Choice-of-Law Methodologies: Updating the List
April 18, 2022
This is an update of the list of choice-of-law methodologies followed in the United States. The changes are: (1) the abandonment of the lex loci contractus rule by the Supreme Court of Rhode Island in 2022, and (2) the enactment of a new choice-of-law codification by Puerto Rico in 2020.
The American choice-of-law revolution in tort and contract conflicts, which began in the 1960s, succeeded in toppling the lex loci delicti and lex loci contractus rules from the dominant position they occupied under the traditional system enshrined in the First Conflicts Restatement of 1933. By 1978, more than half of the fifty-two U.S. jurisdictions had abandoned the lex loci delicti rule and, by 1985, more than half abandoned the lex loci contractus rule. Today, only nine jurisdictions follow the first rule and ten follow the second rule.
However, the revolution did not replace the ancien regime with a new unified system, or even a single methodology. Instead, it spawned several partly overlapping alternative choice-of-law “approaches.” In an effort to assist readers, I developed (beginning in the 1900s) a list showing the judicial following of these approaches in the 50 states, the District of Columbia, and the Commonwealth of Puerto Rico. The previous lists can be found in the annual choice-of-law surveys published in the American Journal of Comparative Law. The latest version is available for download here. It is subject to the same caveats and qualifications that have accompanied all the previous annual tables.
Rhode Island and Eclecticism in Tort Conflicts
The decisions of the Rhode Island Supreme Court on tort conflicts illustrate the methodological eclecticism that, in recent years, characterizes the decisions of many other courts. In the 1968 case Woodward v. Stewart, the court abandoned the lex loci delicti rule and adopted a “new interest weighing approach” based exclusively on Professor Robert Leflar’s five “choice influencing considerations,” including the better law criterion. In subsequent cases, the court began relying on § 145 of the Restatement (Second), including the interest analysis part of it. In some of those cases, the court relied on the Restatement in lieu of Leflar’s approach. In other cases, the court combined the two approaches, sometimes using all five of Leflar’s considerations, and sometimes using only the first four, excluding the better-law criterion. Table 2 below shows the methodologies followed in these cases.
Table 1. Rhode Island and Choice-of-Law Methodology in Tort Conflicts
|Year and case||Methodology|
|1968 Woodward v. Stewart||Leflar’s approach, including better law criterion|
|1969 Brown v. Church of Holy Name of Jesus||Leflar’s approach, plus Restatement (Second)|
|1972 Busby v. Perini Corp.||Restatement (Second); no mention of Leflar|
|1986 Pardey v. Boulevard Billiard Club||Leflar’s approach, including better-law criterion|
|1987 Berardi, U.S.A., Ltd. v. Employers Mut. Cas. Co.||Significant contacts; no mention of Leflar|
|1987 Blais v. Aetna Cas. & Sur. Co.||Restatement (Second); no mention of Leflar|
|1997 Cribb v. Augustyn||Restatement (Second) and Leflar’s considerations, except for the better law criterion.|
|1997 Victoria v. Smythe||Better law criterion|
|2001 Najarian v. National Amusements, Inc.||Restatement (Second) and Leflar but without better law criterion|
|2004 Taylor v. Massachusetts Flora Realty, Inc.||Significant contacts; no mention of Leflar|
|2005 Oyola v. Burgos||Restatement (Second); no mention of Leflar|
|2011 Harodite Industries, Inc. v. Warren Elec. Corp.||Restatement (Second), plus Leflar’s approach, including the better law criterion|
Based on Table 1, one could argue that Rhode Island belongs in the “combined modern” column rather than the “better law” column. This is not a bad argument. On balance, however, I kept Rhode Island in the “better law” column because the Rhode Island Supreme Court has never repudiated the better law criterion even though it does not always rely on it.
Rhode Island and Contract Conflicts
Following the abandonment of the lex loci delicti rule by the Rhode Island Supreme Court in 1968, one would expect that the court would soon also abandon the lex loci contractus rule. However, in the intervening 54 years, the court encountered only six cases involving contract conflicts and none of them provided a good opportunity for reconsidering the lex loci contractus rule. Three of those cases involved choice-of-law clauses and the court relied on § 187 of the Restatement (Second) to determine their enforceability. However, because § 187 is followed even in lex loci contractus states such as Alabama, I have kept Rhode Island in the “traditional” column for contract conflicts.
The opportunity to reconsider the lex loci contractus rule came in 2022 in Webster Bank, Nat’l Ass’n v. Rosenbaum. The Rhode Island Supreme Court abandoned this rule and adopted for contract conflicts the same approach it previously followed in tort conflicts. In Rosenbaum, a bank headquartered in Connecticut extended a loan to a Rhode Island couple, apparently through one of the bank’s Rhode Island branches. The loan agreement contained a Connecticut choice-of-law clause, and the loan was secured by a mortgage on Rhode Island property. Nine years after the borrowers defaulted, the bank sued them in Rhode Island. The action was timely under Rhode Island’s ten-year statute of limitations but not under Connecticut’s six-year statute. The Rhode Island Supreme Court had previously abandoned the traditional procedural characterization of statutes of limitations and subjected them to the same choice-of-law analysis as other issues in the same case. Following that analysis, the trial court held that the Rhode Island statute applied, and thus the action was timely. The Rhode Island Supreme Court affirmed in an opinion that, for the most part, replicated the trial court opinion.
