ALLSTATE INS. CO. v. HAGUE
Legal provision: Article 4, Section 1: Full Faith and Credit Clause
ORAL ARGUMENT OF MARK M. NOLAN ON BEHALF OF THE PETITIONER
Chief Justice Burger: We'll hear arguments next in Allstate Insurance Company against Lavinia Hague.
Mr. Nolan, you may proceed when you are ready.
Mr. Nolan: Mr. Chief Justice, and may it please the Court:
My name is Mark Nolan.
I represent Allstate Insurance Company who appears today as Petitioner on writ of certiorari to the Minnesota Supreme Court.
The judicial trail that leads us here today began when the Respondent, which is the representative of the estate of Mr. Ralph Hague... it began when that representative began a national--
Unidentified Justice: A Minnesota representative?
Mr. Nolan: --Pardon?
Unidentified Justice: A Minnesota representative?
Mr. Nolan: A Minnesota representative.
Unidentified Justice: Was there ever a probate in Wisconsin?
Mr. Nolan: The record is unclear but I think we can presume that there was, because at the time of the incident they resided there and they owned a home there.
Unidentified Justice: What was the purpose of the Minnesota probate?
Mr. Nolan: I think... perhaps I could answer this--
Unidentified Justice: Perhaps we could ask your opponent on this one.
Mr. Nolan: --I think it's best to ask my opponent.
I think it was to... that the actual statute in Minnesota is to appoint a trustee to bring a wrongful death action.
I think what they did is they appointed a representative out of a probate to bring the wrongful death action, or to do all things necessary.
It's indicated in their brief, at any rate, that this action is the main asset of that Minnesota estate, as indicated on page 11 of their brief.
Unidentified Justice: That's why I asked whether there was a Wisconsin probate.
Mr. Nolan: Yes.
That also indicates that there was a Wisconsin probate, that this is the main asset of whatever is in the Minnesota estate.
At any rate, we're here today because Minnesota chose its law to say that the representative could Mr. Hague's Wisconsin insurance policy.
Our position is that Minnesota's choosing of its law in this instance is repugnant to Article 4, Section 1 of the Full Faith and Credit Clause of the Constitution; the Fourteenth Amendment section 1, Due Process, and the line of cases which have interpreted those sections as they apply to choice of law.
Now, in order that you know where I'm going, just in case it may not always appear clear, let me give you a brief table of contents as to how I intend to proceed here.
I will go through the facts because they're brief and important.
I'll break out what contacts go to each state quantitatively, then qualitatively.
I'll discuss those briefly in terms of this Court's decisions on choice of law.
And then, because I anticipate that by counsel's argument in that this Court will have a larger, an interest in the bigger picture of choice of law, I'll discuss briefly in restatement, and more importantly, Professor Leflar's article because it's somewhat representative of what people are saying in choice of law today, and it seems to be what the Minnesota Court relied on more than cases of this Court.
Unidentified Justice: Well, before you get into that let me ask a question or two.
Are insurance rates of Allstate higher in Wisconsin than they are in Minnesota, or is there any difference?
Mr. Nolan: I don't know, and the record doesn't reflect.
Unidentified Justice: What happens when a policy is issued, for instance, in the District of Columbia, where automobiles almost daily cross over into Virginia and Maryland?
Do they take into account experience in those states as well as in the District, and are rates affected?
Mr. Nolan: I don't know the answer to that, but Minnesota courts seem to indicate that they are and they seem to make the admission that they are.
They did in the case of Bolgrean v. Stich, wherein they indicated that the insurer is interested in the Minnesota risk as opposed to another state's risk.
Unidentified Justice: Suppose this accident had taken place in Red Wing, on the Minnesota side of the Eisenhower Bridge.
All other facts being the same, would you be here?
Mr. Nolan: I think that Watson might preclude us from being here: this Court's case, Watson v. Employer's.
Unidentified Justice: And the accident took place on the, just barely on the Wisconsin side?
By "barely", I mean within five miles.
Mr. Nolan: It was a bordering... yes, it was a bordering state.
But I think that in conflicts of law, the state line is very important and must be honored.
Chief Justice Burger: Well, it's like any other line-drawing, isn't it?
You have a line or you don't have a line?
Mr. Nolan: That's right.
And it's especially important here in terms of the Full Faith and Credit Clause.
Briefly, the facts of this case are that on July 1, 1974, Mr. Hague resided with his family in Wisconsin.
He had traveled for 15 years to work in Minnesota but he resided in Wisconsin with his family.
On that date he was riding as a passenger on his son's motorcycle when it was struck in the rear by another Wisconsin resident.
Mr. Hague, the son, and the person hitting him were Wisconsin residents; the accident took place on a Wisconsin road.
Neither his son, whose cycle he was on, nor the person who hit him, had insurance.
Therefore, any insurance available in wrongful death action came from Mr. Hague's, or would come from Mr. Hague's uninsured motorist coverage.
In Wisconsin you can stack that; in Minnesota you cannot.
Two years later Mrs. Hague... two years later, I mean in 1976, approximately two years after this accident, Mrs. Hague moved to Minnesota and began this action; contemporaneously with moving here she was appointed the representative.
Her capacity as plaintiff is as a representative.
The contacts in that setting are these.
The contacts in Minnesota, that the Minnesota court felt significant, were, number one, that Mr. Hague had traveled to Minnesota for some 15 years prior to this accident; that Allstate did business in the State of Minnesota; that Mrs. Hague at the time she began this action was a resident of the State of Minnesota; and that now Minnesota had some interest in the heirs of this estate.
The contacts with the State of Wisconsin are that with regard to the occurrence, it involved three Wisconsin residents, it took place on Wisconsin roads which presumably are regulated by the State of Wisconsin.
The action before you is a contract declaratory judgment action.
This contract was applied for, written, and delivered in the State of Wisconsin; most importantly, written to conform with Wisconsin's law which had $15,000 worth of minimum coverage.
