CHAPTER IV

TORTS AND DAMAGES -CASES

CASE NO. 1

621 S.E.2d 413 (2005)

279 Ga. 808

DOWIS et al.
v.
MUD SLINGERS, INC. et al.

No. S05G0336.

Supreme Court of Georgia.

October 24, 2005.

414*414 Ronald P. Jayson, Decatur, for Appellants.

Gregory T. Presmanes, Amy Rogers Perkins, Bovis, Kyle & Burch, LLC, Atlanta, for
Appellees.

HINES, Justice.

This Court granted certiorari to the Court of Appeals in Dowis v. Mud Slinger
Concrete, 269 Ga.App. 805, 605 S.E.2d 615 (2004), to consider whether the conflict
of laws rule lex loci delicti should be retained in Georgia. For the reasons which
follow, this Court will not abandon the traditional rule.

Johnny Edwin Dowis ("Dowis"), a Tennessee resident, was hired by a Missouri

corporation, Mud Slingers, Inc. ("Mud Slingers"), whose president is Michael
Clement Graves ("Graves"), to hang large sheets of precast plaster molding at a
national chain hotel in Roswell, Georgia. Dowis was injured at the Roswell project
when he fell four stories from the basket of a telescopic boom forklift operated by
Graves.

Mud Slingers had workers' compensation insurance in Missouri, where Dowis filed
his claim and received benefits. Dowis later filed this tort action in Georgia seeking
damages against Mud Slingers and Graves. Dowis argued that, under Missouri's
workers' compensation law, he could collect benefits and bring a tort action
against Mud Slingers and/or Graves. Applying the exclusive remedy provision of
the Georgia Workers' Compensation Act, OCGA § 34-9-11 et seq., and the lex loci
delicti rule regarding the applicable substantive law, the trial court granted
summary judgment to the defendants. The Court of Appeals affirmed the grant of
summary judgment, holding that lex loci delicti and the consequent application
of Georgia's exclusive remedy provision precluded Dowis from maintaining his tort
action in Georgia. In so doing, the Court of Appeals correctly noted that this Court
has addressed the issue of the viability of the rule of lex loci delicti and has
continued to apply it. Sargent Indus. v. Delta Air Lines, 251 Ga. 91, 303 S.E.2d 108
(1983); see also Mullins v. M.G.D. Graphics Systems Group, 867 F.Supp. 1578
(N.D.Ga.1994).

There are several principle approaches to the resolution of conflict of laws issues
in tort cases. 16 Am.Jur.2d Conflict of Laws § 124. The traditional approach,
frequently referred to as the "vested rights" approach, was set forth in the
Restatement (First) of Conflict of Laws and established the rule of lex loci delicti.[1]
See ATLA-TORT § 3:21. Under this traditional rule, a tort action is governed by the
substantive law of the state where the tort was committed. Georgia Farm Bureau
Mut. Ins. Co. v. Williams, 266 Ga.App. 540, 541, n. 4, 597 S.E.2d 430 (2004).
Subsequently, due in part to an attempt to accommodate the increased mobility
of the population and interstate and international commerce, other approaches
emerged which were perceived to be less territorial. Hataway v. McKinley, 830
S.W.2d 53, 57 (Tenn. 1992). These approaches have gained acceptance in
deciding which state's substantive law should apply.[2] 16 Am.Jur.2d Conflict of
Laws § 124. The first such approach is based upon a concept of "governmental
interest."[3] Id. This approach, developed by Professor Brainerd Currie, involves an
analysis 415*415 of the respective interests of the involved states to determine the
law that most appropriately applies to the issues in the case; controlling effect is
given to the law of the jurisdiction which has the greatest concern with the specific
issue raised in the litigation, unless a public policy exception dictates a contrary
result. 16 Am.Jur.2d Conflict of Laws § 129; see Brainerd Currie, The Disinterested
Third State, 28 Law and Contemporary Problems 754 (1963). Specifically, this theory
mandates that a court first identify the specific law in each state bearing upon the
legal issue in dispute, then determine the precise policies which the respective
laws were designed to serve, and finally, that the court examine the relationship
of each jurisdiction with the litigation and determine whether the application of a
particular state's law would be consistent with the purposes identified as
supportive of that law. Hataway v. McKinley, supra at 58, citing Gregory E. Smith,
Choice of Law in the United States, 31 Hastings L.J. 1041, 1047 (1987); B. Currie,
Selected Essays on the Conflict of Laws (1963).

Another approach is that of "choice-influencing considerations"[4] espoused by

Robert A. Leflar. Under this theory, five factors are examined: (1) predictability of
result; (2) maintenance of the interstate and international order; (3) simplification
of the judicial task; (4) advancement of the forum's governmental interest; and (5)
application of the better rule of law. Robert A. Leflar, Choice-Influencing
Considerations in Conflicts Law, 41 N.Y.U.L.Rev. 267 (1966); Robert A. Leflar,
Conflicts Law: More on Choice-Influencing Considerations, 54 Cal. L.Rev. 1584
(1966).

A third alternative to the traditional doctrine is lex fori, which provides that the
rights and liabilities of the parties are governed by the law of the forum.[5] Hataway
v. McKinley, supra at 58.

Finally, a majority of the states that have abandoned the rule of lex loci delicti
have embraced the formulation expressed in the Restatement (Second) of
Conflict of Laws, which calls for an assessment of which jurisdiction has the "most
significant relationship"[6] to the dispute, based upon several sets of factors. 16
Am.Jur.2d Conflict of Laws § 128. The appellants Dowis urge that Georgia join this
group of states and adopt the "most significant relationship" test of the
Restatement (Second) of Conflict of Laws, and thus, allow them under Missouri law
to proceed with their Georgia lawsuit against Mud Slingers and Graves. But it is
well-settled 416*416 that Georgia will continue to adhere to a traditional conflict
of laws rule until a better approach is found. Convergys Corp. v. Keener, 276 Ga.
808, 812, 582 S.E.2d 84 (2003); General Telephone Co. of the Southeast v. Trimm,
252 Ga. 95, 96, 311 S.E.2d 460 (1984). So the initial question becomes whether the
approach of the Restatement (Second) of Conflict of Laws is superior to the
traditional rule utilized in Georgia.

The doctrine of lex loci delicti has served the resolution of conflict of laws issues in
tort actions in this State for nearly 100 years. See Southern Railway Co. v. Decker,
5 Ga.App. 21, 62 S.E. 678 (1908). It is desirable to have stability and certainty in the
law; therefore, stare decisis is a valid and compelling argument for maintaining
the doctrine. Hall v. Hopper, 234 Ga. 625, 216 S.E.2d 839 (1975); see also In re J. M.,
276 Ga. 88, 91, 575 S.E.2d 441 (2003) (Carley, J., concurring). Moreover, as
appellants acknowledge, lex loci delicti has the virtues of consistency,
predictability, and relative ease of application. See Fitts v. Minnesota Mining &
Mfg. Co., 581 So.2d 819 (Ala.1991); Mills v. Quality Supplier Trucking, 203 W.Va. 621,
510 S.E.2d 280 (1998); Paul v. National Life, 177 W.Va. 427, 352 S.E.2d 550 (1986).

Appellants and other opponents of the rule criticize its perceived rigidness and
argue that its strict application is insufficient to address the complexities of modern
litigation and can lead to unjust results, in that the results may be "unrelated to the
contemporary interests of the states involved or the realistic expectations of the
parties." First Nat. Bank in Fort Collins v. Rostek, 182 Colo. 437, 514 P.2d 314, 317
(1973). But such criticism ignores several salient facts. As appellees point out, some
courts in other jurisdictions have been motivated to depart from the traditional rule
in order to redress perceived unjust results by applying their own law. See, e.g.,
Mellk v. Sarahson, 49 N.J. 226, 229 A.2d 625 (1967); Chambers v. Dakotah Charter,
488 N.W.2d 63 (S.D. 1992). In fact, the first departure by a sister state from the use
of lex loci delicti accomplished the application of the law of that state. See
Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963). By
contrast, appellants are asking this Court to abrogate its long-used conflict of laws
rule in order to bypass Georgia law. Furthermore, the criticism glosses over the fact
that the courts of this State have the power to ameliorate the sometimes seeming
harshness of the rule when public policy considerations dictate that they do so.
See Alexander v. General Motors Corp., 267 Ga. 339, 478 S.E.2d 123 (1996); Karimi
v. Crowley, 172 Ga.App. 761, 324 S.E.2d 583 (1984).

Appellants also go so far as to assert that the rule of lex loci delicti is premised upon
"absolute fortuity," in that the place of the incident giving rise to the litigation is an
entirely fortuitous factor. But this ignores the reality that the place of an allegedly
tortious act is not irrelevant to the conflict issue, in that a state has an interest in
wrongs committed within its boundaries. The crux of the matter in regard to
criticism of the traditional rule is the common underlying misconception that the
resolution of a conflict of laws in complex litigation requires an equally
complicated mechanism to do so.

The approach taken by the Restatement (Second) of Conflict of Laws (1971)

certainly fits a description of complexity. It is expansive; it provides a multi-step
procedure for making the determination of which state's law should prevail.
Section 145 provides the general principle for determining the relevant contacts:

(1) The rights and liabilities of the parties with respect to an issue in tort are
determined by the local law of the state which, with respect to that issue, has the
most significant relationship to the occurrence and the parties under the principles
stated in § 6.

(2) Contacts to be taken into account in applying the principles of § 6 to

determine the law applicable to an issue include:

(a) the place where the injury occurred,

(b) the place where the conduct causing the injury occurred,

(c) the domicile, residence, nationality, place of incorporation and place of

business of the parties, and

(d) the place where the relationship, if any, between the parties is centered.

417*417 These contacts are to be evaluated according to their relative

importance with respect to the particular issue.
Section 6 sets forth the choice-of-law principles:

(1) A court, subject to constitutional restrictions, will follow a statutory directive of

its own state on choice of law.

(2) When there is no such directive, the factors relevant to the choice of the
applicable rule of law include

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative interests of those
states in the determination of the particular issue,

(d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability and uniformity of result, and

(g) ease in the determination and application of the law to be applied.

Finally, Section 146 specifically addresses personal injury actions:

In an action for a personal injury, the local law of the state where the injury
occurred determines the rights and liabilities of the parties, unless, with respect to
the particular issue, some other state has a more significant relationship under the
principles stated in § 6 to the occurrence and the parties, in which event the local
law of the other state will be applied.

This layered analysis has been described as "eclectic" because it represents a

combination of several choice-of-law methodologies. James P. George, False
Conflicts and Faulty Analyses: Judicial Misuse of Governmental Interests in the
Second Restatement of Conflicts of Laws, 23 Rev. of Litig. 489, 519 (Summer 2004).
It has been said to function like a code — that is, for any given problem, several
Second Restatement sections are likely to apply. Id. This is in contrast to
Restatements in other areas of law which tend to pronounce fairly discrete rules.
Id. The approach of the Restatement (Second) of Conflict of Laws has been
described as working through three related functions, "in the reverse order of their
best use." Id. As is evident, Section 6, which is the consideration most identified with
the most-significant-relationship test, has two components. Id.

Section 6(1) gives dispositive priority to the forum's statutory choice-of-law rules. If
none apply, section 6(2) lists seven non-exclusive policies that may identify the
state having the most significant relationship to the dispute: ...

The second functional component is a set of three general principles for torts,
contracts, and property. The general principles for torts and contracts list contacts
"to be taken into account in applying the principles of § 6." ... The Second
Restatement's third functional component is a number of sections focused on
specific claims and issues. [Section 146.] For most choice-of-law questions, more
than one section will apply.

Id. at 519-520.

The approach of the Restatement (Second) has been praised by some courts and
commentators for its flexibility and its reflection of more "modern" thinking on
choice of law. Hataway v. McKinley, supra at 57, citing Gregory E. Smith, Choice
of Law in the United States, 31 Hastings L.J. 1041, 1046 (1987). But it has its share of
critics in the courts and in the commentary of scholars.
The very flexibility of the approach of the Restatement (Second) has proved to be
problematic. There are those who have criticized it as a tool for courts to simply
engage in "contact counting" without consideration of what is espoused in the
Restatement (Second), that is, the interests and policies of the states in question.
Hataway v. McKinley, supra at 58, citing Gregory E. Smith, Choice of Law in the
United States, 31 Hastings L.J. at 1046. It has been said to have "indeterminate
language and lack of concrete guidelines." Paul v. National Life, supra at 553.
Others find it:

has the irony of dominating the field while bewildering its users. The result is a set
of choice-of-law decisions so lacking in uniformity that the Second Restatement's
balancing 418*418 test has become chimeric, taking on vastly different forms in
different courts. Erratic applications may be partly due to its code-like function,
which can require the application of two or more black letter sections, each with
multiple analytical steps....Second Restatement adoptions necessarily assume
different forms in different states, even without aberrational applications.

James P. George, False Conflicts and Faulty Analyses: Judicial Misuse of

Governmental Interests in the Second Restatement of Conflicts of Laws, 23 Rev. of
Litig. 489, 491-492 (Summer 2004).

The adoption of the Restatement (Second) approach has not brought certainty
or uniformity to the law. Fitts v. Minnesota Min. & Mfg. Co., supra at 823. Quite the
contrary. As the Supreme Court of Alabama noted,

Some state courts routinely list [the Restatement's] relevant sections in their
opinions and try to follow them; this task is easiest when the case is controlled by
one of the Restatement Second's specific narrow rules. Other state courts have
not been consistent in their terminology about what approach they are following,
and others have retained primary emphasis on the place of the wrong in tort
cases, even while abandoning the lex loci delicti for the Restatement Second....

Id. at 823, quoting Kay, Theory Into Practice: Choice of Law in the Courts, 34
Mercer L.Rev. 521, 561-562 (1983). A review of cases shows that while the rule of
lex loci delicti of the original Restatement is attacked because of its seeming
rigidity and its insistence on the application of a few specific rules, the approach
of the Restatement (Second) fails to provide enough guidance to the courts to
produce even a semblance of uniformity among the states following its method.
Id.

The methodology is not only complex, but it provides no underlying principle other
than applying the law of the state that has the "most significant relationship" to the
issue.... As a result, it has become difficult to predict what a court will do when
faced with choice of law issues, and each case seems to demand an ad hoc
determination. For attorneys, this lack of predictability may discourage settlement;
it certainly inhibits an accurate case valuation. For judges, choice of law issues
take an inordinate amount of time and require a fairly complex analysis.

Shirley A. Wiegand, Fifty Conflict of Laws "Restatements": Merging Judicial

Discretion and Legislative Endorsement, 65 La. L.Rev. 1, 4 (2004).

The inescapable conclusion is that the approach of the Restatement (Second) of

Conflict of Laws is not superior to the traditional rule of lex loci delicti currently used
in Georgia. Nor have the other major approaches mentioned earlier proven to be
a panacea for the resolution of conflict of laws issues.[7] In fact, the array of
"modern" conflict approaches and their seemingly unending variations have been
described as creating "a veritable playpen for judicial policymakers."[8] Shirley A.
Wiegand, Fifty Conflict of Laws 419*419 "Restatements": Merging Judicial Discretion
and Legislative Endorsement, 65 La. L.Rev. 1, 4 (2004). This Court declines to
engage in such a policymaking exercise.[9]

Utilizing a rule in the area of conflict of laws can serve the ends of justice because
it furnishes the judicial machinery by which like situations are adjudged equally.
First Nat. Bank in Fort Collins v. Rostek, supra at 319, citing Reese, Choice of Law:
Rules or Approach, 57 Cornell L.Rev. 315 (1972). Such a rule of law can fulfill an
essential function of concrete justice. Id. at 319. This Court will retain its long-held
conflict of laws rule not out of blind adherence but rather, out of the candid
recognition that the subsequently-developed theories have significant problems.
The relative certainty, predictability, and ease of the application of lex loci delicti,
even though sometimes leading to results which may appear harsh,[10] are
preferable to the inconsistency and capriciousness that the replacement choice-
of-law approaches have wrought. Paul v. National Life, supra at 555; First Nat'l Bank
v. Rostek, supra. As the Court of Appeals of New York aptly noted, "we should not
depart from sound precedent simply for the sake of change or merely because
other courts have arrived at a result different from that which we have espoused."
Endresz v. Friedberg, 24 N.Y.2d 478, 301 N.Y.S.2d 65, 248 N.E.2d 901, 906 (1969).

The rule of lex loci delicti remains the law of Georgia, and the judgment of the
Court of Appeals is affirmed.[11]

Judgment affirmed.

All the Justices concur.