Without citing § 187 of the Restatement (Second), the court held that the Connecticut choice-of-law clause was unenforceable because Connecticut had “very little relationship to this matter, other than the fact that the bank may be headquartered there.” In fact, the bank is headquartered in Connecticut and, ordinarily, this a sufficiently “substantial” relationship under § 187. With the choice-of-law clause out of the way, the court proceeded to apply its eclectic “interest-weighing approach” for identifying the state of “the most significant relationship” through Leflar’s choice influencing considerations, including the better law criterion.
The court agreed with the trial court’s finding that all five considerations pointed to Rhode Island. For example, the “maintenance of interstate order” factor pointed to Rhode Island because (1) Connecticut “would not be offended by the application of the Rhode Island statute of limitations because Rhode Island law provided better protection to a Connecticut-headquartered organization by extending the limitation period,” and (2) Rhode Island “would not be offended by such application because the [Rhode Island] General Assembly purposefully enacted a ten-year statute of limitations to afford a longer limitation period for contract actions.” The court followed the same logic in comparing the interests of the two states. The court concluded that Connecticut “did not have an interest in depriving its citizen, plaintiff, of a remedy, or in protecting Rhode Island residents from suit,” whereas Rhode Island “had an interest in applying its own statute of limitations to suits brought in the state concerning Rhode Island residents,” apparently regardless of whether the statute favors those residents. Finally, the court found that, compared to Connecticut’s six-year statute of limitations, Rhode Island’s ten-year statute was “the better rule of law to apply because it provided a [Connecticut] plaintiff with more time to file suit [against the Rhode Island defendants].”
As the above description of Rosenbaum indicates, the Rhode Island Supreme Court’s choice-of-law approach combines elements from several modern approaches. Nevertheless, the court’s heavy reliance on Leflar’s five influencing considerations, including the better-law criterion, justifies my placement of Rhode Island in the “better law” column rather than the “combined modern” column.
Two other points in Rosenbaum deserve mention. The first is that the defendants did not timely invoke Rhode Island’s borrowing statute, which could have led to a different outcome. The second point concerns the court’s statement that the loan agreement “d[id] not clearly specify either the choice of forum or the statute of limitations that would apply.” This statement suggests that the court would consider applying Connecticut’s six-year statute in two circumstances: (1) if the loan agreement contained a Connecticut choice-of-forum clause in addition to the choice-of-law clause, or (2) if the Connecticut choice-of-law clause expressly included Connecticut’s statute of limitations.
Both hypotheses depend on additional contingencies. One such contingency is whether the court before which these clauses are pending sits in a state that, like Rhode Island, characterizes statutes of limitations as substantive rather than procedural. From the perspective of those states, it makes sense to allow parties to choose the statute of limitations of another state, even if that state, like Connecticut in this case, characterizes statutes of limitations as procedural. When the parties’ choice is express, as in the second hypothesis above, the choice is in principle enforceable. But when there is no express choice of the other state’s statute of limitations and there is only a choice-of-forum clause pointing to the other state, as in the first hypothesis above, one should not readily conclude that the parties intended to choose that state’s statute of limitations without additional evidence of the parties’ intent, including knowledge that the chosen state, like Connecticut in Rosenbaum, characterizes statutes of limitations as procedural.
Puerto Rico’s New Codification
The second recent methodological change is the 2020 enactment of new choice-of-law rules by the Commonwealth of Puerto Rico. Because of its historical ties to Spain, Puerto Rico’s private law has been largely based on Spanish law. This includes the first Puerto Rico Civil Code of 1902 (later revised in 1930), which was based on the Spanish Civil Code of 1889 and contained a handful of choice-of-law articles traceable to the French Civil Code of 1804.
These articles were very traditional in substance and style but, beginning in the 1960s, they were essentially supplanted by the decisions of the Puerto Rico Supreme Court. In 1961, only seven years after the ground breaking New York decision in Auten v. Auten, the court abandoned the lex loci contractus rule in favor of a “significant contacts” approach. At that time, only New York and Indiana had made a similar move. In 1966, only three years after Babcock, the Puerto Rico court abandoned the lex loci delicti rule in favor of the same approach. At that time, only five states had also discarded that rule. With these decisions and several that followed, Puerto Rico conflicts law joined the mainstream of American conflicts law. This is why I decided to include Puerto Rico in the annual list of choice-of-law methodologies.
In 2020, Puerto Rico adopted a new civil code replacing the code of 1930. The new code contains 37 articles on choice of law (Arts. 30–66) which, in keeping with the civilian tradition, are placed in the code’s preliminary title. They include four articles on contract conflicts and three articles on tort conflicts. Because the new articles are drawn from a variety of modern sources and methodologies, I have moved Puerto Rico from the “significant contacts” column” to the “combined modern” column.