That is why this particular type of coverage was written and all the premiums on this insurance policy were at all times paid from the State of Wisconsin.
Looking at those contacts qualitatively, the Minnesota contacts, the fact that Minnesota does, or Allstate does business in the State of Minnesota is important to jurisdiction but it does not give Minnesota an interest as to what Allstate does with contracts in Wisconsin.
It's... if that were true, you'd be in somewhat the same situation as in Savchuk v. Rush, where they tried to tie some significance to State Farm being in all 50 states and Justice White dismissed that as not being a significant test for jurisdiction purposes.
The other tests that Mr.... or one other test, that Mr. Hague drove to Minnesota, has really nothing to do with either this transaction, in that the transaction was written to comply with the Wisconsin statutes as a Wisconsin risk.
It has nothing to do with this occurrence because there's no... there is agreement on all sides that Mr. Hague was not going to work, coming from work, having anything to do with work at the time he was injured.
Justice Rehnquist: Mr. Nolan, you referred to Savchuk and I think Volkswagen is probably along the same lines.
That really is the exercise of judicial jurisdiction--
Mr. Nolan: Yes.
Justice Rehnquist: --over a party.
What you're talking about is the Home Insurance, Delta Pine line that raises... that say even if you have judicial jurisdiction, the Due Process Clause or the Full Faith and Credit Clause limits the right of one state to wholly impose its laws even on a party that conceivably is before it for jurisdictional purposes.
Mr. Nolan: That's correct.
I think that along those lines I think that choice of law cases have not had as much exposure as jurisdiction cases, but I think we would argue that they're perhaps more important in that jurisdiction establishes a convenience test, where you can hale a person into court, where choice of law really decides what is going to be the ultimate outcome, the disposition of matters.
It's a little bit like saying that jurisdiction may decide where a person is going to be hung, but choice of law would decide whether he is going to be hung.
Unidentified Justice: Did the policy have any provision as to which law would apply?
Mr. Nolan: No it had no... no clause in it.
Unidentified Justice: That would have been an easy way out for Allstate, wouldn't it?
Mr. Nolan: Yes, it would.
Unidentified Justice: As to both states and both parties, they were equally accessible; right?
There was no problem in getting a hold of Allstate in Wisconsin?
Mr. Nolan: No.
Unidentified Justice: So there was no problem there.
Mr. Nolan: No.
Unidentified Justice: In what county of Wisconsin were--
Mr. Nolan: Pierce County, I believe we're talking about.
In terms of those... the cases that--
Unidentified Justice: --That's a border county?
Mr. Nolan: --Pardon?
Unidentified Justice: That's a border county?
Mr. Nolan: That is a border county; yes.
Justice Marshall: This wouldn't go as far as Alaska, would it?
Mr. Nolan: Pardon?
Justice Marshall: Wouldn't go as far as Alaska, would it?
Mr. Nolan: You mean, this case?
If I could perhaps survey the cases, those cases in which this Court has said that a forum court cannot apply its own law, the ones that I think are most pertinent are Dick v. Home Insurance, Yates v. John Hancock, Delta Pine; those would support our position.
In both of those, this Court reversed a forum court that applied its own law because it said that contacts were either too slight or casual; or that, in Yates, by applying the Georgia jury, letting the matter go to the jury, did not give full faith and credit to New York's law.
Those... more importantly, I should probably distinguish those cases which, in which you have let the forum court apply its own law over the contracting, the state of contracting.
The two that are the most prominent are Watson and Clay.
Now, those are distinguished from this case.
First of all, Watson.
In Watson you allowed direct action in Louisiana.
The injury took place in Louisiana to a resident of Louisiana and the Louisiana court applied its direct action statute without regard to the policy of insurance which was made and delivered in another state, which indicated you could not do that.
This Court said that was all right for Louisiana to do that and in so doing recognized that Louisiana had a significant contact in interest with this, with the matter under consideration because the person at the time they were injured was a resident of Louisiana and the injury took place in Louisiana.
Neither of those things happened in Minnesota.
With regard to Clay, Clay was... is perhaps somewhat analogous in that we're talking about an ambulatory contract It was a contract on personal property.
I think it was drawn in Illinois.
Mr. Clay, after it was made and drawn in Illinois, moved to Florida, lived there for two years, paid insurance premiums from there, and then after that time the loss occurred.
Florida applied its law to nullify a contract provision in that Illinois contract which would have limited actions to a certain period of time which had now expired, in order to give its resident the right to recover on this insurance policy.
That case came up to this Court twice, but finally this Court indicated that because Mr. Clay had moved to Wisconsin, in that the loss took place in... or not Wisconsin, Florida; and the loss took place in Florida; and presumably that the company accepted premiums from Florida for that two years; that not only did Florida have an interest in this matter, but it didn't upset anybody's justified expectations because the premiums came and everybody knew the risk had moved to Florida.
That did not happen in this case.
In this case all of the contacts which this Court has previously indicated would lean toward the choice of that state's laws are in Wisconsin.
With regard to Professor Leflar's discussion, I think perhaps we should touch upon it because it seems this has become a favorite of law review articles and this Minnesota Supreme Court certainly gave that more weight and credence than they did the decisions of this Court.
Professor Leflar indicates a five-stage test to deciding choice of law: predictability of results, maintenance of governmental order, simplification of judicial task, governmental interest, and better rule of law.
Now, Minnesota somehow applied that test and got to their law.
I think that if you really look at what Professor Leflar has indicated, number one, Minnesota did that without looking to the constitutional safeguards, and that's why we're here today.
But even if you were just to look at Professor Leflar's test as it applies to the fact that now we have to look at the interests of the states and we have a more fluid society, that sort of approach, it still leans to Wisconsin.
In other words, predictability of results, his first test, very important in a contract dispute.
This is a contract dispute.
People have the right... this is very similar to the justified expectations test of the restatement... people have a right to have, unless there is some substantial overriding interest of an opposing state, they have a right to have the law of the state they intended to have, but in--
Unidentified Justice: Minnesota is free to adopt Professor Leflar's test whether we think it is a wise one or not, unless it somehow offends the Constitution.