[1] The following cases from sister states apply the lex loci delicti rule: Fitts v.
Minnesota Min. & Mfg. Co., 581 So.2d 819 (Ala. 1991); Ling v. Jan's Liquors, 237 Kan.
629, 703 P.2d 731 (1985); Hauch v. Connor, 295 Md. 120, 453 A.2d 1207 (1983);
Kemp v. Allstate Ins. Co., 183 Mont. 526, 601 P.2d 20 (1979); Boudreau v.
Baughman, 322 N.C. 331, 368 S.E.2d 849 (1988); Dawkins v. State, 306 S.C. 391, 412
S.E.2d 407 (1991); Rhoades v. Wright, 622 P.2d 343 (Utah, 1980), cert. denied, 454
U.S. 897, 102 S.Ct. 397, 70 L.Ed.2d 212 (1981); McMillan v. McMillan, 219 Va. 1127,
253 S.E.2d 662 (1979); Paul v. National Life, 177 W.Va. 427, 352 S.E.2d 550 (W.V.,
1986); Ball v. Ball, 73 Wyo. 29, 269 P.2d 302 (1954). See 16 Am.Jur.2d Conflict of Laws
§ 124, n. 15.

[2] There are variations of these approaches, but for the purpose of this analysis,
the focus will be on the core concepts and not hybrid theories.

[3] The following cases have utilized a "governmental interest" analysis: Wallis v.
Mrs. Smith's Pie Co., 261 Ark. 622, 550 S.W.2d 453 (1977); Bernhard v. Harrah's Club,
16 Cal.3d 313, 128 Cal.Rptr. 215, 546 P.2d 719 (1976), cert. denied, 429 U.S. 859, 97
S.Ct. 159, 50 L.Ed.2d 136 (1976); District of Columbia v. Coleman, 667 A.2d 811
(D.C.Ct.App., 1995); Gantes v. Kason Corp., 145 N.J. 478, 679 A.2d 106 (1996):
Padula v. Lilarn Properties Corp., 84 N.Y.2d 519, 620 N.Y.S.2d 310, 644 N.E.2d 1001
(1994), See 16 Am.Jur.2d Conflict of Laws § 129, n. 42.

[4] The following cases have employed "choice-influencing considerations" to

resolve a conflict of laws: Clark v. Clark, 107 N.H. 351, 222 A.2d 205 (1966); Busby v.
Perini Corp., 110 R.I. 49, 290 A.2d 210 (1972); Zelinger v. State Sand & Gravel Co.,
38 Wis.2d 98, 156 N.W.2d 466 (1968); See 16 Am.Jur.2d Conflict of Laws § 132, n. 48.

[5] The following cases have utilized a concept of lex fori: Foster v. Leggett, 484
S.W.2d 827 (Ky. 1972); Olmstead v. Anderson, 428 Mich. 1, 400 N.W.2d 292 (1987).
See Hataway v. McKinley, supra at 59.

[6] The following cases have applied the "most significant relationship" approach:
Ehredt v. DeHavilland Aircraft Co. of Canada, Ltd., 705 P.2d 446 (Alaska 1985);
Bryant v. Silverman, 146 Ariz. 41, 703 P.2d 1190 (1985); First Nat. Bank in Fort Collins
v. Rostek, 182 Colo. 437, 514 P.2d 314 (1973); O'Connor v. O'Connor, 201 Conn.
632, 519 A.2d 13 (1986); Travelers Indem. Co. v. Lake, 594 A.2d 38 (Del. 1991); Bishop
v. Florida Specialty Paint Co., 389 So.2d 999 (Fla. 1980); Johnson v. Pischke, 108
Idaho 397, 700 P.2d 19 (1985); Fuerste v. Bemis, 156 N.W.2d 831 (Iowa, 1968); Adams
v. Buffalo Forge Co., 443 A.2d 932 (Me. 1982); Mitchell v. Craft, 211 So.2d 509 (Miss.
1968); Kennedy v. Dixon, 439 S.W.2d 173 (Mo. 1969); Harper v. Silva, 224 Neb. 645,
399 N.W.2d 826 (1987); Morgan v. Biro Mfg. Co., Inc., 15 Ohio St.3d 339, 474 N.E.2d
286 (1984); Brickner v. Gooden, 525 P.2d 632 (Okla. 1974): Myers v. Cessna Aircraft
Corp., 275 Or. 501, 553 P.2d 355 (1976); Chambers v. Dakotah Charter 488 N.W.2d
63 (S.D. 1992); Hataway v. McKinley, supra (Tenn. 1992); Gutierrez v. Collins, 583
S.W.2d 312 (Tex. 1979); Amiot v. Ames, 166 Vt. 288, 693 A.2d 675 (1997); Baffin Land
Corp. v. Monticello Motor Inn, Inc., 70 Wash.2d 893, 425 P.2d 623 (1967). See 16
Am.Jur.2d Conflict of Laws § 124, n. 16.

[7] Currie's "governmental interest" approach fails to adequately deal with true
conflicts and is easily manipulated by identifying alternative governmental
interests of a forum law, thereby leading to forum favoritism. Hataway v. McKinley,
supra at 58; Gregory E. Smith, Choice of Law in the United States, 31 Hastings L.J.
1041, 1048 (1987).

Leflar's "choice-influencing considerations" almost always leads the forum to select

its own law; it has been described as "plagued by excessive forum favoritism."
Hataway v. McKinley, supra at 58; Gregory E. Smith, Choice of Law in the United
States, 31 Hastings L.J. at 1049.

The concept of lex fori, by definition, requires that the law of the forum governs
the rights and liabilities of the parties. Hataway v. McKinley, supra at 58-59.

[8] The current situation in the area of conflict theories has also been unfavorably
described as "a total disaster," "chaos," "gibberish," and "a conflicts mine field in a
maze constructed by professors drunk on theories." Shirley A. Wiegand, Fifty
Conflict of Laws "Restatements": Merging Judicial Discretion and Legislative
Endorsement, 65 La. L.Rev. 1, 4 (2004), quoting Michael H. Gottesman, Adrift on
the Sea of Indeterminacy, 75 Ind. L.J. 527 (2000); Alfred Hill, For a Third Conflicts
Restatement-But Stop Trying to Reinvent the Wheel, 75 Ind. L.J. 535, 538 (2000);
Friedrich K. Juenger, A Third Conflicts Restatement, 75 Ind. L.J. 403 (2000); Paul v.
Nat'l Life, supra at 551; Friedrich K. Juenger, Choice of Law and Multistate Justice
235 (1993).

[9] In the context of examining the traditional conflict of laws rule lex loci
contractus, it has been suggested that any adoption of the approach of the
Restatement (Second) of Conflict of Laws is a matter properly for the General
Assembly. Convergys Corp. v. Keener, supra at 813, 582 S.E.2d 84 (Sears, P. J.,
concurring).

[10] It should be noted that in this case, the claimed harshness of result is belied by
appellants' own assertion that they could have brought their tort action in Missouri
or Tennessee.

[11] In this appeal from the grant of certiorari, this Court does not revisit the
determinations by the Court of Appeals regarding any public policy exception to
the rule of lex loci delicti in this case.
CASE NO. 2

13 N.E.3d 533 (2014)

James K. MELTON, Perdue Foods, LLC f/k/a Perdue Farms Incorporated and FPP
Business Services, Inc. f/k/a Perdue Business Services, Inc., Appellants-
Defendants,
v.
Chad STEPHENS, Guardian of the Person and Estate of Stacy S. Stephens and Chad
Stephens, Appellees-Plaintiffs.
James K. Melton, Perdue Foods, LLC f/k/a Perdue Farms Incorporated and FPP
Business Services, Inc. f/k/a Perdue Business Services, Inc., Third Party Plaintiffs,
v.
Knox County EMS, Inc., Third Party Defendant.

No. 14A01-1308-CT-356.

Court of Appeals of Indiana.

July 22, 2014.

Rehearing Denied October 14, 2014.

534*534 Ross E. Rudolph, Max E. Fiester, Kyle R. Rudolph, Rudolph Fine Porter &
Johnson, LLP, Evansville, IN, Kevin C. Schiferl, Lucy R. Dollens, Timothy L. Karns, Frost
Brown Todd, LLC, Indianapolis, IN, Attorney for Appellants.

Matt Parmenter, David G. Hatfield, Monica C. Gilmore, Parmenter Hatfield &

Gilmore, LLP, Vincennes, IN, Attorneys for Appellees.

OPINION

RILEY, Judge.

STATEMENT OF THE CASE

Appellants-Defendants, James K. Melton (Melton), Perdue Foods, LLC f/k/a/

Perdue Farms Incorporated (Perdue), and FPP Business Services, Inc. f/k/a/ Perdue
Business Services, Inc. (FPP Business) (collectively, Appellants), appeal the trial
court's findings of fact and conclusions thereon determining that the substantive
laws of the State of Illinois apply to a motor vehicle collision which occurred in the
State of Illinois between residents of the State of Indiana.[1] We affirm.

ISSUE

Appellants raise one issue on interlocutory appeal, which we restate as: Whether
the trial court properly held that Illinois substantive law is applicable to a collision
which occurred in Illinois between two Indiana residents after considering the
choice of law factors delineated in Hubbard 535*535 Manufacturing Co., Inc. v.
Greeson, 515 N.E.2d 1071 (Ind.1987).

FACTS AND PROCEDURAL HISTORY

The underlying lawsuit arose out of a motor vehicle collision between Appellees-
Plaintiffs, Stacy S. Stephens (Stacy) and Chad Stephens (Chad) (collectively,
Stephens)[2] and Melton at the intersection of U.S. 50 and County Road 900 East in
Lawrence County, Illinois. Stacy, a resident of the State of Indiana, was within the
course and scope of her employment with Knox County EMS of Vincennes,
Indiana, and Melton, also a resident of the State of Indiana, was within the course
and scope of his employment with Perdue. Perdue, a Maryland corporation and
registered to do business in Illinois, is a wholly owned subsidiary of FPP Business.
At the time of the accident, Melton had been employed by Perdue for
approximately 14 years as a commercial motor vehicle (CMV) driver and had
made deliveries to Perdue's poultry farms in Illinois at least once or twice a week
for each of the past 14 years. Both individuals were making roundtrips that
originated in Indiana and which were designed to return them to their respective
places of employment when their vehicles collided in Illinois. Although Melton
made regular deliveries from Perdue's feed mill in Washington, Indiana to its
operations in Illinois, this was the first time Stacy had travelled to Bridgeport, Illinois
at the direction of her employer to transport an Illinois patient to an appointment
in Indiana.

Melton, in a semi tractor-trailer, travelled west on U.S. 50, which has a posted
speed limit of 50 mph, at a speed of 58 mph. He was behind the 2006 Ford Fusion,
driven by Stacy, when Stacy began to slow the car several hundred feet from the
intersection in anticipation of making her turn. She had nearly completed her left
turn onto County Road 900 East when Melton collided into her vehicle. Melton
contends that he was attempting to pass Stacy at the time of impact and claims
that Stacy failed to signal her turn as she approached the intersection. He was
issued a citation for passing within 100 feet of an intersection, which was
adjudicated in the Lawrence Circuit Court, Lawrence County, Illinois.

On June 9, 2011, the Stephens filed a Complaint against Melton and Perdue,
alleging negligence by Melton in the operation of the tractor-trailer. Specifically,
they contend that:

a) [Melton] drove his vehicle to the left side of the center of the roadway in an
attempt to overtake and pass the vehicle being operated by [Stacy] when
approaching within 100 feet of and while traversing the intersection of U.S. 50 and
County Road 900 East in the County of Lawrence, State of Illinois in direct violation
of 625 ILCS 5/11-706;

b) [Melton] drove his vehicle to the left of center of the roadway while attempting
to overtake and pass the vehicle being driven by [Stacy] and in doing so interfered
with the safe operation of the vehicle being operated by [Stacy] in direct violation
of 625 ILCS 5/11-705;

c) [Melton] failed to reduce the speed of his vehicle so as to avoid colliding with
the vehicle being driven by [Stacy] in direct violation of 625 ILCS 5/11-601;

536*536 d) [Melton] drove his vehicle at a speed which was in excess of that which
was reasonable and prudent under the conditions in direct violation of 625 ILCS
5/11-601;

e) [Melton] negligently failed to keep his vehicle under control at all times;

f) [Melton] negligently failed to keep a reasonable lookout for the vehicle being
operated by [Stacy].

(Appellant's App. p. 45). In addition, the Stephens claimed that, as a result of

Melton's negligence, Chad suffered a loss of consortium.

On February 23, 2012, the Stephens filed an Amended Complaint, reasserting the
negligence claims and adding a new claim against Perdue, which specified:

a) [Perdue] negligently failed to train [Melton] in the proper use and operation of
a commercial motor vehicle;

b) [Perdue] negligently failed to supervise [Melton] while operating the

commercial motor vehicle they provided to him;
c) [Perdue] promulgated policies which encouraged its employees who operated
motor vehicles to exceed the posted speed limit;

d) [Perdue] promulgated policies which encouraged its employees who operated

commercial motor vehicles to drive at a speed that was in excess of that which
was reasonable and prudent under the conditions.

(Appellant's App. pp. 53-54). In addition, Chad also asserted a loss of consortium
claim against Perdue.

On July 20, 2012, Appellants filed their motion to determine applicable law,
requesting the trial court to apply Indiana's substantive law to the instant cause, in
adherence to our supreme court's decision in Hubbard Manufacturing Co., Inc. v.
Greeson, 515 N.E.2d 1071 (Ind.1987). On August 2, 2012, the Stephens responded
to the motion.

On August 27, 2012, the Stephens filed a Second Amended Complaint, amending
their contentions against Melton and Perdue, and adding new, direct claims
against FPP Business. With respect to Melton and Perdue, the Stephens added that
"[Melton] drove a commercial motor vehicle in violation § 391.41(a)(l)(I) of the
Federal Motor Carrier Safety Regulation when he was not properly medically
certified as physically qualified to do so." (Appellant's App. p. 102). The Stephens'
new negligence claim against FPP Business rests upon the specific contentions
that:

a) [FPP Business] negligently failed to train [Melton] in the proper use and operation
of a commercial motor vehicle;

b) [FPP Business] negligently failed to supervise [Melton] while operating the

commercial motor vehicle provided to him by [Perdue];

c) [FPP Business] promulgated policies which encouraged the employees of

[Perdue] to operate commercial motor vehicles at a speed in excess of the posted
speed limit;

d) [FPP Business] promulgated policies which encouraged the employees of

[Perdue] who operated commercial motor vehicles to drive at a speed that was
in excess of that which was reasonable and prudent under the conditions.

(Appellant's App. p. 107). As with the previous Complaints, Chad also added a loss
of consortium claim against FPP Business.

On March 27, 2013, the trial court conducted a hearing on Appellants' motion to
determine applicable law. Thereafter, on June 4, 2013, the trial court issued its
findings of fact and conclusions thereon, holding that the substantive law of Illinois
is applicable to the facts at hand.

537*537 Two days later, on June 6, 2013, the Stephens filed a Third Amended
Complaint. Besides reiterating the allegations included in the previous Complaints,
the Stephens added a claim for punitive damages against Appellants. With
respect to Melton, the Stephens asserted:

2. That [Melton] knew that he had obstructive sleep apnea from May 22, 2009
through the time of the motor vehicle collision[.];

3. That at the time of the collision [] [Melton], wantonly, maliciously, oppressively,

or willfully operated a commercial motor vehicle while his ability to do so was
impaired as a result of untreated severe obstructive sleep apnea.
4. That at the time of the collision, [] [Melton], operated a commercial motor
vehicle while his ability to do was impaired as a result of untreated severe
obstructive sleep apnea in reckless disregard or indifference to the health and
safety of others, including [] [Stacy].

5. That at all times herein and in the months and years leading up to the date of
the collision [] [Melton] engaged in conduct that constituted intentional, willful or
wanton deceit in order to obtain or maintain his status with a commercial driver's
license and employment with [Perdue] by providing the medical examiners who
performed his fitness determination examinations false, incomplete, or inaccurate
information concerning his health history or failed to provide them pertinent
information concerning his health history.

6. That the conduct of [Melton] [] constituted wanton, malicious, oppressive, or

willful misconduct or constituted a reckless disregard or indifference to the health
and safety of others, including [Stacy].

7. That the conduct of [Melton] constitutes such conduct for which punitive
damages should be assessed and awarded at the time of the trial of this cause by
the trier of fact.

(Appellant's App. pp. 269-70). A similar claim against Perdue and FPP Business is
based on the particular assertions that:

e) [Perdue] allowed [Melton] to operate a commercial motor vehicle when he

was not medically qualified to do so in contravention of 49 CFR § 392.3;

f) [Perdue] failed to develop or implement policies, programs or procedures to

identify, test and remove from service those commercial motor vehicle drivers with
signs, traits and symptoms of obstructive sleep apnea, including [Melton];

g) [Perdue] failed to train its commercial motor vehicle drivers, including [Melton]
concerning the hazards of operating a commercial motor vehicle with untreated
sleep apnea;

h) [Perdue] failed to train the medical examiners who performed fitness

examinations for its commercial motor vehicle drivers of the signs, traits and
symptoms of obstructive sleep apnea.

(Appellant's App. pp. 271-72).

