Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy

Analyzing a conflict of laws requires thinking both about the scope of potentially applicable law and about priority, or choice, among potentially applicable laws. The Restatement (Second) of Conflict of Laws, published in 1971, contains little guidance on how, or in what order, courts are to address these two inquiries. The draft Restatement (Third), in contrast, differentiates clearly the respective roles of the two analytical elements. It characterizes the resolution of a choice-of-law question as a two-step process. First, the scope of the relevant states’ internal laws must be determined, in order to ascertain which states’ laws might be used as a rule of decision. Second, if more than one state’s law might be used as a rule of decision, and those laws conflict, it must be decided which law is given priority. The draft defines “internal law” to include restrictions on the geographic scope of the law. However, there are two questions the draft does not answer clearly. First, is the definition of internal law meant to include only express restrictions on scope? Second, absent explicit indications of legislative intent, how is the scope of a law to be determined? In particular, should courts employ a presumption against the extraterritorial application of state law? This article begins by analyzing the role of the presumption against extraterritoriality in supplying implied restrictions on the scope of law. It considers the role of the presumption in both international and interstate conflicts of laws, and argues that the Restatement (Third) should differentiate clearly between those two contexts. It then turns to the question whether geographic scope restrictions should properly be considered part of a state’s internal law. The paper analyzes that question through the lens of a common problem: a contract dispute involving a transaction or event that falls outside the scope of the law chosen by the parties to govern their agreement. On the basis of that analysis, it concludes that forthcoming sections will need to address the implications of the draft’s categorical treatment of legislative scope

The Viability of Enterprise Jurisdiction: A Case Study of the Big Four Accounting Firms

One of the boundaries that U.S. courts must observe as they adjudicate regulatory disputes is the limit on their own jurisdictional authority -authority that is measured at the level of the particular forum state. Confronting the expansion of U.S. business activity from the local to the national scale during the second half of the twentieth century, courts consciously broadened jurisdictional standards to address the expanded activities of nationwide corporate groups. Today, by contrast, as the economy continues to expand from the national to the transnational scale, the U.S. Supreme Court has begun a retrenchment. In cases decided during the past several years, the Court has both restricted the basis for general jurisdiction over non-resident defendants and articulated a highly localized approach for assessing the availability of specific jurisdiction. This retrenchment opens a gap between the effectiveness of global enterprises in operating within the transnational space and the effectiveness of our courts in regulating their activity. This Article investigates whether enterprise theory can provide a way to fill that gap. In general, jurisdictional analysis follows an entity approach: personal jurisdiction over a particular company within a corporate enterprise must be predicated on that company\u27s own contacts with the forum. Even the exceptions that courts have developed to this rule -for instance, using agency principles to attribute the contacts of one company to another, or using alter-ego principles to collapse the boundary between two companies -fit within the entity theory framework. Under an enterprise approach, by contrast, where the components of a group constitute a unitary business that operates as an integrated enterprise, the jurisdictional analysis would under certain circumstances take into account the forum contacts of the entire group. Exactly how an enterprise-jurisdiction standard would operate remains unclear. Some gestures toward enterprise analysis can be seen in the case law, but they are typically under-explained and often confuse that analysis with more traditional entity-based approaches to jurisdictional attribution (an area that is itself widely viewed as a mess). Moreover, enterprise theory in general has been much criticized for its complexity and indeterminacy. At this point, then, many more questions have been raised than answered. Can certain enterprises - whether held together by ownership ties or other linkages -fairly be characterized as unified, and using what criteria? Are there circumstances under which the objectives underlying jurisdictional law would be better served by an approach considering enterprise-wide contacts? Would such an approach be consistent with the due process analysis articulated in the recent Supreme Court jurisprudence? The goal of this Article is to address these questions through an investigation of litigation involving the Big Four accounting firms. These enterprises, which operate as integrated multinational service providers but constitute networks of independently-owned offices, provide a useful case study that: (1) assesses the feasibility of making accurate and predictable determinations that particular enterprises are unified; and (2) illuminates the vagaries of current jurisdictional analysis relating to multinational enterprises. Through this study, the Article lends much needed specificity to the analysis of enterprise jurisdiction and the consideration of its prospects

Class Actions, Conflict and the Global Economy

This essay is a lightly edited and footnoted version of a lecture delivered in April 2011 (video below) to inaugurate the John E. Schiller Chair in Legal Ethics at the Indiana University Maurer School of Law. It was previously published in FESTSCHRIPT FOR ROLF STCTRNER ZUM 70. GEBURTSTAG 1443 (Bruns et al. eds., Mohr Siebeck 2013)

The Interpretation and Effect of Permissive Forum Selection Clauses Under U.S. Law

A forum selection clause is a form of contractual waiver. By this device, a contract party waives its rights to raise jurisdictional or venue objections if a lawsuit is initiated against it in the chosen court. The use of such a clause in a particular case may therefore raise a set of questions under contract law. Is the waiver valid? Was it procured by fraud, duress, or other unconscionable means? What is its scope? And so on. Unlike most contractual waivers, though, a forum selection clause affects not only the private rights and obligations of the parties, but something of more public concern: the jurisdiction of a court to resolve a dispute. The enforcement of such a clause therefore raises an additional set of questions under procedural law. For instance, if the parties designate a court in a forum that is otherwise unconnected to the dispute, must (or should) that court hear a case initiated there? If one of the parties initiates litigation in a non-designated forum that is connected to the dispute, must (or should) that court decline to hear the case? This report, prepared for the International Academy of Comparative Law in connection with its XXth International Congress, analyzes the approach to these questions in the United States. The bottom line is straightforward: almost always, in consumer as well as commercial contracts, forum selection clauses will be enforced. Navigating the array of substantive, procedural, and conflicts rules whose interplay yields that result, though, is far less straightforward. That is the task of this report. Following a short background, it surveys current state law on their use, in consumer as well as commercial contracts. The report then discusses the interpretation and enforcement of forum selection clauses in both state and federal courts. It analyzes their effect on jurisdiction as well as on doctrines involving venue, such as removal and forum non conveniens. The report also covers choice of law problems, particularly as they arise in the course of litigation in federal courts