Mr. Nolan: --Exactly.
And not only... the only point that I raise it today is because the Minnesota court seems to say that there is some... we should be more interest-oriented in interest analysis in these types of choice of law.
I am saying that even if they wanted to take that approach, they could apply Leflar and they still should have ended up with Wisconsin law.
Unidentified Justice: This brings me back to my rate question.
Had this policy been issued to a Minnesota decedent or a Minnesota resident, would the policy be any different than the one that was issued to the decedent?
Mr. Nolan: Would the wording of the policy be any different, you mean?
Unidentified Justice: Or the rate be any different?
Mr. Nolan: I personally do not know, but, again, the Minnesota court indicated in their opinion, they seem to concede that it would.
In other words, I think on page 49 of their decision, they indicate that Wisconsin has a legitimate interest in keeping insurance premiums low.
Unidentified Justice: Well, sometimes policies do vary from state to state, and I... but I wondered whether this record showed anything on that.
I take it it doesn't.
It doesn't show anything about it.
Mr. Nolan: No, the record was submitted on stipulated facts and it did not include that and the Minnesota Supreme Court did not ask for that, but they... I think the law of the case would presume that they felt it would make a difference.
Unidentified Justice: If it did, if Minnesota rates were higher, that would have been a factor in your favor had it been in the record.
Mr. Nolan: Yes.
Chief Justice Burger: Would the, would such an element as the age in which one state sold intoxicating liquors to persons have some bearing on rates?
That is, if one state had 18 years and the other state had 21 years, are those the kinds of factors that enter into the ratemaking process?
Mr. Nolan: I frankly do not know.
To the extent that it could be shown that more accidents occur because of that and if it could be shown that states do write to the total risk of that state... in other words, how many claims are brought, it would.
Chief Justice Burger: On the basis of massive information on the subject, couldn't any court take judicial notice that intoxicating liquors have a very serious effect on automobile accidents?
Mr. Nolan: Yes, I think... yes.
I think they could, Your Honor, and I think in the same respect in Justice Blackmun's case they could also take judicial notice that it would likely make the premium higher in the State of Minnesota if Minnesota has a policy which in essence gives out more benefits on the same insurance contract language.
Justice Stevens: Mr. Nolan, if you would help me with the other... I was thinking about the contractual aspect of this for a moment.
Could you help me with this concept of stacking that's kind of at the bottom of this, I must confess I didn't think about it enough before argument.
What that means, I gather, is that the victim who has a policy, has an uninsured motorist clause in it and has two policies may recover on both policies.
Is that the way it--
Mr. Nolan: Right.
Justice Stevens: --And there was... or are there three policies here?
Mr. Nolan: Three policies here.
Justice Stevens: And you're saying that in Wisconsin he could only recover on one because Wisconsin in effect as a matter of law imposes a condition in the contract that says, even if you take out three or four more policies with uninsured motorist clauses in them, they don't mean what they appear to say?
Mr. Nolan: But... well, it's--
Justice Stevens: Is that what it is?
Mr. Nolan: --They don't quite phrase it that way.
Justice Stevens: I know, but I'm just... that's, I'm just trying to see what kind of obligation is being changed here by Minnesota.
Mr. Nolan: Minnesota... take the... in both contracts, I think it's safe to say, whether it was written in Minnesota, it would merely say that under this coverage you have uninsured motorist coverage of X amount, $15,000 in this case, on one vehicle.
It was three coverages.
Not three coverages on one person, it was three coverages--
Justice Stevens: I see.
Mr. Nolan: --on three separate vehicles.
And Wisconsin would say, you may take the coverage from one vehicle and apply it.
Minnesota would say, you may take the coverage from all three vehicles for which you've paid a premium and stack it so as to--
Justice Stevens: It's a question of whether the policy should be construed as limited to the vehicle described in that policy or without saying anything pick up other vehicles and additional coverage, then?
Mr. Nolan: --That's right.
Justice Stevens: I see.
Mr. Nolan: That's right.
Justice Stevens: I think that you said the other way around.
Justice Powell: Mr. Nolan, a good many states, I think, require uninsured motorist insurance--
Mr. Nolan: That's correct.
Justice Powell: --Do either of these states require it as a matter of law for policies written in them?
Mr. Nolan: I believe they do.
There is... my only hesitation is that at various times in the middle '70s there was differences, I think, between the two states as to whether you had to offer it as opposed to whether you had to get a rejection of it, of the option.
And I'm not sure of the distinction between the two states in that regard.
Justice Powell: Do you know whether they were different?
I think you are saying you don't know whether they had it.
Mr. Nolan: --I don't know with regard to that, to the part of whether in Wisconsin and Minnesota at the same time the law was that you had to reject uninsured motorist or you got it as opposed to just having to make it available.
Justice Powell: Wouldn't that appear from the statutes of the two states or from the regulations of the insurance commissioners?
Mr. Nolan: Yes, it would.
Justice Powell: It'd be a matter of record somewhere?
Mr. Nolan: It would be a matter of record.
Justice Stevens: In this case, of course, the uninsured person, or the person who had the policy, wasn't in any of the three vehicles on which he had the insurance?
Mr. Nolan: No, he was not, and both the vehicles involved were uninsured.
The... his son's vehicle, the motorcycle, his son had other policies, but they didn't cover this vehicle.
Yes, the insurance that they're looking to is outside of the vehicles involved in this accident.
Unidentified Justice: Right.
Mr. Nolan: The last area... or excuse me, I guess I wandered from Professor Leflar.
At any rate, Minnesota somehow got to applying Professor Leflar instead of the U.S. Constitution, but even Professor Leflar is really a contacts test.
His two most important tests, maintenance of interstate order in governmental interest, are at the heart of the contacts tests.
In other words in terms of maintenance of interstate order, if Minnesota is to apply their law on the fragile contacts that they have with this case, then, in essence, they are chipping away at the sovereignty of Wisconsin to make laws and to judicially interpret those laws.