In their Answer to the Third Amended Complaint, Appellants denied any

negligence in training, supervision, and screening Melton for obstructive sleep
apnea. Additionally, they also alleged that Stacy should be allocated fault for
certain violations of the Illinois Vehicle Code-Rules of the Road.

In light of this Third Amended Complaint, the Appellants filed a renewed motion
to determine applicable law on June 28, 2013. The following month, on July 19,
2013, the trial court denied Appellants' renewed motion, incorporating into its
Order the trial court's prior June 4, 2013 findings of fact and conclusion thereon
and holding the Illinois' substantive law applicable 538*538 to the facts before the
court. At the same time, the trial court certified its Order for interlocutory appeal,
which this court subsequently accepted on September 27, 2013.

Additional facts will provided as necessary.

DISCUSSION AND DECISION

This interlocutory appeal is limited to the parties' dispute concerning the

substantive law applicable to the instant case. Although relying on the same set
of cases—Hubbard and Simon v. U.S., 805 N.E.2d 798 (Ind.2004)—both parties
reach a different result in applying Indiana's choice of law rules. Based on these
principles, Appellants argue for the application of Indiana substantive law, while
the trial court concluded, and the Stephens agree, that Illinois substantive law
governs the cause.

I. Standard of Review

Indiana Trial Rule 52(A) provides that "[o]n appeal of claims tried by the court
without a jury ... the court on appeal shall not set aside the findings or judgment
unless clearly erroneous[.]" The court engages in a two-tiered standard of review
when applying this standard. Burk v. Heritage Food Serv. Equip., Inc., 737 N.E.2d
803, 811 (Ind.Ct.App.2000). First, we consider whether the evidence supports the
findings, construing these findings liberally in support of the judgment. Id. Findings
are clearly erroneous only when a review of the record leaves us firmly convinced
that a mistake has been made. Id. Next, we determine whether the findings
support the judgment. Id. A judgment is clearly erroneous when the findings of fact
and conclusions thereon do not support it. Id. However, here, the trial court did
not conduct an evidentiary hearing on Appellants' renewed Motion to Determine
Applicable Law. Therefore, to the extent the trial court's factual findings are based
on a paper record, this court conducts its own de novo review of the record.
Equicor Dev., Inc. v. Westfield-Washington Twp. Plan Comm'n, 758 N.E.2d 34, 37
(Ind.2001).

II. Indiana's Choice of Law[3]

Rules about the choice of law are among the few fields still dominated by judge-
made 539*539 doctrine and choosing the applicable substantive law for a given
case is a decision made by the courts of the state in which the lawsuit is pending.
In 1987, our supreme court issued Hubbard, its seminal case on Indiana's choice of
law jurisprudence. Since then, Hubbard and its progeny have dominated this
state's choice of law landscape.

In Hubbard, our supreme court advocated a multiple step inquiry to determine

Indiana's choice of law framework in tort cases. As a preliminary premise, the trial
court must determine whether the differences between the laws of the states are
"important enough to affect the outcome of the litigation." Hubbard, 515 N.E.2d
at 1073. If such a conflict exists, the presumption arises that the traditional lex loci
delicti rule—the place of the wrong—will apply. Id. Under this initial step, the trial
court applies the substantive law of "the state where the last event necessary to
make an actor liable for the alleged wrong takes place." Id.

In a large number of cases, the place of the tort will be significant and the place
with the most contacts. Id. In those cases, the traditional rule serves well. However,
this presumption is not conclusive. Id. When the place of the tort is an insignificant
contact, then the trial court should be allowed to evaluate other factors. Id. In
these instances, where the place of the tort bears little connection to the legal
action, our supreme court allows the consideration of factors that may be more
relevant, such as: 1) the place where the conduct causing the injury occurred; 2)
the residence or place of business of the parties; and 3) the place where the
relationship is centered. Id. at 1073-74.

In Simon v. U.S., 805 N.E.2d 798, 805 (Ind.2004), the court clarified the additional
contacts which may be considered when the location of the tort is deemed
insignificant, noting that "[t]hese factors are not an exclusive list nor are they
necessarily relevant in every case. All contacts should be evaluated according to
their relative importance to the particular issues being litigated." Id. This litigation
ought to focus on the essential elements of the whole cause of action, rather than
on the issues one party or the other forecasts will be the most hotly contested given
the anticipated proofs. Id.

Because both parties agree—and we concur—that the distinction between

Indiana's and Illinois' substantive law are important enough to affect the outcome
of the litigation, we will next turn to the lex loci delicti step of the Hubbard inquiry.

A. Lex Loci Delicti

Under this presumption, the court applies the substantive laws of the state 540*540
where the last event necessary to make an actor liable for the alleged wrong
takes place. Shaw v. LDC Enterprises, 863 N.E.2d 424, 431 (Ind.Ct.App.2007), trans.
granted (July 19, 2007), order vacated and trans. denied (Sept. 18, 2007). "[W]here
the issue is the choice between the law of the place where an allegedly wrongful
act or omission took place and the law of the place where physical injury was
inflicted, the general rule is that the `place of the tort' is the place where the injury
or death was inflicted and not the place where the allegedly wrongful act or
omission took place." Id. (citing E.H. Schopler, Annotation, What is the Place of Tort
Causing Personal Injury or Resultant Damage or Death, for Purpose of Principle of
Conflict Laws that Law of Place of Tort Governs, 77 A.L.R.2d 1266, 1273 (1961)).

Although Appellants contest the place where the allegedly wrongful act took
place, they do not dispute that Stacy's injury occurred in Illinois. As such, the lex
loci delicti is established in Illinois' substantive law.

B. Significance of Illinois' Substantive Law

Contending that the presumption of the lex loci delicti is overcome in favor of
Indiana's substantive law, Appellants assert that "[b]ecause the gravamen of the
Stephens' claim [] is wholly centered on conduct which predates the [c]rash and
occurred in Indiana, the place of the tort, Illinois, bears little connection to this
action[.]" (Appellants' Reply Br. p. 6). Appellants contend that the Stephens
mischaracterize their action as a routine vehicle accident where liability will be
grounded upon violations of the Illinois rules of the road. Instead, Appellants assert,
the core of the Stephens' claim is "focused upon [Melton's] operation of his tractor-
trailer when he allegedly knew, or reasonably should have known, he suffered
from untreated obstructive sleep apnea." (Appellants' Reply Br. p. 5). Clarifying
their position, Appellants maintain that the center of the Stephens' suit against
Melton emphasizes his untreated sleep apnea, while the claim against Perdue
and FPP Business "wholly" relates to the failure to provide training and supervision
to Melton and promulgation of appropriate policies—conduct which occurred
entirely in Indiana. (Appellants' Reply Br. p. 5) (See also Appellants' Br. pp. 17-18).

It is a "rare case" where the place of the tort is insignificant. Simon, 805 N.E.2d at
806. In fact, Simon appears to suggest that most cases involving an automobile
accident will be governed by the laws of the state where the accident occurred.
See id. ("[U]nlike in cases involving an automobile accident, the laws of the state
where the crash occurred did not govern the conduct of the parties at the time
of the accident.") (emphasis added).

To determine whether this is one of those "rare case[s]," this court should define
"the gravamen" of the Stephens' complaint. See Judge v. Pilot Oil Corp., 17
F.Supp.2d 832, 834 (N.D.Ind.1998). Focusing on the Stephens' Amended
Complaints, we note that all the allegations stem from Melton's perceived
negligence in operating his vehicle, be it negligently ignoring the rules of the road
or negligently driving with knowledge of his severe sleep apnea. Through the
doctrine of respondeat superior as well as through the independent negligence
claims of failure of supervision and training, the Stephens attempt to also hold
Perdue and FPP Business responsible for Stacy's injuries. Accordingly, without
Melton's alleged negligence in operating his vehicle, there would be no need for
this lawsuit.

Moreover, even though at first glance, the claims of negligent supervision and
541*541 training lodged at Perdue and FPP Business do not find a contact point in
Illinois substantive law, we hasten to clarify that these allegations are also
embedded in Illinois' Rules of the Road. Specifically, 625 ILCS § 5/18b-105
incorporates certain parts of Title 49 of the Code of Federal Regulations, such as
the prohibition that a driver with a respiratory dysfunction is not medically
certifiable to drive a CMV; and the prohibition that Perdue/FPP Business can
require Melton to operate a CMV while his alertness is likely to be impaired.
Although we agree with Appellants that Perdue and FPP Business's failure in
supervision and training occurred in Indiana and Maryland, this conduct only
became legally negligent as a result of Melton's accident in Illinois.

In addition to emphasizing the location of the tort, the Stephens also point to
Appellants' claims for contribution against the State of Illinois based on the Illinois
Joint Tortfeasor Contribution Act pending in the Illinois Court of Claims, alleging
Illinois' alleged failure to meet applicable highway engineering standards set forth
by the Illinois Department of Transportation; Melton's citation issued by the Illinois
State Police for passing within 100 feet of an intersection; and Stacy's pending
claim for Illinois' Workers' Compensation benefits for injuries as separate contact
points to increase the significance of the lex loci delicti. Mindful of Simon's directive
to include the "essential elements of the whole cause of action," we must reject
the Workers' Compensation Claim as it fails to relate to the gravamen of the
Stephens' action. See Simon, 805 N.E.2d at 806; Hubbard, 515 N.E.2d at 1074
(concluding that Illinois bore little connection because it being the site of the
coroner's inquest and source of worker's compensation benefits did not "relate[]
to the wrongful death action").

Because the drivers' conduct in operating their motor vehicles prior to the collision
will be the focus of attention to determine liability, and that conduct was
governed by the rules of the road of the state in which the accident occurred, we
conclude that the presumption of the lex loci delicti remains significant and is not
overcome. See also Tompkins v. Isbell, 543 N.E.2d 680, 682 (Ind.Ct.App.1989) ("[T]he
place of the tort in a case arising out of a motor vehicle accident has extensive
connection with the legal action."). Moreover, recognizing that the issues
presented by Stephens are substantial and not merely remedial or procedural, the
conduct must be necessarily governed by Illinois' Rules of the Road as "people do
not take the laws of their home state with them when they travel but are subject
to the laws of the state in which they act." Simon, 805 N.E.2d at 806. Based on the
circumstances before us, we conclude that the place of the tort is significant to
the action.

However, even if we were to concur with Appellants' arguments and conclude

that the presumption of the lex loci delicti is overcome, our analysis of Hubbard's
additional factors would reach the same result.

B. Second Hubbard Step: Relative Importance of Additional Contacts

Even if we deemed the State of Illinois, as place of the tort, to be an insignificant

contact—which we do not—an analysis of the additional Hubbard factors would
yield a similar outcome.
Where the place of the tort bears little connection to the legal action, our supreme
court allows the consideration of other factors that may be more relevant, such
as: 1) the place where the conduct causing the injury occurred; 2) the residence
or place of business of the parties; and 3) the place where the relationship is
centered. Hubbard, 542*542 515 N.E.2d at 1073-74. "These factors are not an
exclusive list nor are they necessarily relevant in every case." Simon, 805 N.E.2d at
805. All contacts "should be evaluated according to their relative importance to
the particular issues being litigated." Id.

Maintaining that the collision only took place in Illinois by accident, Appellants
content that the real connection lies in Indiana. They especially refer to the
second contact point—domicile—to bolster their claim: both Melton and Stacy
are Indiana residents and were employed by Indiana-based corporations at the
time of the accident. Focusing on the negligent acts of supervision, Appellants
argue that "[a]lthough the effect of those allegedly negligent acts may have been
felt in Illinois, the conduct which is of the greatest significance to the Stephens'
claims (i.e., that Melton operated his tractor-trailer when he knew, or reasonably
should have known, that he suffered from untreated obstructive sleep apnea and
that Perdue and/or FPP [Business] failed to provide Melton with training on the
dangers of driving a[CMV] with untreated sleep apnea) is rooted in Indiana."
(Appellants' Reply Br. p. 10). Thus, Appellants assert that the Hubbard factors favor
Indiana because "the relationship between the two drivers and their employers,
which took them on routes just over the Indiana border, are centered in Indiana."
(Appellants' Br. p. 19).

Although we agree that the residence element of the Hubbard test favors Indiana,
as both Melton and Stacy are Indiana residents, working for Indiana-based
companies, neither of the other two elements support the application of Indiana
substantive law to this cause. Despite Appellants' arguments to center the
relationship in Indiana, the `relationship' between the two actors in the collision
only came into existence through the accident in Illinois. There is no evidence, and
the parties cannot point us to any, that their paths crossed anywhere else but in
Illinois.

Furthermore, unlike Appellants, we deem the place of the conduct causing injury
to be centered in Illinois. We have defined the gravamen of the Stephens'
Complaint to be Melton's negligent operation of his vehicle. Therefore, this
conduct is necessarily governed by the law of the state in which he negligently
acted, i.e., Illinois. Even though the Stephens asserted negligent training and
supervision against Perdue and FPP Business through the doctrine of respondeat
superior, this negligence only became actionable when the injury occurred at the
time of the collision. As our supreme court noted in Simon,

[i]f the state of conduct has a law regulating how the tortfeasor or victim is
supposed to act in the particular situation, courts will apply that standard rather
than the law of the parties' residence. In fact, this preference of the conduct-
regulating law of the conduct state is virtually absolute, winning out even over the
law of other interested states. Courts as a practical matter recognize a conduct-
regulating exception to the normal interest-based choice-of-law methods.... This is
also true in Indiana.

Simon, 805 N.E.2d at 807 n. 12. See also Judge v. Pilot Oil Corp., 17 F.Supp.2d 832,
836 (N.D.Ind.1998) ("Each state has an interest in having its policies applied to its
residents and to conduct that occurs within its borders.").

Accordingly, the trial court correctly determined that in the case at bar, the place
of the tort has extensive connection with the legal action, and thus, the doctrine
of lex loci delicti retains its vitality. We hold that the trial court correctly applied the
543*543 Hubbard test and concluded that Illinois substantive law governs the
action.

CONCLUSION

Based on the foregoing, we conclude that the trial court properly held that Illinois
substantive law is applicable to a collision which occurred in Illinois between two
Indiana residents.

Affirmed.

NAJAM, J. and ROBB, J. concur.

[1] We held oral argument in this case on June 24, 2014 at the Court of Appeals
Courtroom in Indianapolis, Indiana. We thank counsel of both parties for their
excellent advocacy.

[2] Although the caption of the Briefs read "Appellees-Plaintiffs, Chad Stephens,
Guardian of the Person and Estate of Stacy S. Stephens, and Chad Stephens,"
during the pendency of this appeal we granted the motion of substitution, filed by
Chad Stephens, as Guardian, to substitute him with the real party in interest, Stacy
S. Stephens.

[3] Appellants spent the major part of their Brief attempting to persuade us that an
anomalous result would ensue if Illinois law is applied to the instant facts. Relying
on the Illinois precedent established in Murphy v. Mancari's Chrysler Plymouth, Inc.,
408 Ill. App.3d 722, 350 Ill.Dec. 164, 948 N.E.2d 233 (2011), and construing Illinois
choice of law rules, Appellants suggest that Indiana law should be applied to the
collision. Appellants maintain that applying Illinois' substantive law would create
an anomaly as the forums bordering Indiana would not reach a similar result.

However, this cause was filed in Indiana and pursuant to Indiana's choice of law
rules, the starting point is Indiana law—not Illinois law. See Hubbard Mfg. Co., Inc.
v. Greeson, 515 N.E.2d 1071 (1987) (Indiana courts apply Indiana choice of law
rules in determining which state's substantive laws apply to the facts of the cases
pending in Indiana). In Hubbard, our supreme court recognized the danger of an
anomalous result and proposed a modified choice of law test. Specifically, the
Hubbard court noted

The historical choice-of-law rules for torts, like contracts, was lex loci delicti
commissi, which applied the substantive law where the tort was committed. The
tort is said to have been committed in the state where the last event necessary to
make an actor liable for the alleged wrong takes place. Rigid application of the
traditional rule to this case, however, would lead to an anomalous result. Had
plaintiff Elizabeth Greeson filed suit in any bordering state the only forum which
would not have applied the substantive law of Indiana is Indiana. To avoid this
inappropriate result, we look elsewhere for guidance.

Choice-of-law rules are fundamentally judge-made and designed to ensure the

appropriate substantive law applies. In a large number of cases, the place of the
tort will be significant and the place with the most contacts. In such cases, the
traditional rules serves well. A court should be allowed to evaluate other factors
when the place of the tort is an insignificant contact.

Hubbard, 515 N.E.2d at 1073. (internal references omitted).

Thus, viewed within the Hubbard context, it is clear that our supreme court already
took into account the possibility of an anomalous result by re-defining the choice
of law test and ameliorating the harsh effects of the rigid application of the lex loci
delicti. See also Castelli v. Steele, 700 F.Supp. 449, 453 (S.D.Ind.1988) (In Hubbard,
the supreme court "found it appropriate to slightly modify the traditional choice of
law rules for torts to ensure that `anomalous result[s]' are not reached in certain
instances."). As such, Hubbard does not require a separate `anomalous
investigation' as proposed by Appellants.

