Wholesale Corp. v. Liberty Mut. Ins. Co., 472 F. Supp. 2d 1183, 1200 (S.D. Cal. 2007).
    4. Second, if there is a difference, the court examines each jurisdiction’s interest in the application of its own law to determine whether a “true conflict” exists. If not, and only one jurisdiction actually has a governmental interest in having its laws apply, there is only a “false conflict” and the law of the interested jurisdiction will apply.
      1. But even where the forum’s interest is too weak to sustain its side of a “true conflict,” the non-U.S. state must still be shown to have its own legitimate interest in applying its laws. McGhee v. Arabian Am. Oil Co., 871 F.2d 1412, 1424 (9th Cir. 1989).
      2. Where neither state has an interest in applying its laws, the laws of the forum will apply.
    5. Third, if there is a “true conflict” and each jurisdiction has a legitimate interest in the application of its rule of decision, then the court analyzes the “comparative impairment” of the interested jurisdictions to identify the law of the state whose interest would be the more impaired if its law were not applied.
      1. The analysis does not involve weighing the government interests in the sense of determining which law is worthier or best, but as a process of allocating respective “spheres of lawmaking influence.” Offshore Rental Co. v. Continental Oil Co., 583 P.2d 721, 726 (Sup. Ct. Cal. 1978); McGhee v. Arabian Am. Oil Co., 871 F.2d 1412, 1422 (9th Cir. 1989).
      2. In determining the policies and interests of a non-U.S. state, courts – looking to case law or legislative histories – may make their own determinations independent of what the parties demonstrate. See Offshore Rental, 583 P.2d at 725, n.5.
      3. The courts will consider the various contacts in determining which state has the greater interest and would suffer the greater impairment, such as the situs of the injury, the situs of the wrongful conduct, the domicile and business of the parties, and the place of contracting.
    6. The governmental interest analysis considers what is in the competing states’ public policy interests. Where a non-U.S. law violates the forum state’s public policy, that law will not be applied. Kashani v. Tsann Kuen China Enter. Co., 118 Cal. App. 4th 531, 543 (“the forum state will not apply the law of another state to enforce a contract if to do so would violate the public policy of the forum state.”)
      1. For example, recognizing strict liability of manufacturers and compensating injured parties for pain and suffering are public policies of California that will be recognized over non-U.S. law. Kasel v. Remington Arms Co., 24 Cal. App. 3d 711, 735 & n.28 (2d Dist. 1972).
    7. The governmental interest approach requires a separate analysis with respect to each issue. Beech Aircraft v. Superior Court, 132 Cal. Rptr. 541, 550 (Cal. App. 1976).
    8. The courts will determine the relative commitment of the respective states to the law involved, whether the policy underlying the law was more strongly held in the past than now, and whether the law is attenuated and anachronistic. Offshore Rental, 583 P.2d at 726.
    9. Courts performing the comparative impairment analysis also consider the modern pertinence of the underlying policy of the competing laws, and whether the policy can be satisfied by some other means (e.g. insurance satisfies the purpose of providing compensation to tort victims instead of laws permitting a broader range of tort claims).
  5. Changing residency after the wrongful conduct will have no bearing on the choice of law analysis, as court do not want to encourage forum shopping. Reich v. Purcell, 432 P.2d 727, 730 (Cal. 1967).
  6. When more than two jurisdictions are involved, once a party has invoked the choice of law analysis, the interests of all potentially affected jurisdiction are considered. States with similar laws may be grouped together for purposes of the comparative impairment step of the analysis. Among the states that are grouped as one, it is the state with the real interest in the outcome of the litigation whose impairment will be measured against that of a conflicting state. Costco Wholesale Corp. v. Liberty Mut. Ins. Co., 472 F. Supp. 2d 1183, 1199 (S.D. Cal. 2007).

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