They're giving it no credence, they're not respecting that sovereignty.
With regard to his test of governmental interest, you don't have significant governmental interest if you don't have contacts with the matter, significant contacts, with either the transaction or the occurrence.
Minnesota in this case seized upon two very dangerous contacts to deem them significant.
By that I mean that two of the four that they even talked about as being contacts, the fact that at the time the action was commenced and the fact that at the time the action was commenced they were now concerned with the heirs of this estate, are dangerous contacts in choice of law decisions because those are the type of contacts which may be developed voluntarily, willfully, after the occurrence giving rise to the dispute.
In other words, if you're going to have a rule that's going to be predictable, and to not promote forum shopping, you really have to... perhaps the case will arise where you cannot disregard an after-acquired contact, but you have to look very closely at those, and in most instances just freeze the facts at the time of the occurrence or the time of the transaction, because if you can deem significant a contact like Mrs. Hague moving to Minnesota, and especially in this, a representative-type action, then let's say in this case Mrs. Hague didn't even move to Minnesota.
They just picked a Minnesota contact.
Justice Marshall: Mr. Nolan, is there a shortage of... in Minnesota?
Mr. Nolan: No, I think there's an abundance of them.
Justice Marshall: I mean, I was just wondering.
Maybe I was trying to find a reason for this.
Mr. Nolan: I'd like to save the rest of my time, if there are no questions, for rebuttal.
Chief Justice Burger: Very well Mr. Nolan.
ORAL ARGUMENT OF ANDREAS F. LOWENFELD ON BEHALF OF THE RESPONDENT
Mr. Lowenfeld: Mr. Chief Justice, and may it please the Court:
I'd like, if I may, to open by answering the question put by Justice Blackmun about probate and the relations of the parties.
There was probate in Wisconsin.
It happened the decedent did own a vacant parcel of land there.
There was a joint tenancy homestead which passed outside of probate.
In Minnesota, there were a variety of interests at the time.
The decedent worked in Minnesota.
He had a profit-sharing retirement plan, he had some trust benefits, some medical benefits, he had some accrued compensation payroll where he had worked that wasn't due yet, and he had life insurance proceeds.
As you undoubtedly know better than I do, Justice Blackmun, the place where the accident happened near where they lived, Hager City, is a very small place.
Red Wing, which is where he worked, is the larger place.
It's where... one would go shopping, and so on.
In fact, when he was lying on the ground, the ambulance came and brought him to Red Wing to the hospital there.
If, for example, he had not been dead on arrival and there had been, let's say, two or three weeks of medical care, intensive care, that kind of thing, obviously one would have thought that Minnesota has an interest in recovering that kind of thing.
That's one of the dangers, I think, in the notion that at the moment of impact of the car and the motorcycle you freeze all events.
Chief Justice Burger: Do these distances make a difference in applying choice of law concepts or do lines, boundaries on maps?
Mr. Lowenfeld: Well, I'm suggesting, Your Honor, that in a constitutional sense what you have to look at is the interest of the two states.
Chief Justice Burger: Well, what if the accident had happened at, up at Superior, Wisconsin, instead of where it did, 150 miles north?
Mr. Lowenfeld: I think not necessarily, if it turns out that--
Chief Justice Burger: Or make it on the other end.
Put it over in Menominee, Wisconsin, in the far end of the state.
Mr. Lowenfeld: --I'm sorry to say I'm not as prepared on the geography of Wisconsin as Mr. Chief Justice.
Chief Justice Burger: One is on the east and one is on the west.
Mr. Lowenfeld: But I think what we're focusing on what the Supreme Court of Minnesota focused on, was its own interests.
Now, what were its interests?
Its interests were primarily that the typical interest in compensation law... that is to say, compensation for injured parties and in the case of death, compensation for the survivors, in this case the widow who, as is perfectly natural, after the death of her husband, she moved in with one of her sons.
It wasn't a very long move, as it happened, but the son lived in Minnesota.
Subsequently she remarried, also in Minnesota.
Unidentified Justice: In Red Wing?
Mr. Lowenfeld: I beg your pardon?
Unidentified Justice: In Red Wing?
Do you know?
Mr. Lowenfeld: I think the son was in Red Wing.
She subsequently married a man who lived in Savage.
Unidentified Justice: She was a resident there when the Minnesota probate was begun?
Mr. Lowenfeld: That's correct.
Unidentified Justice: And how long... does the record show how long she had been a resident?
Mr. Lowenfeld: I think since very soon after the accident.
She moved within a couple of weeks, which was '74, it was July, '74, was the accident.
Unidentified Justice: Is there any inference that the move was made in order to bring a, or to institute a Minnesota probate and bring this action?
Mr. Lowenfeld: None whatever.
Justice Rehnquist: You're saying that your case might well be different if the decedent had lived in Madison, which is 150 miles from the Minnesota line, and commuted to Minnesota every day to work?
Mr. Lowenfeld: No, I don't think I would say that, Justice Rehnquist.
I'm saying the case would have been different if she hadn't made a bona fide move to Minnesota before she brought suit.
The issue of the fact that it was so close to the boundary line is, I think, important in the context of the expectation.
That is to say, the insurance company knew that the decedent drove every day for 15 years from his home, drove across the river to work.
And as the Minnesota Supreme Court found, a substantial portion of the risk was in Minnesota.
This was a global policy.
It was in that case different, for example, from the Home Insurance against Dick, which is the principal case relied on by my opponent, in which the policy was limited to two particular rivers near Tampico.
And if the boat was going to go anywhere else, even in Mexico, it had to have special permission and a special endorsement for an additional premium from the insurance company.
That wasn't this case at all.
Now, I think that's... before I go on to--
Unidentified Justice: If the accident had occurred in Minnesota, could she have sued in Wisconsin?
Mr. Lowenfeld: --I believe she could have; yes.
She could have sued in either place.
There's no question that Allstate does business in all 50 states; indeed, that's in their very name, and in all their commercials.