Moreover, Appellants reach this `anomalous result' by applying the choice of law
test adopted by the Restatement (Second) of Conflict of Laws. See Murphy, 350
Ill.Dec. 164, 948 N.E.2d at 236. Our supreme court explicitly rejected the
Restatement test in Simon as "an unattractive path." Simon, 805 N.E.2d at 804.
CASE NO. 3

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 122191 October 8, 1998

SAUDI ARABIAN AIRLINES, petitioner,

vs.
COURT OF APPEALS, MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in his
capacity as Presiding Judge of Branch 89, Regional Trial Court of Quezon City,
respondents.

QUISUMBING, J.:

This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set
aside the Resolution1 dated September 27, 1995 and the Decision2 dated April 10, 1996 of
the Court of Appeals3 in CA-G.R. SP No. 36533,4 and the Orders5 dated August 29, 1994
6 and February 2, 19957 that were issued by the trial court in Civil Case No. Q-93-18394.8

The pertinent antecedent facts which gave rise to the instant petition, as stated in the
questioned Decision9, are as follows:

On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight

Attendant for its airlines based in Jeddah, Saudi Arabia. . . .

On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went

to a disco dance with fellow crew members Thamer Al-Gazzawi and Allah
Al-Gazzawi, both Saudi nationals. Because it was almost morning when
they returned to their hotels, they agreed to have breakfast together at
the room of Thamer. When they were in te (sic) room, Allah left on some
pretext. Shortly after he did, Thamer attempted to rape plaintiff.
Fortunately, a roomboy and several security personnel heard her cries
for help and rescued her. Later, the Indonesian police came and arrested
Thamer and Allah Al-Gazzawi, the latter as an accomplice.

When plaintiff returned to Jeddah a few days later, several SAUDIA

officials interrogated her about the Jakarta incident. They then requested
her to go back to Jakarta to help arrange the release of Thamer and Allah.
In Jakarta, SAUDIA Legal Officer Sirah Akkad and base manager Baharini
negotiated with the police for the immediate release of the detained crew
members but did not succeed because plaintiff refused to cooperate. She
was afraid that she might be tricked into something she did not want
because of her inability to understand the local dialect. She also declined
to sign a blank paper and a document written in the local dialect.
Eventually, SAUDIA allowed plaintiff to return to Jeddah but barred her
from the Jakarta flights.

Plaintiff learned that, through the intercession of the Saudi Arabian

government, the Indonesian authorities agreed to deport Thamer and
Allah after two weeks of detention. Eventually, they were again put in
service by defendant SAUDI (sic). In September 1990, defendant SAUDIA
transferred plaintiff to Manila.

On January 14, 1992, just when plaintiff thought that the Jakarta incident
was already behind her, her superiors requested her to see Mr. Ali
 Meniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When
she saw him, he brought her to the police station where the police took
her passport and questioned her about the Jakarta incident. Miniewy
simply stood by as the police put pressure on her to make a statement
dropping the case against Thamer and Allah. Not until she agreed to do
so did the police return her passport and allowed her to catch the
afternoon flight out of Jeddah.

One year and a half later or on lune 16, 1993, in Riyadh, Saudi Arabia, a
few minutes before the departure of her flight to Manila, plaintiff was not
allowed to board the plane and instead ordered to take a later flight to
Jeddah to see Mr. Miniewy, the Chief Legal Officer of SAUDIA. When she
did, a certain Khalid of the SAUDIA office brought her to a Saudi court
where she was asked to sign a document written in Arabic. They told her
that this was necessary to close the case against Thamer and Allah. As
it turned out, plaintiff signed a notice to her to appear before the court on
June 27, 1993. Plaintiff then returned to Manila.

Shortly afterwards, defendant SAUDIA summoned plaintiff to report to

Jeddah once again and see Miniewy on June 27, 1993 for further
investigation. Plaintiff did so after receiving assurance from SAUDIA's
Manila manager, Aslam Saleemi, that the investigation was routinary and
that it posed no danger to her.

In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi

court on June 27, 1993. Nothing happened then but on June 28, 1993, a
Saudi judge interrogated plaintiff through an interpreter about the
Jakarta incident. After one hour of interrogation, they let her go. At the
airport, however, just as her plane was about to take off, a SAUDIA officer
told her that the airline had forbidden her to take flight. At the Inflight
Service Office where she was told to go, the secretary of Mr. Yahya
Saddick took away her passport and told her to remain in Jeddah, at the
crew quarters, until further orders.

On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same
court where the judge, to her astonishment and shock, rendered a
decision, translated to her in English, sentencing her to five months
imprisonment and to 286 lashes. Only then did she realize that the Saudi
court had tried her, together with Thamer and Allah, for what happened
in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a
disco, dancing and listening to the music in violation of Islamic laws; and
(3) socializing with the male crew, in contravention of Islamic tradition. 10

Facing conviction, private respondent sought the help of her employer, petitioner
SAUDIA. Unfortunately, she was denied any assistance. She then asked the Philippine
Embassy in Jeddah to help her while her case is on appeal. Meanwhile, to pay for her
upkeep, she worked on the domestic flight of SAUDIA, while Thamer and Allah
continued to serve in the international
flights. 11

Because she was wrongfully convicted, the Prince of Makkah dismissed the case
against her and allowed her to leave Saudi Arabia. Shortly before her return to Manila,
12 she was terminated from the service by SAUDIA, without her being informed of the

cause.

On November 23, 1993, Morada filed a Complaint 13 for damages against SAUDIA, and
Khaled Al-Balawi ("Al-Balawi"), its country manager.

On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14 which raised the
following grounds, to wit: (1) that the Complaint states no cause of action against
Saudia; (2) that defendant Al-Balawi is not a real party in interest; (3) that the claim or
demand set forth in the Complaint has been waived, abandoned or otherwise
extinguished; and (4) that the trial court has no jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) 15. Saudia filed
a reply 16 thereto on March 3, 1994.

On June 23, 1994, Morada filed an Amended Complaint 17 wherein Al-Balawi was
dropped as party defendant. On August 11, 1994, Saudia filed its Manifestation and
Motion to Dismiss Amended Complaint 18.

The trial court issued an Order 19 dated August 29, 1994 denying the Motion to Dismiss
Amended Complaint filed by Saudia.

From the Order of respondent Judge 20 denying the Motion to Dismiss, SAUDIA filed on
September 20, 1994, its Motion for Reconsideration 21 of the Order dated August 29,
1994. It alleged that the trial court has no jurisdiction to hear and try the case on the
basis of Article 21 of the Civil Code, since the proper law applicable is the law of the
Kingdom of Saudi Arabia. On October 14, 1994, Morada filed her Opposition 22 (To
Defendant's Motion for Reconsideration).

In the Reply 23 filed with the trial court on October 24, 1994, SAUDIA alleged that since
its Motion for Reconsideration raised lack of jurisdiction as its cause of action, the
Omnibus Motion Rule does not apply, even if that ground is raised for the first time on
appeal. Additionally, SAUDIA alleged that the Philippines does not have any substantial
interest in the prosecution of the instant case, and hence, without jurisdiction to
adjudicate the same.

Respondent Judge subsequently issued another Order 24 dated February 2, 1995,

denying SAUDIA's Motion for Reconsideration. The pertinent portion of the assailed
Order reads as follows:

Acting on the Motion for Reconsideration of defendant Saudi Arabian

Airlines filed, thru counsel, on September 20, 1994, and the Opposition
thereto of the plaintiff filed, thru counsel, on October 14, 1994, as well as
the Reply therewith of defendant Saudi Arabian Airlines filed, thru
counsel, on October 24, 1994, considering that a perusal of the plaintiffs
Amended Complaint, which is one for the recovery of actual, moral and
exemplary damages plus attorney's fees, upon the basis of the applicable
Philippine law, Article 21 of the New Civil Code of the Philippines, is,
clearly, within the jurisdiction of this Court as regards the subject matter,
and there being nothing new of substance which might cause the
reversal or modification of the order sought to be reconsidered, the
motion for reconsideration of the defendant, is DENIED.

SO ORDERED. 25

Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and
Prohibition with Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary
Restraining Order 26 with the Court of Appeals.

Respondent Court of Appeals promulgated a Resolution with Temporary Restraining

Order 27 dated February 23, 1995, prohibiting the respondent Judge from further
conducting any proceeding, unless otherwise directed, in the interim.

In another Resolution 28 promulgated on September 27, 1995, now assailed, the appellate
court denied SAUDIA's Petition for the Issuance of a Writ of Preliminary Injunction dated
February 18, 1995, to wit:

The Petition for the Issuance of a Writ of Preliminary Injunction is hereby

DENIED, after considering the Answer, with Prayer to Deny Writ of
Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it
appearing that herein petitioner is not clearly entitled thereto (Unciano
Paramedical College, et. Al., v. Court of Appeals, et. Al., 100335, April 7,
1993, Second Division).

SO ORDERED.
On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition 29 for
Review with Prayer for Temporary Restraining Order dated October 13, 1995.

However, during the pendency of the instant Petition, respondent Court of Appeals
rendered the Decision 30 dated April 10, 1996, now also assailed. It ruled that the
Philippines is an appropriate forum considering that the Amended Complaint's basis
for recovery of damages is Article 21 of the Civil Code, and thus, clearly within the
jurisdiction of respondent Court. It further held that certiorari is not the proper remedy
in a denial of a Motion to Dismiss, inasmuch as the petitioner should have proceeded
to trial, and in case of an adverse ruling, find recourse in an appeal.

On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for
Temporary Restraining Order 31 dated April 30, 1996, given due course by this Court.
After both parties submitted their Memoranda, 32 the instant case is now deemed
submitted for decision.

Petitioner SAUDIA raised the following issues:

The trial court has no jurisdiction to hear and try Civil Case No. Q-93-
18394 based on Article 21 of the New Civil Code since the proper law
applicable is the law of the Kingdom of Saudi Arabia inasmuch as this
case involves what is known in private international law as a "conflicts
problem". Otherwise, the Republic of the Philippines will sit in judgment
of the acts done by another sovereign state which is abhorred.

II

Leave of court before filing a supplemental pleading is not a

jurisdictional requirement. Besides, the matter as to absence of leave of
court is now moot and academic when this Honorable Court required the
respondents to comment on petitioner's April 30, 1996 Supplemental
Petition For Review With Prayer For A Temporary Restraining Order
Within Ten (10) Days From Notice Thereof. Further, the Revised Rules of
Court should be construed with liberality pursuant to Section 2, Rule 1
thereof.

III

Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-
G.R. SP NO. 36533 entitled "Saudi Arabian Airlines v. Hon. Rodolfo A.
Ortiz, et al." and filed its April 30, 1996 Supplemental Petition For Review
With Prayer For A Temporary Restraining Order on May 7, 1996 at 10:29
a.m. or within the 15-day reglementary period as provided for under
Section 1, Rule 45 of the Revised Rules of Court. Therefore, the decision
in CA-G.R. SP NO. 36533 has not yet become final and executory and this
Honorable Court can take cognizance of this case. 33

From the foregoing factual and procedural antecedents, the following issues emerge
for our resolution:

I.

WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING

THAT THE REGIONAL TRIAL COURT OF QUEZON CITY HAS
JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-93-18394
ENTITLED "MILAGROS P. MORADA V. SAUDI ARABIAN AIRLINES".

II.

WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT

IN THIS CASE PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the
outset. It maintains that private respondent's claim for alleged abuse of rights occurred
in the Kingdom of Saudi Arabia. It alleges that the existence of a foreign element
qualifies the instant case for the application of the law of the Kingdom of Saudi Arabia,
by virtue of the lex loci delicti commissi rule. 34

On the other hand, private respondent contends that since her Amended Complaint is
based on Articles 19 35 and 21 36 of the Civil Code, then the instant case is properly a
matter of domestic law. 37

Under the factual antecedents obtaining in this case, there is no dispute that the
interplay of events occurred in two states, the Philippines and Saudi Arabia.

As stated by private respondent in her Amended Complaint 38 dated June 23, 1994:

2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines

corporation doing business in the Philippines. It may be served with
summons and other court processes at Travel Wide Associated Sales
(Phils.). Inc., 3rd Floor, Cougar Building, 114 Valero St., Salcedo Village,
Makati, Metro Manila.

xxx xxx xxx

6. Plaintiff learned that, through the intercession of the Saudi Arabian

government, the Indonesian authorities agreed to deport Thamer and
Allah after two weeks of detention. Eventually, they were again put in
service by defendant SAUDIA. In September 1990, defendant SAUDIA
transferred plaintiff to Manila.

7. On January 14, 1992, just when plaintiff thought that the Jakarta
incident was already behind her, her superiors reauested her to see MR.
Ali Meniewy, Chief Legal Officer of SAUDIA in Jeddah, Saudi Arabia.
When she saw him, he brought her to the police station where the police
took her passport and questioned her about the Jakarta incident.
Miniewy simply stood by as the police put pressure on her to make a
statement dropping the case against Thamer and Allah. Not until she
agreed to do so did the police return her passport and allowed her to
catch the afternoon flight out of Jeddah.

8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia,
a few minutes before the departure of her flight to Manila, plaintiff was
not allowed to board the plane and instead ordered to take a later flight
to Jeddah to see Mr. Meniewy, the Chief Legal Officer of SAUDIA. When
she did, a certain Khalid of the SAUDIA office brought her to a Saudi
court where she was asked to sigh a document written in Arabic. They
told her that this was necessary to close the case against Thamer and
Allah. As it turned out, plaintiff signed a notice to her to appear before
the court on June 27, 1993. Plaintiff then returned to Manila.

9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to

Jeddah once again and see Miniewy on June 27, 1993 for further
investigation. Plaintiff did so after receiving assurance from SAUDIA's
Manila manger, Aslam Saleemi, that the investigation was routinary and
that it posed no danger to her.

10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi
court on June 27, 1993. Nothing happened then but on June 28, 1993, a
Saudi judge interrogated plaintiff through an interpreter about the
Jakarta incident. After one hour of interrogation, they let her go. At the
airport, however, just as her plane was about to take off, a SAUDIA officer
told her that the airline had forbidden her to take that flight. At the Inflight
Service Office where she was told to go, the secretary of Mr. Yahya
Saddick took away her passport and told her to remain in Jeddah, at the
crew quarters, until further orders.
 11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the
same court where the judge, to her astonishment and shock, rendered a
decision, translated to her in English, sentencing her to five months
imprisonment and to 286 lashes. Only then did she realize that the Saudi
court had tried her, together with Thamer and Allah, for what happened
in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a
disco, dancing, and listening to the music in violation of Islamic laws; (3)
socializing with the male crew, in contravention of Islamic tradition.

12. Because SAUDIA refused to lend her a hand in the case, plaintiff
sought the help of the Philippines Embassy in Jeddah. The latter helped
her pursue an appeal from the decision of the court. To pay for her
upkeep, she worked on the domestic flights of defendant SAUDIA while,
ironically, Thamer and Allah freely served the international flights. 39

Where the factual antecedents satisfactorily establish the existence of a foreign

element, we agree with petitioner that the problem herein could present a "conflicts"
case.

A factual situation that cuts across territorial lines and is affected by the diverse laws
of two or more states is said to contain a "foreign element". The presence of a foreign
element is inevitable since social and economic affairs of individuals and associations
are rarely confined to the geographic limits of their birth or conception. 40

The forms in which this foreign element may appear are many. 41 The foreign element
may simply consist in the fact that one of the parties to a contract is an alien or has a
foreign domicile, or that a contract between nationals of one State involves properties
situated in another State. In other cases, the foreign element may assume a complex
form. 42

In the instant case, the foreign element consisted in the fact that private respondent
Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign
corporation. Also, by virtue of the employment of Morada with the petitioner Saudia as
a flight stewardess, events did transpire during her many occasions of travel across
national borders, particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice
versa, that caused a "conflicts" situation to arise.

We thus find private respondent's assertion that the case is purely domestic, imprecise.
A conflicts problem presents itself here, and the question of jurisdiction 43 confronts the
court a quo.

After a careful study of the private respondent's Amended Complaint, 44 and the
Comment thereon, we note that she aptly predicated her cause of action on Articles 19
and 21 of the New Civil Code.

On one hand, Article 19 of the New Civil Code provides:

Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice give everyone his due and
observe honesty and good faith.

On the other hand, Article 21 of the New Civil Code provides:

Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for damages.

Thus, in Philippine National Bank (PNB) vs. Court of Appeals, 45 this Court held that:

The aforecited provisions on human relations were intended to expand

the concept of torts in this jurisdiction by granting adequate legal remedy
for the untold number of moral wrongs which is impossible for human
foresight to specifically provide in the statutes.
Although Article 19 merely declares a principle of law, Article 21 gives flesh to its
provisions. Thus, we agree with private respondent's assertion that violations of
Articles 19 and 21 are actionable, with judicially enforceable remedies in the municipal
forum.

