February 5, 2013
The U.S. District Court for the Northern District of Texas recently decided numerous choice-of-law issues in a products liability action brought by the family of a deceased helicopter pilot. See Sulak v. Am. Eurocopter Corp., Act. No. 4:09-CV-651-Y, 2012 WL 4740176 (N.D. Tex. Oct. 3, 2012). The decedent was a resident of Hawaii and was killed in Hawaii while piloting a helicopter manufactured and distributed by the defendants, who were located in France. The decedent's family filed their action in Hawaii state court, and the defendants removed it to federal court in Hawaii. The Hawaii federal court then transferred the action to the federal district court in Texas based on one defendant's insufficient contacts with Hawaii.
In light of the fact that the action ended up in federal court in Texas and that the crash had occurred in Hawaii, the court was faced with numerous choice-of-law issues involving both procedural and substantive questions. Noting that it had jurisdiction over the lawsuit based upon federal diversity jurisdiction, the court stated that it was required to apply Texas choice-of-law rules to determine whether Texas or Hawaii law governed the plaintiffs' action. Texas applies the most-significant-relationship test set forth in the Restatement (Second) of Conflict of Laws. Under that analysis, it is not necessary that a single state's law control all substantive issues. Each issue is, therefore, considered separately, and the state law that has the most significant relationship to the issue controls.
The court observed that under the Texas most-significant-relationship analysis, the law of the place of the injury governs questions of substantive law unless the policy considerations of the Restatement's choice-of-law principles show that another forum has a more significant relationship with such an issue. The court contrasted this rule with the principle that the applicable procedural rules are those of the forum. The court noted the general rule that if a Federal Rule of Civil Procedure or Evidence governs a disputed point, the Federal Rule is to be followed, even in diversity cases. The court concluded that the Federal Rule of Evidence restricting the admissibility of subsequent remedial measures should govern in strict products liability cases. The court also held that it would apply the Federal Rule of Civil Procedure governing the impleading of a third-party defendant, rather than Hawaii law governing the liability of third-party defendants, when the issue was not the substantive question of whether a potential third-party defendant was liable, but the procedural question of whether such a defendant could be impleaded.
Turning to the issue of the necessity of expert testimony to prove the existence of a defect in the product, the court noted that under Texas law, courts undertake a choice-of-law analysis only if there is a conflict of laws that actually affects the outcome of an issue. The court found such a conflict regarding the requirement of expert testimony, in that Hawaii law does not always require such testimony to prove the existence of a product defect but Texas law does when the defect involves technical matters beyond the general experience of the jury. Section 135 of the Restatement provides that the local law of the forum determines whether a party has introduced sufficient evidence to warrant a finding in his or her favor on an issue of fact. The court concluded that Texas conflict-of-laws rules include the principle set forth in section 135 and found that the issue of the necessity of expert testimony is a question of the amount of evidence required to establish a defect, which is governed by the law of the forum. Thus, the plaintiffs were required to present expert testimony to prove that there was a defect in the helicopter.
The court also addressed the issue of whether the plaintiffs were required to prove the existence of a safer, alternative design that would have prevented or significantly reduced the risk of injury. Pursuant to Texas law, a plaintiff must prove that there was such a safer design. Under Hawaii law, the existence of a safer design is merely a factor to be applied in determining whether a product was defective. The court concluded that under Texas conflict-of-laws principles, Texas law applied to the issue because it was also one involving the sufficiency of evidence, pursuant to Restatement § 135.
Finally, the court turned to the choice-of-law issues regarding the questions of joint and several liability and comparative fault. The court determined that under Texas conflict-of-laws rules as set forth in the Restatement, the court was required to consider specific qualitative factors to decide which state's law applied, since the general choice-of-law principles did not favor any one state. Those factors were (1) that the place of the injury pointed to Hawaii, where the pilot worked and lived and where the crash occurred; (2) that the location of the conduct causing the injury was France, where the helicopter was designed and manufactured; (3) that the location of the parties implicated numerous fora; and (4) that the place of the parties' relationship was neutral.
As to the relevant specific factors, the court stated that under the governing Texas principles as set forth in the Restatement, the focus is primarily on balancing the competing interests of the policies of the forum and those of other interested jurisdictions. Applying this test, the court found that Hawaii law applied to the issues of joint and several liability and comparative fault. As to joint and several liability, Hawaii had a greater interest in seeing its pure comparative negligence damages policies enforced than Texas had in enforcing its percentage-based negligence scheme. This was because the accident occurred in Hawaii, the deceased pilot was a resident of Hawaii, and the helicopter was operated and maintained in Hawaii. Under the circumstances, Hawaii's interest in protecting those within its borders from defective products imported into the state was more substantial than Texas's interest, which arose largely because it was the litigation forum. The court found that the same reasons favored the application of Hawaii law to the issue of comparative negligence.
Finally, the court determined that the factor protecting justified expectations was neutral because the parties had no expectations that the laws of a particular forum would be applied. Second, the factor examining the needs of the interstate and international systems did not favor a particular forum. And third, the factor analyzing certainty, predictability, and uniformity of result was of diminished importance because the parties likely did not give advance thought to the legal consequences of their transactions.
Sulak is thus an instructive decision on many choice-of-law issues that may arise in products liability litigation. The court aptly discussed and applied the principles contained in the Restatement, which have been incorporated into the choice-of-law rules of most states. The opinion is also helpful in distinguishing between procedural and substantive law for purposes of conflict-of-laws analysis.