Justice Marshall: Well, you couldn't sue them in Hawaii, could you?
Mr. Lowenfeld: I wouldn't have thought so in terms of the rules of forum non conveniens.
Justice Marshall: You mean you do think so, now?
Mr. Lowenfeld: Well, I think it would be a transitory cause of action.
You might get judicial jurisdiction, but undoubtedly a motion to dismiss for forum non conveniens would have been granted in that sense.
Unidentified Justice: Well, suppose it wasn't?
Mr. Lowenfeld: Oh, I suppose in that case suit could have... if we still believe in transitory actions, I suppose suit could have been brought in Hawaii.
I think if the Hawaii court... that that then would apply its own laws.
Justice White: Well, suppose... suppose the lady hadn't moved to Minnesota but had simply sued the insurance company in the Minnesota courts.
Same question, and the Minnesota court didn't dismiss on forum non conveniens ground.
Could it have applied its own law or couldn't it?
Mr. Lowenfeld: I think the case for application in those circumstances would be very close to arbitrary action.
Justice White: Well, on what--
Mr. Lowenfeld: And at--
Justice White: --What clause of the Federal Constitution would be implicated?
The Due Process Clause?
Mr. Lowenfeld: --Yes.
I think... and I think, to anticipate a little bit, I was going to come to that later.
But the answer to Justice White's questions, and in a sense also to the Chief Justice's question, does one draw lines?
Yes, one draws lines but if you consider that that only mandate that this Court has, only mandate since Erie against Tompkins and Klaxon, that is to say, you no longer can say, we'll decide what's the better view; we'll decide whether Professor Leflar, Professor Currie, or some other professor has the best view.
That's not within the scope of this Court's decision.
The only one that really makes sense now is the Fourteenth Amendment.
And what does that safeguard?
It safeguards individuals, including insurance companies, but it safeguards them from arbitrary governmental action.
And what's arbitrary in this field?
There's no kind of procedural due process, no question that there was service of process and notice and all of that.
They've a right to be allowed to be heard.
A kind of substantive due process may come in when a state applies a law that has nothing to do with it: if Minnesota applied the law of Hawaii, or if, for example, Minnesota said, we are interested in this case simply because it's in our court, although we never heard of this lady.
She doesn't live here, she just found--
Justice Brennan: Is this an argument that choice of law problems as they present Federal constitutional questions, is that only due process?
Mr. Lowenfeld: --I think that is essentially our position.
It's true that the Full Faith and Credit Clause is occasionally brought in.
I think the workmen's compensation type of cases, Alaska Packers and Pacific Employer's, especially, have put that to rest; Clay as well, and in a sense, as a kind of a fortiori case, your most recent decision last June in Thomas against Washington Gas Light.
I think, realistically speaking, Justice Brennan, the Full Faith and Credit Clause doesn't have any place here, remembering that there is no act, there's no statute of Wisconsin that's relevant to this case.
Justice Stevens: Would the case be any different if the insurance policies had express language in them saying that only the coverage under one policy should... one policy shall provide the maximum uninsured motorist coverage?
And then with... Minnesota said those... we stack in Minnesota, and that's contrary to our public policy.
Would that be a same case?
Mr. Lowenfeld: If I could make a somewhat roundabout answer to your question, Justice Stevens, I think it's worth putting this whole question of uninsured motorist insurance in context a little bit.
Just let me back up for a moment.
It starts out in about the mid-60s.
In many states there is a drive for compulsory insurance and the insurance industry resists.
In other states there's a drive for no-fault insurance, and the insurance industry resists.
And what they say, they recognized the problem of the uncompensated traffic victim and they say, here's what we'll do: we'll offer a policy, and then later some states required it, but we'll offer a policy that says the motor vehicle owner and members of his household, as defined in one of those small print clauses, but basically that's right... will be covered for accidents arising where the fault is that of the uninsured motorist.
In other words, it's a kind of hybrid.
It's first-party coverage but it's tort; it's negligence, it's not a non-fault coverage.
Well, now, what happens is, it works both ways.
You are covered, yourself, and your members of your family, wherever you may be, in... it doesn't have to be your own car, and also occupants of your car are covered.
So it happens all the time that, let's say, Mr. A has insurance, including this insurance.
He then is driving as a passenger in Mr. B's car when X, the uninsured motorist, negligently runs into them.
So A is covered under his own policy, for which he's paid a premium, and he's covered as an occupant under B's policy.
Now, then the question is, what does the coverage say?
The insurance companies try to make so-called other insurance clauses.
And there is a standard clause put out by the National Insurance Bureau, which was followed in this policy and seems to be in all the textbooks and in nearly all the policies.
It didn't quite say there shall never be stacking.
Apparently, if they'd said that, the insurance commissioners' wouldn't have permitted it.
But what they tried to do is to say, if there are two policies, one of them is excess to the other and you don't get more than the total limit.
Now, then, the stacking cases came up and I was astounded... if you look at Professor Widiss's book on uninsured motorist insurance, which came out in 1969... there's a 1980 supplement... it's about 400 pages of mostly cases.
All this has come up in the last few years.
Interestingly enough, about a third of the cases seem to involve Allstate.
So they're very fully aware of this.
There's no unexpected there.
And the majority of states so far... it's a little hard to have an exact rule, because not all of the cases involve the highest court of the state... and there are different kinds of stacking.
There's the guy in the other fellow's car, and there's also the fellow who has more than one policy, or more than one car on the policy.
The majority of states that have faced this problem have said, we will permit recovery on each policy since, after all, a premium has been paid on each policy.
And there's no windfall, since there is actual... it only goes up to the provable damages.
It's not like having two policies on a boat that sinks and you could recover $4,000 on a $2,000 boat.
That's not this at all.
This is recovery for accidental injury or death up to your provable damages.
In our case we had a 52-year-old man who was earning about $15,000 and had children, so there's no issue here, that he's being somehow given a windfall.