Based on the allegations 46 in the Amended Complaint, read in the light of the Rules of
Court on jurisdiction 47 we find that the Regional Trial Court (RTC) of Quezon City
possesses jurisdiction over the subject matter of the suit. 48 Its authority to try and hear
the case is provided for under Section 1 of Republic Act No. 7691, to wit:

Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the

"Judiciary Reorganization Act of 1980", is hereby amended to read as
follows:

Sec. 19. Jurisdiction in Civil Cases. — Regional Trial Courts shall

exercise exclusive jurisdiction:

xxx xxx xxx

(8) In all other cases in which demand, exclusive of

interest, damages of whatever kind, attorney's fees,
litigation expenses, and cots or the value of the property
in controversy exceeds One hundred thousand pesos
(P100,000.00) or, in such other cases in Metro Manila,
where the demand, exclusive of the above-mentioned
items exceeds Two hundred Thousand pesos
(P200,000.00). (Emphasis ours)

xxx xxx xxx

And following Section 2 (b), Rule 4 of the Revised Rules of Court — the venue, Quezon
City, is appropriate:

Sec. 2 Venue in Courts of First Instance. — [Now Regional Trial Court]

(a) xxx xxx xxx

(b) Personal actions. — All other actions may be commenced and tried
where the defendant or any of the defendants resides or may be found,
or where the plaintiff or any of the plaintiff resides, at the election of the
plaintiff.

Pragmatic considerations, including the convenience of the parties, also weigh heavily
in favor of the RTC Quezon City assuming jurisdiction. Paramount is the private interest
of the litigant. Enforceability of a judgment if one is obtained is quite obvious. Relative
advantages and obstacles to a fair trial are equally important. Plaintiff may not, by
choice of an inconvenient forum, "vex", "harass", or "oppress" the defendant, e.g. by
inflicting upon him needless expense or disturbance. But unless the balance is strongly
in favor of the defendant, the plaintiffs choice of forum should rarely be disturbed. 49

Weighing the relative claims of the parties, the court a quo found it best to hear the case
in the Philippines. Had it refused to take cognizance of the case, it would be forcing
plaintiff (private respondent now) to seek remedial action elsewhere, i.e. in the Kingdom
of Saudi Arabia where she no longer maintains substantial connections. That would
have caused a fundamental unfairness to her.

Moreover, by hearing the case in the Philippines no unnecessary difficulties and

inconvenience have been shown by either of the parties. The choice of forum of the
plaintiff (now private respondent) should be upheld.

Similarly, the trial court also possesses jurisdiction over the persons of the parties
herein. By filing her Complaint and Amended Complaint with the trial court, private
respondent has voluntary submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions 50 praying for the
dismissal of Morada's Amended Complaint. SAUDIA also filed an Answer In Ex
Abundante Cautelam dated February 20, 1995. What is very patent and explicit from the
motions filed, is that SAUDIA prayed for other reliefs under the premises. Undeniably,
petitioner SAUDIA has effectively submitted to the trial court's jurisdiction by praying
for the dismissal of the Amended Complaint on grounds other than lack of jurisdiction.

As held by this Court in Republic vs. Ker and Company, Ltd.: 51

We observe that the motion to dismiss filed on April 14, 1962, aside from
disputing the lower court's jurisdiction over defendant's person, prayed
for dismissal of the complaint on the ground that plaintiff's cause of
action has prescribed. By interposing such second ground in its motion
to dismiss, Ker and Co., Ltd. availed of an affirmative defense on the
basis of which it prayed the court to resolve controversy in its favor. For
the court to validly decide the said plea of defendant Ker & Co., Ltd., it
necessarily had to acquire jurisdiction upon the latter's person, who,
being the proponent of the affirmative defense, should be deemed to
have abandoned its special appearance and voluntarily submitted itself
to the jurisdiction of the court.

Similarly, the case of De Midgely vs. Ferandos, held that;

When the appearance is by motion for the purpose of objecting to the

jurisdiction of the court over the person, it must be for the sole and
separate purpose of objecting to the jurisdiction of the court. If his
motion is for any other purpose than to object to the jurisdiction of the
court over his person, he thereby submits himself to the jurisdiction of
the court. A special appearance by motion made for the purpose of
objecting to the jurisdiction of the court over the person will be held to
be a general appearance, if the party in said motion should, for example,
ask for a dismissal of the action upon the further ground that the court
had no jurisdiction over the subject matter. 52

Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of
Quezon City. Thus, we find that the trial court has jurisdiction over the case and that its
exercise thereof, justified.

As to the choice of applicable law, we note that choice-of-law problems seek to answer
two important questions: (1) What legal system should control a given situation where
some of the significant facts occurred in two or more states; and (2) to what extent
should the chosen legal system regulate the situation. 53

Several theories have been propounded in order to identify the legal system that should
ultimately control. Although ideally, all choice-of-law theories should intrinsically
advance both notions of justice and predictability, they do not always do so. The forum
is then faced with the problem of deciding which of these two important values should
be stressed. 54

Before a choice can be made, it is necessary for us to determine under what category
a certain set of facts or rules fall. This process is known as "characterization", or the
"doctrine of qualification". It is the "process of deciding whether or not the facts relate
to the kind of question specified in a conflicts rule." 55 The purpose of "characterization"
is to enable the forum to select the proper law. 56

Our starting point of analysis here is not a legal relation, but a factual situation, event,
or operative fact. 57 An essential element of conflict rules is the indication of a "test" or
"connecting factor" or "point of contact". Choice-of-law rules invariably consist of a
factual relationship (such as property right, contract claim) and a connecting factor or
point of contact, such as the situs of the res, the place of celebration, the place of
performance, or the place of wrongdoing. 58
Note that one or more circumstances may be present to serve as the possible test for
the determination of the applicable law. 59 These "test factors" or "points of contact" or
"connecting factors" could be any of the following:

(1) The nationality of a person, his domicile, his residence, his place of
sojourn, or his origin;

(2) the seat of a legal or juridical person, such as a corporation;

(3) the situs of a thing, that is, the place where a thing is, or is deemed to
be situated. In particular, the lex situs is decisive when real rights are
involved;

(4) the place where an act has been done, the locus actus, such as the
place where a contract has been made, a marriage celebrated, a will
signed or a tort committed. The lex loci actus is particularly important in
contracts and torts;

(5) the place where an act is intended to come into effect, e.g., the place
of performance of contractual duties, or the place where a power of
attorney is to be exercised;

(6) the intention of the contracting parties as to the law that should
govern their agreement, the lex loci intentionis;

(7) the place where judicial or administrative proceedings are instituted

or done. The lex fori — the law of the forum — is particularly important
because, as we have seen earlier, matters of "procedure" not going to
the substance of the claim involved are governed by it; and because the
lex fori applies whenever the content of the otherwise applicable foreign
law is excluded from application in a given case for the reason that it falls
under one of the exceptions to the applications of foreign law; and

(8) the flag of a ship, which in many cases is decisive of practically all
legal relationships of the ship and of its master or owner as such. It also
covers contractual relationships particularly contracts of affreightment.
60 (Emphasis ours.)

After a careful study of the pleadings on record, including allegations in the Amended
Complaint deemed admitted for purposes of the motion to dismiss, we are convinced
that there is reasonable basis for private respondent's assertion that although she was
already working in Manila, petitioner brought her to Jeddah on the pretense that she
would merely testify in an investigation of the charges she made against the two
SAUDIA crew members for the attack on her person while they were in Jakarta. As it
turned out, she was the one made to face trial for very serious charges, including
adultery and violation of Islamic laws and tradition.

There is likewise logical basis on record for the claim that the "handing over" or
"turning over" of the person of private respondent to Jeddah officials, petitioner may
have acted beyond its duties as employer. Petitioner's purported act contributed to and
amplified or even proximately caused additional humiliation, misery and suffering of
private respondent. Petitioner thereby allegedly facilitated the arrest, detention and
prosecution of private respondent under the guise of petitioner's authority as employer,
taking advantage of the trust, confidence and faith she reposed upon it. As purportedly
found by the Prince of Makkah, the alleged conviction and imprisonment of private
respondent was wrongful. But these capped the injury or harm allegedly inflicted upon
her person and reputation, for which petitioner could be liable as claimed, to provide
compensation or redress for the wrongs done, once duly proven.

Considering that the complaint in the court a quo is one involving torts, the "connecting
factor" or "point of contact" could be the place or places where the tortious conduct or
lex loci actus occurred. And applying the torts principle in a conflicts case, we find that
the Philippines could be said as a situs of the tort (the place where the alleged tortious
conduct took place). This is because it is in the Philippines where petitioner allegedly
deceived private respondent, a Filipina residing and working here. According to her,
she had honestly believed that petitioner would, in the exercise of its rights and in the
performance of its duties, "act with justice, give her due and observe honesty and good
faith." Instead, petitioner failed to protect her, she claimed. That certain acts or parts of
the injury allegedly occurred in another country is of no moment. For in our view what
is important here is the place where the over-all harm or the totality of the alleged injury
to the person, reputation, social standing and human rights of complainant, had lodged,
according to the plaintiff below (herein private respondent). All told, it is not without
basis to identify the Philippines as the situs of the alleged tort.

Moreover, with the widespread criticism of the traditional rule of lex loci delicti
commissi, modern theories and rules on tort liability 61 have been advanced to offer
fresh judicial approaches to arrive at just results. In keeping abreast with the modern
theories on tort liability, we find here an occasion to apply the "State of the most
significant relationship" rule, which in our view should be appropriate to apply now,
given the factual context of this case.

In applying said principle to determine the State which has the most significant
relationship, the following contacts are to be taken into account and evaluated
according to their relative importance with respect to the particular issue: (a) the place
where the injury occurred; (b) the place where the conduct causing the injury occurred;
(c) the domicile, residence, nationality, place of incorporation and place of business of
the parties, and (d) the place where the relationship, if any, between the parties is
centered. 62

As already discussed, there is basis for the claim that over-all injury occurred and
lodged in the Philippines. There is likewise no question that private respondent is a
resident Filipina national, working with petitioner, a resident foreign corporation
engaged here in the business of international air carriage. Thus, the "relationship"
between the parties was centered here, although it should be stressed that this suit is
not based on mere labor law violations. From the record, the claim that the Philippines
has the most significant contact with the matter in this dispute, 63 raised by private
respondent as plaintiff below against defendant (herein petitioner), in our view, has
been properly established.

Prescinding from this premise that the Philippines is the situs of the tort complained of
and the place "having the most interest in the problem", we find, by way of
recapitulation, that the Philippine law on tort liability should have paramount
application to and control in the resolution of the legal issues arising out of this case.
Further, we hold that the respondent Regional Trial Court has jurisdiction over the
parties and the subject matter of the complaint; the appropriate venue is in Quezon City,
which could properly apply Philippine law. Moreover, we find untenable petitioner's
insistence that "[s]ince private respondent instituted this suit, she has the burden of
pleading and proving the applicable Saudi law on the matter." 64 As aptly said by private
respondent, she has "no obligation to plead and prove the law of the Kingdom of Saudi
Arabia since her cause of action is based on Articles 19 and 21" of the Civil Code of the
Philippines. In her Amended Complaint and subsequent pleadings, she never alleged
that Saudi law should govern this case. 65 And as correctly held by the respondent
appellate court, "considering that it was the petitioner who was invoking the
applicability of the law of Saudi Arabia, then the burden was on it [petitioner] to plead
and to establish what the law of Saudi Arabia is". 66

Lastly, no error could be imputed to the respondent appellate court in upholding the
trial court's denial of defendant's (herein petitioner's) motion to dismiss the case. Not
only was jurisdiction in order and venue properly laid, but appeal after trial was
obviously available, and expeditious trial itself indicated by the nature of the case at
hand. Indubitably, the Philippines is the state intimately concerned with the ultimate
outcome of the case below, not just for the benefit of all the litigants, but also for the
vindication of the country's system of law and justice in a transnational setting. With
these guidelines in mind, the trial court must proceed to try and adjudge the case in the
light of relevant Philippine law, with due consideration of the foreign element or
elements involved. Nothing said herein, of course, should be construed as prejudging
the results of the case in any manner whatsoever.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-
93-18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED
to Regional Trial Court of Quezon City, Branch 89 for further proceedings.

SO ORDERED.
CASE NO. 4

514 P.2d 314 (1973)

FIRST NATIONAL BANK IN FORT COLLINS, as guardian of Mickey Allen Hornbacher,

et al., Petitioner,
v.
Shirley L. ROSTEK, Administratrix of the Estate of John E. Rostek, Respondent.

No. C-317.

Supreme Court of Colorado, En Banc.

September 24, 1973.

315*315 The Law Offices of Daniel S. Hoffman; by Gene M. Hoffman, of counsel,

Denver, for petititoner.

Hill & Hill, Fort Collins, Blunk, Johnson & Allspach, Denver, for respondent.

PRINGLE, Chief Justice.

This case arises out of events surrounding a tragic airplane accident which took
the lives of Carol Hardin Rostek and her husband, John E. Rostek. The First National
Bank in Fort Collins, plaintiff below (petitioner herein), is the guardian of the natural
children of Carol Hardin Rostek. The respondent is the administratrix of the estate
of John E. Rostek.

Pursuant to 1967 Perm.Supp., C.R.S. 1963, 41-1-3, petitioner filed a wrongful death
action in Colorado district court alleging that negligent operation of the aircraft
on the part of John E. Rostek caused the accident and the ensuing death of his
guest-passenger, Carol Hardin Rostek.

The respondent filed a motion for summary judgment alleging the rights of the
parties are governed by the South Dakota Aircraft Guest Statute, S.D.C.L.1967, 50-
13-15. This South Dakota statute requires proof by the guest-passenger of willful or
wanton misconduct on the part of an operator of an aircraft.

For purposes of the summary judgment motion the parties stipulated that at most
the petitioner's evidence would show simple negligence on the part of John
Rostek. The parties also stipulated that John and Carol Rostek were both citizens
and residents of the state of Colorado, and that Carol Rostek's natural children,
who are her sole heirs at law, resided with her in Colorado. With respect to the
events in question, the stipulation stated:

"That on or about December 29, 1969, John E. Rostek, deceased, accompanied

by his wife, Carol Hardin Rostek, deceased, took off from Colorado enroute to
Iowa and Vermillion, South Dakota. That the Rosteks intended to remain in
Vermillion, South Dakota, overnight, but after ascertaining that a board of
directors meeting could not be held that evening decided to return to Fort Collins
the same night.

"That the Rosteks took off in their twin engine plane that evening from Harold
Davidson Airport, Vermillion, South Dakota. That two days later, the plane was
found approximately 500 feet from the end of the runway."

The trial court granted the respondent's motion for summary judgment and held:

". . . The parties have agreed that if the trial court is to adopt the law of the place
of the wrong, lex loci, the case must be dismissed. If the Court is to adopt the law
in which the trial is held, lex fori, the motion must be denied.
"The law in Colorado is that the claim is governed by lex loci delicti, rather than lex
fori. Pando v. Jasper [133 Colo. 321], 295 P.2d 229 and Bannowsky v. Krauser,
[D.C.], 294 F.Supp. 1204."

The petitioner then petitioned this court, pursuant to C.A.R. 50, for a writ of certiorari
to review the summary judgment of the trial court. We granted certiorari for the
sole purpose of determining if Colorado courts are compelled to apply the
doctrine of lex loci delicti (the law of the place of the wrong), under the facts and
circumstances of this case.

I.

A brief review of Colorado case law convinces us that the issue presented in this
case has in reality never been previously decided by this court, and that the
doctrine of lex loci delicti appears in Colorado law more by default than by
design.

316*316 In both Atchison T. & S.F.R. Co. v. Betts, 10 Colo. 431, 15 P. 821 (New Mexico
law applied where a suit was brought for the killing of plaintiff's mule by defendant
railroad in New Mexico) and Denver & R.G.R. Co. v. Warring, 37 Colo. 122, 86 P.
305 (New Mexico law applied to determine if legal action by a personal
representative of deceased was proper when accident occurred in New Mexico),
the question of whether any rule other than lex loci delicti should be applied was
never raised. In both cases the court applied the law of the place of the wrong
without recognition of the choice of law issue and without a discussion of any
choice of law doctrine. This is, of course, typical of cases from all jurisdictions in the
days when A. T. & S. F. and D. & R. G. R. were decided. Lex loci delicti was
accepted doctrine then and none challenged it or gave any thought to its
justification or its fairness.

The only Colorado case which expressly mentions the doctrine of lex loci delicti is
Pando v. Jasper, 133 Colo. 321, 295 P.2d 229, cited by the trial court in the instant
case to support its summary judgment. In Pando an accident had occurred in
Kansas and the suit was brought in Colorado. In the process of addressing the issue
of whether the Kansas guest statute had to be proven like other facts at trial, the
court assumed that the claim was governed generally by Kansas law under the
doctrine of lex loci delicti. This reference to lex loci delicti is unquestionably dicta,
and the court reached this conclusion without citing any previous Colorado cases
as precedent. Further, in Pando, as in previous cases where the court applied the
law of the place of the wrong, no issue was raised concerning the applicability or
scope of the doctrine of lex loci delicti or any other choice of law rule.

Thus, this court in effect has not previously been confronted with the issue of the
propriety and the justice of the doctrine of lex loci delicti, nor has this court
previously held that such a broad rule unfailingly applies in all multistate
controversies.[1] We conclude, therefore, that stare decisis does not compel this
court to apply the rule of lex loci delicti without regard to the facts and
circumstances in the particular case. Instead, this court must decide, as a matter
of first impression, whether the broad rule of lex loci delicti should be adopted and
applied to this case, or whether a more flexible choice of law rule should control.

II.

When the doctrine of lex loci delicti was first established in the mid-nineteenth
century, conditions were such that people only occasionally crossed state
boundaries. Under those circumstances, there was legitimacy in a rule which
presumed that persons changing jurisdictions would be aware of the different
duties and obligations they were incurring when they made the interstate journey.
Further, even if persons making these occasional journeys into neighboring states
were not actually aware of the changing duties and responsibilities, enforcing the
laws of the jurisdiction in which they were wronged was justified because of the
"vested rights" doctrine that was prevalent and widely accepted at that time. See
Page, Conflict of Law Problems in Automobile Accidents, 1943 Wis.L.Rev. 317*317
145, 150. Thus, the rule of lex loci delicti was originally viewed as a practical formula
by which individuals could govern their actions in accordance with prevailing
attitudes and customs, providing both uniformity of application and predictability
of results.

However, with the industrial revolution and the passage of time, the interstate
mobility of the citizenry increased in speed and availability to such an extent that
persons no longer regarded an interstate journey as a rare occurrence entailing a
significant change of surroundings. As these attitudes and conditions changed, it
became clear that the mechanical application of lex loci delicti to every
multistate tort controversy often yielded harsh, unjust results, unrelated to the
contemporary interests of the states involved or the realistic expectations of the
parties.

To avoid the growing number of undesirable results which strict adherence to lex
loci delicti produced, courts devised various methods of characterizing the issues
in the controversy to allow them to deviate from the application of lex loci delicti
without offending stare decisis. By labeling a matter as "procedural" rather than
"substantive," or "contractual" rather than "tortious," courts were able to apply law
other than the law of the place of the wrong. See, e.g., Kilberg v. Northeast Airlines,
Inc., 9 N.Y.2d 34, 211 N.Y.S.2d 133, 172 N.E.2d 526; Grant v. McAuliffe, 41 Cal.2d
859, 264 P.2d 944. In the process the courts were, in effect, making a choice of law
decision without exposing the real choice influencing factors for objective
classification and criticism. This constant search for a result which would comport
with reason and justice made it evident by the mid-twentieth century that the
doctrine of lex loci delicti no longer provided the high degree of predictability and
uniformity which were considered its primary virtues.

The questionable viability of the lex loci delicti rule in today's society has been
recognized by courts and commentators alike. In the last ten years, while several
states have retained adherence to the broad lex loci delicti rule,[2] a greater
number of jurisdictions have abandoned or rejected lex loci delicti in favor of a
more flexible and rational choice of law approach in multistate tort cases.[3] The
majority of those cases rejecting the lex loci delicti rule have 318*318 involved the
application of host-guest statutes or the question of interspousal liability for injuries
received in automobile or airplane accidents. Additionally, the overwhelming
majority of commentators are opposed to the mechanical application of the
place of wrong rule,[4] largely for the reasons previously discussed.

The rationale of the cases rejecting lex loci delicti, the views of eminent authorities
in the field of tort law, and our own observations and experience convince us a
more flexible and rational approach than lex loci delicti affords is necessary. We
fully appreciate the arguments made by the defendant that lex loci delicti retains
some predictability of result and ease of application by courts. Yet, the facts in the
case at bar classically demonstrate the injustice and irrationality of the automatic
application of the lex loci delicti rule. Both Carol and John Rostek were citizens of
Colorado. The airplane in question was registered in Colorado and was returning
to Colorado when the accident occurred. The lawsuit was brought in a Colorado
forum with a Colorado resident as defendant. It becomes evident, therefore, that
South Dakota's only interest in this controversy is the fortuitous occurrence of the
accident within its borders. Thus the trial court's decision to apply South Dakota
law to this case can be affirmed only if we are to adhere to a mechanical and
unfailing application of the place of wrong rule, regardless of the interests of the
states involved or the expectations of the parties. This we refuse to do.

III.

Although most courts and commentators are united in their opposition to the use
of the general lex loci delicti rule, there is disagreement as to which approach
should be adopted.[5] Some would emphasize the law of the place of the forum,
while others would place more emphasis on the expectations of the parties. Still
others stress the need to consider the interests of the various governmental entities
involved. All of the generally accepted approaches, however, suffer from a similar
defect; namely, they are all "approaches," to be applied in a more or less ad hoc
fashion, and containing indeterminate language with no concrete guidelines.
Thus, quite naturally, these approaches have exhibited a certain lack of both
predictability of result and uniformity of application. This situation cannot be
completely disregarded. While we recognize that a rational and equitable
approach to choice of law is desirable, we now harmonize that approach with
the genius of the common law which always sought to provide to its consumers
some degree of predictability and consistency in application. As we have said,
accidents occurring in states not the domicile of all of the parties are
commonplace in today's society. The law should not deal with them as if they were
rare and exotic hypotheticals, to be solved by exercises in intellectual
gamesmanship. The events in this case, and their probable reoccurrence, are real
world concerns, and the law in this area should provide a concrete and viable
system for the equal application of just 319*319 laws. See Rosenberg in Comments
on Reich v. Purcell, 15 U.C.L.A., L.Rev. 551, 641, 644-45 (1968).

Because of the lack of consistency and predictability exhibited by various

proposed choice of law "approaches," the principal question in choice of law
today is whether or not to adopt rational choice of law "rules," or to deal with each
case as it comes to us on an ad hoc basis. Rules are employed in most areas of
the law because they provide the benefits of certainty and predictability. To some
extent the existence of a rule in any area of the law serves the ends of justice since
it furnishes the juridical machinery by which like situations are equally adjudged.
See Reese, Choice of Law: Rules or Approach, 57 Cornell L.Rev. 315 (1972). In short,
rules are one of the laws' attributes, and fulfill an essential function of concrete
justice.

Thus, in order to provide some predictability of result and uniformity of application,

this court turns to the adoption of some rules dealing with choice of law. In so
doing, we begin with the particular issue presented in this case, namely, the
application of a guest statute to a host-guest controversy. We consider this issue a
narrow one, occurring with enough frequency and repetitiveness to enable us to
extract specific guidelines that will satisfactorily regulate this issue. See Reese,
Choice of Law: Rules or Approach, supra, p. 325.

Our search for a workable choice of law rule in the guest-host area leads to the
majority opinion in Neumeier v. Kuehner, 31 N.Y.2d 121, 335 N.Y.S.2d 64, 286 N.E.2d
454 (1972), written by Chief Judge Fuld. See Symposium, Neumier v. Kuehner: A
Conflicts Conflict, supra. In Neumeier the court was faced with a guest-host
accident situation involving a citizen of Canada and a resident of New York.
Judge Fuld admitted that the recent choice of law "approach" in guest-host
controversies, initiated in Babcock v. Jackson, supra, had, until Neumeier, lacked
consistency. The New York court then proceeded to formulate a specific rule
governing the application of guest statutes in multistate tort controversies. This rule
generally embodies the rational underpinnings of the newer approaches to
choice of law problems, emphasizing the expectations of the parties and the
interests of the different jurisdictions involved. We are persuaded that it is just and
equitable and ought to be accepted in Colorado with respect to the first two
sections thereof and we now do so. As stated by the New York court, those
sections provide:

"1. When the guest-passenger and the host-driver are domiciled in the same state,
and the [vehicle] is there registered, the law of that state should control and
determine the standard of care which the host owes to his guest.

"2. When the driver's conduct occurred in the state of his domicile and that state
does not cast him in liability for that conduct, he should not be held liable by
reason of the fact that liability would be imposed upon him under the tort law of
the state of the victim's domicile. Conversely, when the guest was injured in the
state of his own domicile and its law permits recovery, the driver who has come
into that state should not—in the absence of special circumstances—be
permitted to interpose the law of his state as a defense."

IV.

We must now apply the aforementioned choice of law rule to determine if the
South Dakota guest statute should be applied to the case at bar. Both the guest-
passenger and the host-pilot were domiciled and residing in Colorado, and the
airplane was registered in Colorado. Thus, the facts in this case are governed by
the first statement of the rule. Under this statement, the rights and liabilities of the
parties are governed by the law of the place of domicile which in this case is
Colorado. Accordingly, South Dakota law, including its Airplane Guest Statute, is
not the appropriate law to apply under this new rule.

320*320 We recognize that this case is a comparatively easy one and in cases like
it the result will hereafter be reasonably easy for lawyers and judges to reach.
Admittedly, there will be harder cases, more difficult to decide even under the
narrow host-guest rule. However, we believe that the application of this rule
promises a fair level of predictability and uniformity in the application of a rational
and modern set of choice of law considerations.

V.

Since the scope of our decision to reject the mechanical application of the rule
of lex loci delicti extends to all multistate tort controversies, we must now address
ourselves to the question of what rules govern choice of law in Colorado outside
the rules laid down with respect to host-guest controversies which fit those rules.
We announce that Colorado will adopt the general rule of applying the law of the
state with the most "significant relationship" with the occurrence and the parties,
as presented and defined in the Restatement, (Second) Conflict of Laws, Vol. 1,
Sec. 145 (1969). Generally, the Restatement requires the application of separate
rules to various kinds of torts, and defines "significant contacts" in terms of the issues,
the nature of the tort, and the purposes of the tort rules involved. While this
Restatement rule is somewhat broad, it is no less precise than the concepts of
"reasonableness" or "due process" which courts have applied for many years.
Hopefully, at some time in the future, as the body of case law develops, we can
lay down more specific choice of law rules governing other areas, as we have
done today in the area of guest statutes. However, at present, in all areas of
multistate tort controversies other than those involving the situations we have dealt
with in the specific rules laid down today, we will use and apply the rule articulated
in Sec. 145 of the Second Restatement on Conflict of Laws.
VI.

Since Colorado law was the appropriate law to be applied to the issues in this
case, it was error for the trial court to grant respondent's summary judgment
motion on the grounds that South Dakota law barred the suit.

The judgment is reversed and the cause remanded to the trial court for further
proceeding not inconsistent with the views herein expressed.

[1] The defendant and the trial court both rely heavily on Bannowsky v. Krauser,
D.C., 294 F.Supp. 1204 (1969). Bannowsky was a diversity case wherein the plaintiff,
a resident of New Mexico, brought a wrongful death action in the federal district
court in Denver against a Colorado resident, for an accident which occurred in
Colorado. The district court concluded it was required by Pando v. Jasper, supra,
to apply the substantive law of the place where the death occurs in wrongful
death actions. The district court's decision, however, is not binding on this court, it
being well settled that a state court is not bound by federal court interpretation of
state law. See 28 U.S.C. § 1652; Nolan v. Transocean Air Lines, 365 U.S. 293, 81 S.Ct.
555, 5 L.Ed. 2d 571; and Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed.2d
1188; White-Rodgers Co. v. Dist. Court, 160 Colo. 491, 418 P.2d 527.

[2] See Heidemann v. Rohl, S.D., 194 N.W.2d 164 (1972); Winters v. Maxey, Tenn.,
481 S.W.2d 755 (1972); Abendschein v. Farrell, 382 Mich. 510, 170 N.W.2d 137 (1969);
Cook v. Pryor, 251 Md. 41, 246 A.2d 271 (1968); Marmon v. Mustang Aviation, Inc.,
416 S.W.2d 58 (Tex.Civ.App.1967), aff'd 430 S.W.2d 182 (1968); Hopkins v. Lockheed
Aircraft Corp., 201 So.2d 749, rev'd on rehearing, 201 So.2d 743 (Fla.1967); Johnson
v. St. Paul Mercury Ins. Co., 256 La. 289, 236 So.2d 216 (1966); Landers v. Landers,
153 Conn. 303, 216 A.2d 183 (1966); McGinty v. Ballentine Produce, Inc., 241 Ark.
533, 408 S.W.2d 891 (1966); Cherokee Laboratories, Inc. v. Rogers, 398 P.2d 520
(Okla.1965); Cobb v. Clark, 265 N.C. 194, 143 S.E.2d 103 (1965); Friday v. Smoot, 211
A.2d 594 (Del.1965); McDaniel v. Sinn, 194 Kan. 625, 400 P.2d 1018 (1965); Oshiek v.
Oshiek, 244 S.C. 249, 136 S.E.2d 303 (1964).

[3] Issendorf v. Olson, 194 N.W.2d 750 (N. Dakota, 1972); Fox v. Morrison Motor
Freight, Inc., 25 Ohio St.2d 193, 267 N.E.2d 405 (1971); Beaulieu v. Beaulieu, 265
A.2d 610 (Maine, 1970); Kennedy v. Dixon, 439 S.W.2d 173 (Mo.1969); Woodward
v. Stewart, 104 R.I. 290, 243 A.2d 917 (1968), pet. for cert. denied, 393 U.S. 957, 89
S.Ct. 387, 21 L.Ed.2d 371 (1969); Armstrong v. Armstrong, 441 P.2d 699 (Alaska 1968);
Mitchell v. Craft, 211 So.2d 509 (Miss.1968); Schneider v. Nichols, 280 Minn. 139, 158
N.W.2d 254 (1968); Schwartz v. Schwartz, 103 Ariz. 562, 447 P.2d 254 (1968); Casey
v. Marson Constr. & Engineering Co., 247 Or. 274, 428 P.2d 898 (1967); Mellk v.
Sarahson, 49 N.J. 226, 229 A.2d 625 (1967); Myers v. Gaither, 232 A.2d 577 (D.C.App.
1967); Reich v. Purcell, 67 Cal.2d 551, 63 Cal.Rptr. 31, 432 P.2d 727 (1967); Wessling
v. Paris, 417 S.W.2d 259 (Ky.1967); Clark v. Clark, 107 N.H. 351, 222 A.2d 205 (1966);
Wartell v. Formusa, 34 Ill.2d 57, 213 N.E.2d 544 (1966); Fabricus v. Horgen, 257 Iowa
268, 132 N.W.2d 410 (1965); Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796
(1964); Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963).

[4] See, e.g., Leflar, Choice-Influencing Considerations in Conflicts Law, 41

N.Y.U.L.Rev. 267 (1966); Cavers, A Critique of the Choice of Law Problem, 47
Harv.L.Rev. 173 (1933); Cheatham and Reese, Choice of the Applicable Law, 52
Colum.L.Rev. 959 (1952); Currie in Comments on Babcock v. Jackson, A Recent
Development in Conflict of Laws, 63 Colum.L.Rev. 1212, 1233 (1963); Ehrenzeweig,
The "Most Significant Relationship" in the Conflicts Law of Torts, 28 Law &
Contemp.Prob. 700 (1963); Reese in Comments on Babcock v. Jackson, 63
Colum.L.Rev. 1212, 1251 (1963); Traynor, Is This Conflict Really Necessary? 37 Texas
L.Rev. 647 (1959).
[5] In addition to those listed in Note 4, see Symposium, Neumeier v. Kuehner: A
Conflicts Conflict, 1 Hofstra L.Rev. 93 (1973); Restatement (Second), Conflict of
Laws, Vol. 1, Sec. 145 (1969); Juenger, Choice of Law in Interstate Torts, 118
U.Pa.L.Rev. 202 (1969); Cavers, The Choice of Law Process (1965); Weintraub, A
Method for Solving Conflict Problems—Torts, 48 Cornell L.Q. 215 (1963); Comment,
The Second Conflicts Restatement of Torts: A Caveat, 51 Calif.L.Rev. 762 (1963).
CASE NO. 5

585 F.3d 334 (2009)

Joseph KAMELGARD, Plaintiff-Appellant/Cross-Appellee,

v.
Jerzy MACURA, Defendant-Appellee/Cross-Appellant.

Nos. 08-4254, 09-1030.

United States Court of Appeals, Seventh Circuit.

Argued September 15, 2009.

Decided October 23, 2009.

Rehearing Denied November 12, 2009.

335*335 Miles J. Zaremski, Attorney (argued), Zaremski Law Group, Northbrook,

IL, for Plaintiff-Appellant.

Daniel M. Purdom, Attorney, Adam L. Saper, Attorney, Hinshaw & Culbertson,

Chicago, IL, for Defendant-Appellee.

Before POSNER, FLAUM, and ROVNER, Circuit Judges.

336*336 POSNER, Circuit Judge.