Now, if I may get back... a somewhat longwinded answer to your question... if they had absolutely said, no stacking, I think the Wisconsin insurance commissioner would probably have said, no.
Probably the Minnesota insurance commissioner would have said no.
Justice Stevens: Let me rephrase the question.
Say that's what the contract said and Wisconsin insurance commissioner said, that's okay.
Mr. Lowenfeld: --Well, it's kind of interesting, if you look at the policy.
For instance, the... Wisconsin, as we know, has direct action statutes.
And so the policy here... which is why I think, in fact... to come back to Justice Blackmun... the rate's probably higher in Wisconsin rather than lower.
And the policy says no one can sue the insurance company except for injuries in Wisconsin.
Now, you know that's not going to stand up.
If a Wisconsin driver comes--
Justice Stevens: The express language I'm suggesting is no-stacking express language that only one policy shall afford uninsured motorist coverage even though there are three vehicles and three policies.
And that was express, and the parties spelled it out more or less as they had in the Home Insurance Company case on the time problem.
Would not the Home Insurance case control in that hypothetical?
Mr. Lowenfeld: --Well, it's possible.
Courts all around the country, and Minnesota is a good example, have found ways around a variety of these clauses.
Sometimes they say they're ambiguous.
If it were unambiguous, as you suggest, Justice Stevens, they might say it's against public policy.
I'm not certain.
But certainly it would be a stronger case for Allstate than this one.
Justice Rehnquist: Well, Home Insurance was the case of a state court that tried to find a way around a policy and it was reversed by this Court, wasn't it?
Mr. Lowenfeld: That's right.
But if you notice, several things are very different about Home Insurance and this case.
Perhaps the most important one for our present purposes is, that under the present rulings of this Court there would have been no jurisdiction in Home Insurance.
Home Insurance against Dick is really the grandfather of Seider and Roth, and Rush and Savchuk, and all of those cases.
It was a quasi-in-rem action brought by taxing the alleged res, which was the obligation to reinsure, of a New York company that was doing business in Texas.
That is to say, Anglo-Mejicana, which was the actual insurer had no connection whatever.
That's one point.
Second, there was a choice of law clause.
It said, this policy will be governed by the Commercial Code of Mexico.
And third, as I already said, it specifically said, the following rivers are the only ones covered by this policy.
So those are the three differences.
And I guess it is right, that if we had that again, that probably still is arbitrary action.
Justice Stevens: Mr. Lowenfeld, I think what I'm trying to get at is whether the issue is affected at all by the clarity and certainty of the obligation that was created in the other state, whether it depends to a certain extent on a construe in that state's law as opposed to giving effect to a very plainly assumed obligation by parties who negotiate a contract.
Is that relevant at all?
Mr. Lowenfeld: I think it's relevant, but I don't think, Justice Stevens, that it is conclusive.
Because, one, it's understood that this is nationwide, in fact, continental-wide, all of North America, policy.
Second, that the insurance company itself does business... in fact, I think it's the fourth largest insurer with over 200,000 policies... in Minnesota.
If you recall, for example, the quite interesting opinion in the Watson case by Justice Frankfurter, in which he has a kind of alternative argument to the one used by Justice Black.
He says the insurance company knew all about this.
It came into Louisiana, it took advantage of the privilege of doing business there, and it's bound by the laws.
I think that same argument applies to Allstate in this case.
So that if... in other words, if the Minnesota Supreme Court had then said in the present case, Hague against Allstate is different from Van Tassel against Horace Mann, which is the principal case in which they in Minnesota said, we apply stacking.
It's different because there is a choice of law clause, because the anti-stacking clauses are unambiguous in contrast to the other case... here they're the same.
If it had made all those points, I think that is an appropriate way for the Minnesota Supreme Court to do.
If it had still said, no, because what we're concerned with is protection, is the role of the accident compensation system.
And we have our widow, we have an estate that we are concerned with.
And if it had said that, that doesn't strike me as arbitrary action of the kind that this Court ought to interfere with.
This Court is not, I think, a court of errors and appeals on the choice of law theories.
Contrary to what Mr. Nolan said, we're not asking you here to say, we agree with Minnesota Supreme Court's construction of Leflar.
We're simply saying it doesn't rise to the dignity of the kind of arbitrary action that this Court sits to exclude.
Justice Powell: Mr. Attorney General, you have emphasized two factors, primarily: the presence of the will in Minnesota and the fact that the decedent was employed in Minnesota.
I think it was Justice White who asked you what the effect would have been if she had, the widow had remained in Wisconsin.
My question is whether your case would be substantially weakened or you would have no case at all if decedent had not been employed in Minnesota?
Mr. Lowenfeld: Well, Justice Powell, I think the... I raised the issue of employment because the Minnesota Supreme Court raised it.
If you look at the purposes of the accident compensation system... and of course, this is a hybrid between tort and contract, as I already suggested... the more important issue is whether the widow and heiress becomes a public charge or whether there is a fund available to pay for her.
So I think the employment though relevant is less critical than the residence of the lady, provided, and I... just to repeat what I said to Justice Rehnquist, provided there's no suggestion of manipulation or deliberate forum shopping, something like that.
Chief Justice Burger: What if the results were to be the same in both states?
Then what happens to your argument about the widow becoming a public charge?
Mr. Lowenfeld: You mean, if Minnesota also now says stacking is foolish?
Unidentified Justice: No, if the financial result was precisely the same in both states?
Mr. Lowenfeld: Well, I suppose then there is no conflict of laws.
And in fact, as we suggest in our brief, that may well be the situation, since, interestingly enough, the Wisconsin court in the Nelson case, which said, we don't have stacking here, said, that's because this accident happened before the statute was amended and then the statute was amended and they said, well, we make no finding as to how that would come out.
And Minnesota Supreme Court said, it's possible that Wisconsin would come out the same way but we don't have to worry about that; we don't want to hold a hearing on how Wisconsin would judge this, we're just going to apply our own law.
Now, let me just briefly, if I may, come back to the question of what line should be drawn.