The plaintiff, a bariatric surgeon who lives and practices in New Jersey, brought
this diversity suit in the federal district court in Chicago. He claims to have been
defamed by the defendant, another bariatric surgeon, who practices in New York.
The district judge dismissed the suit without prejudice, on the ground that venue in
Chicago was improper, and the plaintiff appeals. The defendant cross-appeals,
claiming that the dismissal of the suit should have been with prejudice because
the suit is time-barred. The cross-appeal is proper — and the plaintiff's challenge
to it and his request for sanctions for the filing of the cross-appeal is frivolous and
itself sanctionable — because it seeks relief beyond what the defendant obtained
from the district court. Greenlaw v. United States, ___ U.S. ___, 128 S.Ct. 2559, 2564,
171 L.Ed.2d 399 (2008); Stone Container Corp. v. Hartford Steam Boiler Inspection
& Ins. Co., 165 F.3d 1157, 1159 (7th Cir. 1999); Abbs v. Sullivan, 963 F.2d 918, 924 (7th
Cir.1992).

The plaintiff had testified against the defendant in a malpractice suit in New York,
and the defendant had retaliated — according to the plaintiff's complaint — by
mailing a defamatory letter on or about March 1, 2006, to the American College
of Surgeons, which is located in Chicago. The defendant had on that day mailed
what the plaintiff believes to be an identical or nearly identical letter of complaint
about the plaintiff's testimony to the American Society of Bariatric Surgeons (now
the American Society for Metabolic and Bariatric Surgery), in Florida. That letter is
in the record, but the letter to the American College of Surgeons (if there is such a
letter) is not, and the plaintiff has seen neither the original nor a copy. On April 5,
however, he received a letter from an official of the American College of
Surgeons, notifying him that the College had received a complaint about his
testimony as an expert witness in the New York malpractice suit against the
defendant. But the letter did not identify the complainant.

The College's disciplinary committee assigned three bariatric surgeons to

investigate the complaint. In October the College sent the plaintiff a letter
charging him with unprofessional conduct. But in March of the following year, after
he had informed the College that the defendant had been sued for malpractice
30 times, the College wrote the plaintiff that its disciplinary committee had "voted
to take no further action with regard to this matter."

The plaintiff claims not to have known that the defendant was the source of
complaints against him until June 13, 2007, when at a convention in California a
bariatric surgeon told him about the Florida letter. After that he put two and two
together and concluded that the defendant must have been the author of the
complaint to the College. His previous ignorance of the putative source of the
complaint is a little hard to credit, since the College had told him that the
complaint concerned his conduct in the malpractice suit against the defendant.
But we'll assume it's true — it has to be, or his goose is cooked, because he didn't
file this suit until June 3, 2008. That was more than a year after the alleged
defamation by the two letters but just under a year after the conversation in
California; and the Illinois statute of limitations, which the plaintiff contends is
applicable to his suit (the defendant disagrees, and their disagreement is the
principal issue in the appeals), requires that a suit for defamation be brought within
a year of the "publication" of the defamatory statement, 735 ILCS 5/13-201; Davis
v. Cook County, 534 F.3d 337*337 650, 654 (7th Cir.2008) — unless the plaintiff could
not have discovered the defamation within that period. Tom Olesker's Exciting
World of Fashion, Inc. v. Dun & Bradstreet, Inc., 61 Ill.2d 129, 334 N.E.2d 160, 164
(1975); Goodman v. Harbor Market, Ltd., 278 Ill.App.3d 684, 215 Ill.Dec. 263, 663
N.E.2d 13, 17-18 n. 3 (1996); Schweihs v. Burdick, 96 F.3d 917, 920 (7th Cir.1996)
(Illinois law).

We begin our analysis with the issue of the missing letter to the American College
of Surgeons. To proceed in a libel suit without the statement that is alleged to be
defamatory is unconventional, though there are a few such cases. Trail v. Boys &
Girls Clubs of Northwest Indiana, 845 N.E.2d 130, 137-38 (Ind.2006), for example,
was a libel suit by a disgruntled former employee against his supervisors
complaining about a biased report that cast him in a negative light. He had not
seen the report, and the court ordered the suit dismissed, explaining that "without
the statement ... the court cannot actually determine if the statement is legally
defamatory." We haven't found a case in which such a suit was successful, but we
don't think there is or should be an absolute rule that without the corpus delicti, as
it were, a libel suit must fail. The allegedly libelous document might have
disappeared through no fault of the plaintiff and there might be evidence of its
existence and contents, such as testimony by persons who had read it — just as
key evidence in a slander case, because slander is oral, is the testimony of persons
who heard it. Robison v. Lescrenier, 721 F.2d 1101, 1104 (7th Cir.1983); Simon v.
Shearson Lehman Brothers, Inc., 895 F.2d 1304, 1309 (11th Cir.1990); Gasbarra v.
Park-Ohio, Inc., 382 F.Supp. 399, 403 (N.D.Ill.1974); Israel Travel Advisory Service Inc.
v. Israel Identity Tours, Inc., No. 92-C-2379, 1994 WL 30984 (N.D.Ill. Jan. 28, 1994),
affirmed, 61 F.3d 1250 (7th Cir.1995).

The plaintiff contends that he asked the College for the letter and the College
wouldn't give it to him — indeed, would neither admit nor deny the existence of
such a letter. He had joined the College as a defendant; and in its motion to
dismiss (which was granted) the College argued that if there was such a letter it
was privileged by the Illinois Medical Studies Act, 735 ILCS 5/8-2101 ("all
information, interviews, reports, statements, memoranda, recommendations,
letters of reference or other third party confidential assessments of a health care
practitioner's professional competence, or other data of ... the Illinois State
Medical Society, [or] allied medical societies ... used in the course of internal
quality control ... for improving patient care ... shall be privileged [and] strictly
confidential"); Jenkins v. Wu, 102 Ill.2d 468, 82 Ill.Dec. 382, 468 N.E.2d 1162, 1168-69
(1984); cf. Austin v. American Association of Neurological Surgeons, 253 F.3d 967,
974 (7th Cir.2001) (Illinois law); by the status of the College as a quasi-judicial body,
Illinois College of Optometry v. Labombarda, 910 F.Supp. 431, 432-34 (N.D.Ill.1996);
and by the common law privilege for a communication that the defendant had
a duty to make and did not disseminate any further than necessary. Kuwik v.
Starmark Star Marketing & Administration, Inc., 156 Ill.2d 16, 188 Ill.Dec. 765, 619
N.E.2d 129, 132-35 (1993); In re Himmel, 125 Ill.2d 531, 127 Ill.Dec. 708, 533 N.E.2d
790 (1988); Smock v. Nolan, 361 F.3d 367, 372 (7th Cir.2004) (Illinois law); J.D.
Edwards & Co. v. Podany, 168 F.3d 1020, 1022 (7th Cir.1999) (same); Jones v.
Western & Southern Life Ins. Co., 91 F.3d 1032, 1035 (7th Cir.1996) (same). A
professional, including a doctor (see American Medical Association, Code of
Medical Ethics, Opinion 9.031 ("Reporting Impaired, Incompetent, or Unethical
Colleagues"), June 2004, www.ama-assn.org/ama/pub/physician-
resources/medical-ethics/code-medical-ethics/opinion9031.shtml 338*338
(visited Oct. 4, 2009)), has a duty to notify the proper public or private authorities
of unprofessional conduct, which he observes, by a fellow professional.

The plaintiff made no effort to obtain the supposed letter to the American College
of Surgeons by compulsory process and seems to have had no plans to do so. As
we'll see, he apparently did not realize that he could obtain it, however unwilling
the College was to divulge it, by subpoena under Rule 45 of the civil rules unless
the College prevailed on one of its claims of privilege.

In light of the plaintiff's failure to obtain the letter, the claim based on it is probably
going nowhere even if the letter exists and is not privileged. Indeed the claim may
have been dismissed already — and on the merits, rather than for improper venue.
The district judge termed the plaintiff's assertion that he could not identify the
alleged defamatory statement made by the defendant because "this information
is solely in [the College's possession] meritless, given his discovery rights." Later the
judge described the plaintiff's complaint as "insufficient to the extent Kamelgard
claims Macura made unidentified defamatory statements to ... American College
of Surgeons" and therefore "there presently appears to be no venue in this court
for Kamelgard's claims against Macura. Unless Kamelgard remedies this situation
within 10 days, his entire complaint shall be dismissed without prejudice for lack of
venue." Presumably the judge thought that if the plaintiff couldn't obtain the letter
on which he based his claim against the College of Surgeons, the claim had no
merit and therefore Illinois (where the College's headquarters are located) had no
connection to the suit: a New Jersey resident would be suing in Illinois a New York
resident over a letter mailed to Florida from New York (presumably — but certainly
not from Illinois).

When the judge turned down a request by the plaintiff to clarify what she meant
by "discovery rights," the plaintiff's lawyer moved to take deposition testimony
under Rule 27 of the civil rules. The judge referred the motion to a magistrate judge,
who held a hearing at which he expressed bafflement at the plaintiff's invocation
of that rule, which governs depositions taken before suit (to preserve evidence) or
pending appeal, neither being a concern pertinent to this case. He asked why the
plaintiff wasn't proceeding under Rule 45, which governs subpoenas. The plaintiff's
lawyer was unacquainted with that rule and, it soon became clear, was in any
event not seeking production of the letter, which he could have done (subject to
a defense of privilege, Fed.R.Civ.P. 45(c)(3)(A)(iii)) by serving a subpoena duces
tecum on the College. Fed.R.Civ.P. 26(b)(1), 45; Gotham Holdings, LP v. Health
Grades, Inc., 580 F.3d 664. (7th Cir.2009); Capital Co. v. Fox, 85 F.2d 97, 100-01 (2d
Cir.1936) (L.Hand, J.). Instead he wanted to depose the bariatric surgeon who had
told him in June 2007 in California about the investigation by the College and the
defendant's letter to the American Society of Bariatric Surgeons.

The magistrate judge noted that the plaintiff's lawyer had withdrawn his motion to
proceed under Rule 27, and suggested that he proceed under Rule 45 to obtain
the letter, but he did not do so. It seems that he may not know how to use
compulsory process to obtain a document 339*339 from a third party for use in a
proceeding in a federal court.

The district judge seems to have considered the failure to obtain the letter that the
plaintiff thinks is in the College's possession fatal to his claim that the letter defamed
him. For remember that she had said that if he didn't "identify" the defamatory
statements that he claimed the defendant had made to the College, she would
dismiss the case for improper venue, since, as we said, without defamatory
statements to the College, Illinois has no connection to the suit. He never did
"identify" the statements, and while the dismissal of the suit was without prejudice,
probably that was only because the claim against the defendant for defamation
by means of the mailing to Florida was still alive when the judge ruled, though that
claim was abandoned, both in the defendant's reply brief in this court and by his
lawyer at the oral argument, for reasons explained later in this opinion.

The most natural interpretation of the district judge's series of orders is thus that the
plaintiff having failed even to attempt by use of process to obtain information that
the judge thought vital to his claim of having been defamed in Illinois, that claim
was dismissed under Rule 12(b)(6) (failure to state a claim), leaving just the claim
based on the letter to Florida, which did not support venue in Illinois. A dismissal for
failure to state a claim is a dismissal on the merits, Fed.R.Civ.P. 41(b), unless the
dismissal order states otherwise; and a dismissal on the merits is normally with
prejudice and thus a bar to relitigation. Federated Department Stores, Inc. v.
Moitie, 452 U.S. 394, 399 n. 3, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981); Waypoint
Aviation Services Inc. v. Sandel Avionics, Inc., 469 F.3d 1071, 1073 (7th Cir.2006); 9
Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2373, pp.
739-42 (3d ed.2008). The usual exception is where the court gives the plaintiff an
opportunity to cure the defect in his complaint by filing an amended complaint.
Kaplan v. Shure Brothers, Inc., 266 F.3d 598, 601 (7th Cir.2001); Bastian v. Petren
Resources Corp., 892 F.2d 680, 682 (7th Cir.1990); McLean v. United States, 566 F.3d
391, 400 (4th Cir.2009). The judge had already given the plaintiff an opportunity to
cure the defect (the absence of the letter or its contents), and the plaintiff's lawyer
had flubbed it.

We are supported in our interpretation of the district judge's actions by the fact
that unless she intended to dismiss the claim arising from the supposed letter on
the merits, her ruling on venue would not make sense. For if that claim were viable,
Illinois would be as good a venue for litigating it as anywhere, since the parties are
residents of two different states and one of the alleged defamatory statements on
which the suit is based was made in Illinois and the other in a fourth state, Florida.
See 28 U.S.C. § 1391(a)(2); Askew v. Sheriff of Cook County, 568 F.3d 632, 636 (7th
Cir.2009); Reliance Ins. Co. v. Polyvision Corp., 474 F.3d 54, 59 (2d Cir.2007); Uffner
v. La Reunion Francaise, S.A., 244 F.3d 38, 43 (1st Cir.2001); 14D Charles A. Wright,
Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3806.1, pp.
199-216 (3d ed. 2007).

At argument the plaintiff's lawyer told us that the Florida letter had been
mentioned in the complaint only to "bolster" the claim arising from the conjectured
letter to the American College of Surgeons; 340*340 the Florida letter was merely
circumstantial evidence that the defendant had written a similar letter to the
American College of Surgeons. So if the claim based on the Illinois letter was
properly dismissed on the merits, then since the claim based on the Florida letter
has been abandoned, the defendant is entitled to dismissal of the entire suit with
prejudice, as he seeks. But there is uncertainty about what the district judge did or
meant to do; the defendant has pitched his defense (and cross-appeal) on a
separate ground — choice of law; and the plaintiff has some evidence that there
was a defamatory letter to the American College of Surgeons. Given the
simultaneous mailing to Florida and the fact that the defendant was the likeliest
person to complain to the American College of Surgeons about the plaintiff's
testimony in a malpractice suit against him, he probably did mail an identical or
nearly identical letter to the College. Against this it could be argued that the
plaintiff's failure to use compulsory process suggests doubt on his part about what
that endeavor would have produced — perhaps no letter, perhaps no
defamatory statements in the letter. But that would be an inference for the jury to
draw or not as it wished.

So on to choice of law. The defendant argues that the applicable law in this case
is not Illinois law, as he had thought initially, until the district judge had questioned
it (and as the plaintiff continues to argue), but New Jersey law. If he is right, the suit
is time-barred because New Jersey, though like Illinois it has a one-year statute of
limitations for defamation suits, 2A NJSA § 14-3; In re Breen, 113 N.J. 522, 552 A.2d
105, 111 (1989); Doug Grant, Inc. v. Greate Bay Casino Corp., 3 F.Supp.2d 518, 538
(D.N.J.1998), has no discovery rule for such suits. Palestri v. Monogram Models, Inc.,
875 F.2d 66, 70 (3d Cir.1989) (New Jersey law); Lawrence v. Bauer Publishing &
Printing Ltd., 78 N.J. 371, 396 A.2d 569, 570-71 (1979) (concurring opinion). In
Williams v. Bell Telephone Laboratories Inc., 132 N.J. 109, 623 A.2d 234, 239 (1993)
(per curiam), the New Jersey supreme court suggested a willingness to reconsider
the issue in a future case, but it has yet to do so.

It used to be a flat rule (called lex loci delicti — the law of the place of the wrong)
that the law applicable in a tort case is the law of the place where the tort
occurred. Slater v. Mexican National R.R., 194 U.S. 120, 126, 24 S.Ct. 581, 48 L.Ed.
900 (1904) (Holmes, J.); Loucks v. Standard Oil Co., 224 N.Y. 99, 120 N.E. 198, 201-
02 (1918) (Cardozo, J.); Restatement of Conflict of Laws §§ 377-378 (1934); 2
Joseph H. Beale, A Treatise on the Conflict of Laws § 377.2, pp. 1287-88 (1935). And
that means the place where the injury caused by the tort occurred. Townsend v.
Sears, Roebuck & Co., 227 Ill.2d 147, 316 Ill.Dec. 505, 879 N.E.2d 893, 899-900 (2007);
Abdullahi v. Pfizer, Inc., 562 F.3d 163, 190 (2d Cir.2009); Abad v. Bayer Corp., 563
F.3d 663, 669 (7th Cir.2009); Kuehn v. Childrens Hospital, 119 F.3d 1296, 1301 (7th
Cir.1997); Rozenfeld v. Medical Protective Co., 73 F.3d 154, 155-56 (7th Cir. 1996).
Injury is necessary to make an act a tort because there is no tort without an injury.
Id. at 156; Janmark, Inc. v. 341*341 Reidy, 132 F.3d 1200, 1202 (7th Cir.1997); Kanar
v. United States, 118 F.3d 527, 531 (7th Cir.1997); W. Page Keeton et al., Prosser &
Keeton on the Law of Torts § 1, p. 4 (5th ed. 1984). The theory of the old rule (if it
can be dignified with the word "theory"), lex loci delicti, as explained in the Holmes
and Cardozo opinions that we cited, is that the right to a tort remedy vests upon
injury; the existence and scope of the right therefore depend on the law of the
place of injury; and the vested right, viewed as a piece of property acquired in
the place of injury, is carried by the plaintiff, like the turtle's shell, to wherever he
decides to sue.