I've already suggested that this Court ought to be reluctant to get into the question of a particular contact or a particular interest, whether it's residence or the place of the accident or the domicile of the... of a particular party, whether it's plaintiff or defendant.
Chief Justice Burger: We'll resume there at 1 o'clock.
Mr. Lowenfeld: All right.
Chief Justice Burger: Mr. Lowenfeld, you may continue.
You have seven minutes remaining.
Mr. Lowenfeld: Thank you very much.
As I was saying at the lunch break, the position that we take is that this Court does not sit to decide between one theory of conflict of laws and another, whether it's contacts analysis or interests analysis, the first restatement, the second restatement, Professor Leflar, or some other professor; that what it sits to oversee is, and only is, the question of arbitrary action.
I'd like, perhaps, in the few minutes I have remaining--
Justice Brennan: I'd like to be sure about what you mean, because there's really no Federal constitutional question for us to decide in choice of law cases, unless there's some alleged arbitrary action, denial of due process, and that's all?
Mr. Lowenfeld: --That's entirely my position, Justice Brennan; yes.
Chief Justice Burger: Does that not, to a degree... or, I'll put it, does it to a degree put jurisdiction and choice of law in logic-tight compartments?
Mr. Lowenfeld: Well, that's an interesting way, Mr. Chief Justice, to put that question.
Of course, we've had this series of cases now... four of them in four years... in which the jurisdiction has been challenged and state court action has been struck down.
It's interesting that Justice Brennan in each of those cases said, why is that so if choice of law would be permissible?
And the majority has said, no, we are prepared to strike down certain cases of arbitrary reaching out.
I think it turns out that some of the cases that you've had in the jurisdiction area... Rush and Savchuk in particular is a good example; perhaps Kulko as well... the Court might have come down the other way, but the difficulty, if it had come down... that is to say, struck them down on choice of law rather than on jurisdictional grounds... but if you had done that, it would have opened up a very large area of fine-line drawing, weighing this against that, and it would have involved this Court telling the Supreme Court of Oklahoma, Minnesota, California, et cetera, how to decide cases.
Justice Rehnquist: Of course, by the same token, you could say we told them how to decide them on the basis of jurisdiction.
Mr. Lowenfeld: No, I don't think so, Justice Rehnquist.
I think what you told them in those cases is, don't decide this case; it ought to be adjudicated somewhere else, or dismissed... as in Volkswagen... dismiss the following parties from the case, and then you can go ahead with other parties.
That's exactly the difference.
And it seems to me that in terms of a vibrant Federal system, it's easier to draw lines and it's less intrusive into the work of the state judiciary to say, you may not hear this case at all, than to say, you can hear it but you'll only decide it in a certain way.
I think that was started with Hanson against Denckla and then kept up in these four cases that you've had in the last four years now.
Chief Justice Burger: Is it possible that... I'll put it another way... which do you think will be advanced by the approach you suggest, hands off, by this Court?
Federalism or parochialism?
Is it parochialism?
Mr. Lowenfeld: I would say... I would say federalism and a certain amount of experimentation.
If you think about the difficulty with setting down rules in the choice of law area, it's a little bit like the criminal procedure cases.
Since you have no Federal statute, you only, your only criterion is a due process criterion if you lay down a certain rule.
For example, the issue must vest at the date of impact, or the following are minimum contacts, and so forth.
It will turn out that neither the lower Federal courts nor the state courts nor state legislatures nor Congress, no one can make any changes.
And that, it seems to me, it would be very unfortunate for the development of federalism.
It's no accident, Mr. Chief Justice, that the conflict of laws has really been in the forefront of experimentation in the whole area of accident compensation.
That is, we've had, for example, the series of guest statute cases that I'm sure you're familiar with, many in New York, some in California and elsewhere.
And the result over time, though the conflict theories have tended to vary with the different professors and the different judges, in the end we've had a reduction in guest statutes; we've had a reduction in wrongful death limitations; a variety of these kind of quirky state rules have tended to go.
In other words, conflict of laws has been an engine of law reform generally and I think it would be very unfortunate if this Court were to stop that.
I think that's what Professor Freund meant in his essay about Chief Justice Stone, which is cited in our brief.
It's what Chief Judge Kaufman meant in the Pearson case in which he warned against returning to the "ice age" of conflict of laws.
I think altogether a dynamic federalism, Mr. Chief Justice, would be furthered by a statement that the Court will come in only at a certain time, only when there's really arbitrary action, not by an attempt to draw particular rules of this kind here.
Justice White: But you don't think that we should say that just because a state court has jurisdiction... obvious jurisdiction, no one questions it... that it may apply its own law?
Mr. Lowenfeld: I'm not sure whether you should say that or not, Mr. Justice White.
Justice White: Would you find the application of that rule arbitrary in some circumstances, if there's acknowledged jurisdiction, everybody agrees there's jurisdiction?
Mr. Lowenfeld: --I would put the statement slightly differently.
I would say that if you exercised the kind of vigilance that you've exercised in the last few years on judicial jurisdiction, on reaching out by state courts, you will not find the kind of arbitrary action, the kind of parochialism... as the Chief Justice suggested... that you need to worry about.
I'm not quite sure I would put... but if you did put it the way you've said, I don't think that would be a tragedy.
I think it's a slight, subtle difference.
Justice Stevens: Mr. Lowenfeld, would you say that a statute would be unconstitutional that... say the State of Minnesota passed a statute that said, in all cases tried in Minnesota courts the Minnesota judges shall apply Minnesota law?
Mr. Lowenfeld: I think I could certainly conceive of situations where, as applied, that such a statute would be unconstitutional.
Yes; for example, if in our case Mrs. Hague had remained in Wisconsin or had moved to New York but had hired Minnesota counsel and then were applying that kind of statute, that would seem to me arbitrary action; yes.
I think my time is out.
Chief Justice Burger: Thank you.
ORAL ARGUMENT OF MARK M. NOLAN ON BEHALF OF THE PETITIONER -- REBUTTAL
Mr. Nolan: If I might respond and rebut quickly and briefly, I would like to answer Justice White's question by pointing out the ludicrousness of it.
Allstate could be sued in all 50 states, all 50 states, for the purposes of a declaratory judgment action, an action directly against the insurance company.
You could sue Allstate in all 50 states.
You would not want any of those 50 states to be able to choose their law.
I would say, in answer to your question, no.
The courts cannot choose their law.
Justice Rehnquist: When you say, ludicrousness, you mean the ludicrousness of the result, not the ludicrousness of the question?
Mr. Nolan: That is so.
Justice White: But where do you find the word "ludicrous" in the Constitution?
Mr. Nolan: Where I find--
Justice White: What's a... what would Allstate be deprived of if sued in Hawaii on this cause of action by a resident of Minnesota?
Mr. Nolan: --Allstate would be deprived of due process and in this particular instance Wisconsin would--
Justice White: How?
How is that?
Mr. Nolan: --be deprived of full faith and credit.
Justice White: Why would it be deprived of due process?
Mr. Nolan: Because there are no contacts--
Justice White: Please tell me if Dick does... why, what deprivation is that?
Mr. Nolan: --There are no contacts with The State of Hawaii that gives them any interest over the State of, over Allstate's interest in writing this contract in conformity with Wisconsin's law.
Justice White: Well, would it be all right to be sued there in Hawaii as long as it applied Wisconsin's laws?
Mr. Nolan: I think they could.
I think somebody might raise a motion of forum non conveniens.
Justice White: Well, suppose it was denied?
It would still be--
Mr. Nolan: --Then I think the result should be that they could hear the case but they should apply Wisconsin's law.
Justice White: --Well, what interest has Hawaii got in hearing that case?
Mr. Nolan: I don't think they have any interest and I would wonder why they would do it.
But they could... I guess what I'm saying is that you're telling me to assume that the jurisdiction is okay?
Justice White: I am.
Mr. Nolan: What should be the choice of law?
Justice White: I am; yes, I am.
Yes I am; yes.
Mr. Nolan: Okay.
I don't think they have any interest in it and that's why I think they should choose Wisconsin's law.
Justice White: Rather than just dismiss the case?
Mr. Nolan: Well, the... what they really... you've told me... I said that I would bring the motion for forum non conveniens.
They should dismiss the case.
Then you've said, assume that's denied.
Well, assuming it's denied, then they should apply Wisconsin law.
Briefly, they also... my opponent's missed the case of Yates versus John Hancock Insurance.
That is a case very much in point with this situation in that that's a life insurance policy which was applied for in New York.
After the death of the husband the wife moved to Georgia.
Georgia applied their law as opposed to New York's law and in that court this case indicated the choice of law was a Full Faith and Credit issue in addition to due process, and additionally indicated that that after-acquired fact of her moving to Georgia was not enough contact with Georgia to give them any interest to apply their law.
The same is true of Mrs. Hague moving to Minnesota after this instance.
Full Faith and Credit does go to not only acts but to judicial proceedings.
What has happened here, there's the judicial proceeding of Wisconsin has said, no stacking; Nelson is the case.
No stacking; to give full faith and credit to that, you must apply Wisconsin's law.
Additionally, there's been a hint that there's no conflict at issue, both in the argument and in the brief.
There definitely is a conflict of law.
The Minnesota court's recognized that the Nelson case in Wisconsin said, no stacking.
It wasn't raised in argument but it is raised in their brief that an amendment was added to the statute after that decision.
That amendment has nothing to do with giving arguments to stacking, as... without getting off on a tangent, it provides arguments for not allowing a set off for med. pay and uninsured motorist coverage.
As the Minnesota court recognized, that amendment did not change the statute.
There is a conflict.
The last issue that I should address is, this Court should hear these cases, should make a determination in these cases.
Its position should not be hands off.
It should not abdicate its role as the protector of the Constitution in letting courts just experiment and go to this better rule of law test without paying attention to the Constitution.
Justice White: Well, if this accident had happened in Wisconsin--
Mr. Nolan: It did.
Justice White: --had happened in Minnesota and--
Mr. Nolan: Yes?
Justice White: --suit was in Wisconsin and the widow had not moved to Minnesota, she sued... probate in Wisconsin and sued in Wisconsin, would you say that the Wisconsin courts could apply either the Minnesota law or Wisconsin law?
Mr. Nolan: I would say that would be a closer case.
I think Wisconsin--
Justice White: Is there always one answer to these questions?
Mr. Nolan: --No, there isn't; that's--
Justice White: I mean, could it... aren't there some cases in which either... the law of either state could be applied without violating the Constitution?
Mr. Nolan: --Yes.
And in that... if that were true then, if you got to that threshold, then better rule of law might be a way of resolving that, that dilemma.
But if you don't get to that threshold, if you don't cross the constitutional area, you surely don't.
Unidentified Justice: Well, in Justice White's hypothetical, would the Full Faith and Credit... in Justice White's hypothetical, would the Full Faith and Credit Clause be involved?
Mr. Nolan: To the extent that... you're saying... I guess, if it would--
Unidentified Justice: As I understand your argument in this case you do rely on the Full Faith and Credit Clause?
Mr. Nolan: --Yes.
Unidentified Justice: And you cited that what the Minnesota Supreme Court did violated that clause--
Mr. Nolan: Yes.
Unidentified Justice: --not giving... in giving weight to... with Nelson.
But in the case that Mr. Justice White put to you how would it be covered?
What would you have to turn to then?
Mr. Nolan: What would you... you mean, what would you turn to as the--
Unidentified Justice: In the Federal Constitution?
Mr. Nolan: --I guess you would turn to Due Process; the contacts, whether the contacts were such.
Unidentified Justice: But these cases do differ.
Mr. Nolan: Yes.
I think that both Due Process and Full Faith and Credit is involved.
Chief Justice Burger: Thank you, gentlemen.
The case is submitted.