The old rule came to seem too rigid, mainly because of such anomalies as suits
between citizens of the same state when it was not the state where the accident
had occurred. The rule has been reduced, in effect, to a presumption, in Illinois as
in other states. See Ingersoll v. Klein, 46 Ill.2d 42, 262 N.E.2d 593, 595 (1970); Ferguson
v. Kasbohm, 131 Ill. App.3d 424, 86 Ill.Dec. 605, 475 N.E.2d 984, 986-87 (1985); Carris
v. Marriott Int'l, Inc., 466 F.3d 558, 560-61 (7th Cir. 2006) (Illinois law); Spinozzi v. ITT
Sheraton Corp., 174 F.3d 842, 844-45 (7th Cir. 1999) (same); Travelers Indemnity Co.
v. Lake, 594 A.2d 38, 47 (Del.1991); Pevoski v. Pevoski, 371 Mass. 358, 358 N.E.2d
416, 417 (1976); Restatement (Second) of Conflict of Laws § 145 comment e, § 146
(1971). We say "in effect" because most states, including Illinois, nowadays apply
the law of the state that has the "most significant relationship" to the claim, e.g.,
Ingersoll v. Klein, supra; Esser v. McIntyre, 169 Ill.2d 292, 214 Ill.Dec. 693, 661 N.E.2d
1138, 1141 (1996); P.V. ex rel. T.V. v. Camp Jaycee, 197 N.J. 132, 962 A.2d 453, 461
(2008); Restatement, supra § 145(1), rather than the lex loci delicti. But as we
explained in the Spinozzi case, the state with the most significant relation to a claim
is usually the state in which the tort (and therefore the injury) occurred. That state
"has the greatest interest in striking a reasonable balance among safety, cost, and
other factors pertinent to the design and administration of a system of tort law.
Most people affected whether as victims or as injurers by accidents and other
injury-causing events are residents of the jurisdiction in which the event takes
place. So if law can be assumed to be generally responsive to the values and
preferences of the people who live in the community that formulated the law, the
law of the place of the accident can be expected to reflect the values and
preferences of the people most likely to be involved in accidents — can be
expected, in other words, to be responsive and responsible law, law that
internalizes the costs and benefits of the people affected by it." 174 F.3d at 845.

Defamation, however, is a tort that the old rule, now a presumption, very often
doesn't fit, because often the defamatory statement is communicated in more
than one state. There is also ambiguity concerning the injury caused by
defamation — does it occur just where the plaintiff incurs some tangible harm such
as a loss of income, or where his reputation is impaired, and if the latter does he
have a reputation in a state in which the statement is communicated even if no
one there has ever heard of him?

When the defamatory statement is communicated in many different states, it

makes sense to apply the law of the plaintiff's domicile, and that is the usual result
in Illinois. See Velle Transcendental Research 342*342 Ass'n, Inc. v. Esquire, Inc., 41
Ill. App.3d 799, 354 N.E.2d 622, 625 (1976); Snead v. Forbes, Inc., 2 Ill.App.3d 22, 275
N.E.2d 746, 748-49 (1971); Rice v. Nova Biomedical Corp., 38 F.3d 909, 915-16 (7th
Cir.1994) (Illinois law), as elsewhere. Selle v. Pierce, 494 N.W.2d 634, 636-37 (S.D.
1993); Williams v. United States, 71 F.3d 502, 506 (5th Cir.1995) (Texas law); Reeves
v. American Broadcasting Cos., 719 F.2d 602, 605 (2d Cir.1983) (New York law);
Hanley v. Tribune Publishing Co., 527 F.2d 68, 70 (9th Cir.1975) (Nevada law);
Restatement, supra, § 150(2) and comment e (1971). But see Wainwright's
Vacations LLC v. Pan American Airways Corp., 130 F.Supp.2d 712, 721-22
(D.Md.2001) (Maryland law). That is where the principal injury from a defamation
will occur because it is where the victim works and lives and where (in the usual
case) most of the people — family, friends, business associates, etc. — are found
with whom he has personal or commercial transactions, which might be impaired
by defamation. Snead v. Forbes, Inc., supra, 275 N.E.2d at 748-49; Crane v. New
York Zoological Society, 894 F.2d 454, 457 (D.C.Cir.1990); Hanley v. Tribune
Publishing Co., supra, 527 F.2d at 70; Fitzpatrick v. Milky Way Productions, Inc., 537
F.Supp. 165, 171 (E.D.Pa. 1982). And it is where, according to Learned Hand, he
feels the sting of defamation. Hand said that "the gravamen of the wrong in
defamation is not so much the injury to reputation, measured by the opinions of
others, as the feelings, that is, the repulsion or the light esteem, which those
opinions engender." Burton v. Crowell Publishing Co., 82 F.2d 154, 156 (2d Cir.1936)
(L.Hand, J.).
The Restatement, while stating that in a defamation case "the state of most
significant relationship will usually be the state where the person was domiciled at
the time," adds — "if the matter complained of was published in that state."
Restatement, supra, § 150(2). In the law of defamation, the word "published" just
means that the defamatory statement was made to someone other than the
plaintiff. Frank v. Kaminsky, 109 Ill. 26 (1884); Emery v. Northeast Illinois Regional
Commuter R.R., 377 Ill.App.3d 1013, 317 Ill.Dec. 10, 880 N.E.2d 1002, 1009 (2007);
Barnes v. Yahoo!, Inc., 570 F.3d 1096, 1104 (9th Cir.2009). There is no actionable
defamation if the recipient of a letter that libels him, no copy of which has been
sent to anyone else, tears it up without communicating its contents to anyone
(that is, without "self-publication," as in Rice v. Nova Biomedical Corp., supra). For
then he cannot suffer an injury to his reputation, or the repulsion that he feels
because of the bad opinion of him that readers of the libel form.

No defamatory letter, so far as appears, was mailed to New Jersey; there was no
"publication" there. But absence of publication in the plaintiff's domicile should not
be an absolute bar to the application of the law of that domicile. What is true,
rather, is that the presumption of the applicability of that law may be rebutted by
showing that the plaintiff incurred no harm at all in his domicile state (an approach
intimated in Ramsey v. Fox News Network, LLC, 351 F.Supp.2d 1145, 1149
(D.Colo.2005), and Arochem Int'l, Inc. v. Buirkle, 767 F.Supp. 1243, 1246-47
(S.D.N.Y.1991)), and if no one in that state had seen or learned of the defamatory
statement, even second hand, this would be a powerful rebuttal to the
presumption that there was harm there. But notice that Hand's analysis would
suggest that the state of the plaintiff's domicile would still be the primary site of the
plaintiff's injury, implying that its law would govern, even if the defamation had
been communicated entirely to people in other states and no one in 343*343 the
plaintiff's state — besides the plaintiff — was even aware of it.

The plaintiff is eager to abandon his Florida claim because it would make his suit
one charging multistate defamation, and would thus point — although, as we
have just seen, not unwaveringly — to the application of New Jersey law. He
prefers a claim limited to Illinois and governed by Illinois law (assuming his Illinois
claim survived his inability or unwillingness to make a serious effort to obtain the
letter to the College of Surgeons), with its discovery rule. But abandoning the
Florida claim does not establish that Illinois law should trump New Jersey law. The
American College of Surgeons is located in Illinois but is no longer accused of
anything, and so Illinois has no interest in the case. Injury to the plaintiff's reputation,
if that should be presumed to occur every time a bariatric surgeon (or perhaps
anyone) learns about the complaint to the College, would occur wherever
members who heard about the complaint live and work, and that could be
anywhere in the United States. There is nothing to suggest that more bariatric
surgeons heard about it in Illinois than in New York or New Jersey or California or
any other major state. It's not as if bariatric surgeons are concentrated in Illinois. Of
the 1,712 members of the American Society for Metabolic and Bariatric Surgery
who are actually practicing surgery, only 54 are in Illinois. (The top states are
California, Texas, New York, and Florida, with 193, 180, 117, and 103 such
members.) The five members of the College of Surgeons' disciplinary committee,
which received the complaint about the plaintiff and referred it to the three
bariatric surgeons, would be among the surgeons most likely to have lost esteem
for the plaintiff on the basis of the defendant's letter (always assuming that there
was such a letter and that it was defamatory). But none of the five lives or practices
in Illinois, and none of them is a bariatric surgeon. There is no indication of where
the three bariatric surgeons who evaluated the complaint practice.
The plaintiff's argument that he is injured whenever someone reads or hears about
the complaint to the American College of Surgeons could, if thought a basis for
resolving choice of law issues, lead to ridiculous forum-shopping. If a bariatric
surgeon in Iceland read a newspaper article about the complaint against the
plaintiff, could the plaintiff ask the Illinois court to apply Icelandic law? The plaintiff
has no reputation in Iceland to be damaged by an Icelander who reads about
him in an Icelandic newspaper, so unless he were planning to move to that
country he wouldn't suffer any injury for which defamation law would provide a
remedy. Mattox v. News Syndicate Co., 176 F.2d 897, 900 (2d Cir.1949) (L.Hand, J.);
Arrowsmith v. United Press Int'l, 320 F.2d 219, 234 (2d Cir.1963) (Friendly, J.); cf.
Restatement, supra, § 145, comment e.

It is true that general damages can be awarded in defamation cases against

private persons, which is to say damages not based on proof of tangible injury.
Cook v. East Shore Newspapers, Inc., 327 Ill.App. 559, 64 N.E.2d 751, 767 (1945);
Dishnow v. School District of Rib Lake, 77 F.3d 194, 199 (7th Cir.1996) (Wisconsin
law); Israel Travel Advisory Service, Inc. v. Israel Identity Tours, Inc., 61 F.3d 1250,
1255 (7th Cir.1995) (Illinois law); Marcone v. Penthouse Int'l Magazine for Men, 754
F.2d 1072, 1080 (3d Cir.1985) (Pennsylvania law). That is related to Hand's point in
the Burton case; in Marcone the court remarked that the plaintiff "was entitled to
recover [general damages] for injury to his reputation as well as for personal
humiliation and mental anguish." 754 F.2d at 1080 (emphasis added). 344*344 The
same point is made in the Cook case, 64 N.E.2d at 767, an Illinois case. But only
New Jersey, where the plaintiff has his practice and is therefore likely to suffer
tangible harm from defamation that impugns his professional integrity and
competence, even if the defamation is not published there, has a substantial
interest in protecting him from defamation; and it is therefore New Jersey law that
should apply. So the suit is indeed time-barred, and should, as the defendant urges
in his cross-appeal, have been dismissed with prejudice. The judgment of the
district court dismissing the suit is therefore modified to make the dismissal with
prejudice.
CASE NO. 6

119 A.D.3d 1404 (2014)

990 N.Y.S.2d 394

2014 NY Slip Op 5255

LAURA LANKENAU, Appellant,

v.
PATRICK K. BOLES et al., Respondents. (Appeal No. 1.)

528 CA 13-01300.

Appellate Division of the Supreme Court of New York, Fourth Department.

Decided July 11, 2014.

Present — Centra, J.P., Peradotto, Carni, Lindley and Whalen, JJ.

Appeal from an order of the Supreme Court, Onondaga County (Deborah H.

Karalunas, J.), entered April 2, 2013. The order denied the motion of plaintiff to
dismiss certain affirmative defenses of defendants.

It is hereby ordered that the order so appealed from is unanimously affirmed

without costs.

Memorandum: Plaintiff, a New York resident, commenced this negligence action

in New York seeking damages for injuries she sustained in a motor vehicle accident
that occurred in Pennsylvania. At the time of the accident, plaintiff was a
backseat passenger in a vehicle operated by her mother, defendant 1405*1405
Deena Lankenau, and owned by her father, defendant Douglas Lankenau, both
of whom are also domiciled in New York. The accident occurred when the
Lankenau vehicle collided with a tractor-trailer operated by defendant Patrick K.
Boles, an employee of defendant M & S Leasing Co., LLC. Both of those
defendants are domiciled in New Jersey. In their answers, defendants asserted as
an affirmative defense that plaintiff failed to mitigate her damages because she
was not wearing an available seat belt. Plaintiff moved to dismiss the affirmative
defense, and we conclude that Supreme Court properly denied the motion.

Plaintiff contends that the court erred in denying her motion because New York's
seat belt affirmative defense regulates conduct, and thus does not apply in a tort
dispute arising from an accident that occurred in Pennsylvania. We reject that
contention. "Conduct-regulating rules have the prophylactic effect of governing
conduct to prevent injuries from occurring" (Padula v Lilarn Props. Corp., 84 NY2d
519, 522 [1994]; see generally Schultz v Boy Scouts of Am., 65 NY2d 189, 198 [1985]).
"`If conflicting conduct-regulating laws are at issue, the law of the jurisdiction
where the tort occurred will generally apply because that jurisdiction has the
greatest interest in regulating behavior within its borders'" (Padula, 84 NY2d at 522,
quoting Cooney v Osgood Mach., 81 NY2d 66, 72 [1993]). Conversely, where the
conflicting laws serve only to allocate losses between the parties, such as vicarious
liability or comparative negligence rules, the jurisdiction where the tort occurred
has only a minimal interest in applying its own law (see Schultz, 65 NY2d at 198;
Burnett v Columbus McKinnon Corp., 69 AD3d 58, 60-62 [2009]).

Here, the conflicting laws relate to whether there is a valid affirmative defense of
seat belt nonuse. Pennsylvania law prohibits the presentation of evidence of seat
belt nonuse (see 75 Pa Cons Stat Ann § 4581 [e]; Gaudio v Ford Motor Co., 976
A2d 524, 536 [Pa Super Ct 2009], appeal denied 605 Pa 686, 989 A2d 917 [2010]),
while New York law allows the trier of fact to consider a plaintiff's failure to wear
an available seat belt only in assessing damages and the plaintiff's mitigation
thereof (see Spier v Barker, 35 NY2d 444, 449-450 [1974]; Ruiz v Rochester Tel. Co.,
195 AD2d 981, 981 [1993]). We therefore conclude that the court properly
determined that the seat belt defense "allocate[s] losses after the tort occurs"
(Cooney, 81 NY2d at 72).

We further conclude that Pennsylvania has at best a minimal interest in applying

its own law in this case (see Schultz, 65 NY2d at 198; Burnett, 69 AD3d at 60-62). The
plaintiff and her 1406*1406 defendant parents are residents of New York, where
the seat belt defense is available. The other defendants are domiciled in New
Jersey, which also permits the seat belt defense (see Waterson v General Motors
Corp., 111 NJ 238, 269-270, 544 A2d 357, 373-374 [1988]). None of the parties is
domiciled in Pennsylvania and, the situs of the tort notwithstanding, we perceive
no basis for applying Pennsylvania law to deny a potential affirmative defense
(see generally Neumeier v Kuehner, 31 NY2d 121, 128 [1972]).

We recognize that New York has adopted a statutory seat belt defense
subsequent to Spier, which is largely conduct-regulating (see Vehicle and Traffic
Law § 1229-c [8]). Nevertheless, section 1229-c (8) did not supersede Spier and,
therefore, the common-law seat belt defense remains valid, as employed here
(see Hamilton v Purser, 162 AD2d 91, 93 [1990]; 1A NY PJI3d 2:87 at 495 [2014]; PJI
2:87.1, 2:87.2). "The fact that [Pennsylvania] law did not require plaintiff to wear
[her] seat belt at the time of the accident is of no moment" (Gardner v Honda
Motor Co., 145 AD2d 41, 47 [1988], lv dismissed 74 NY2d 715 [1989]; see Ruiz, 195
AD2d at 981).

We have reviewed plaintiff's remaining contentions and conclude that they lack
merit.
CASE NO. 7

739 F.3d 405 (2014)

Christine WINTER, Individually and as Executor of the Estate of Ruth Baldwin,

Deceased, Plaintiff-Appellee,
v.
NOVARTIS PHARMACEUTICALS CORPORATION, Defendant-Appellant.
Christine Winter, Individually and as Executor of the Estate of Ruth Baldwin,
Deceased, Plaintiff-Appellee
v.
Novartis Pharmaceuticals Corporation, Defendant-Appellant.

Nos. 12-3121, 12-3409.

United States Court of Appeals, Eighth Circuit.

Submitted: September 26, 2013.

Filed: January 9, 2014.

407*407 John J. Vecchione, John J. Vecchione Law PLLC, argued, Fairfax, VA,
Roger G. Brown, Jefferson City, MO, John J. Beins, Beins, Goldberg & Hennessey,
LLP, Chevy Chase, MD, for Plaintiff-Appellee.

Linda Susan Svitak, Minneapolis, MN, Joseph Michael Price, Minneapolis, MN,
Deirdre C. Gallagher, Saint Louis, MO, Katharine Ruth Latimer, Washington, DC and
Gregory S. Chernack, argued, Washington, DC, for Defendant-Appellant.

Before LOKEN, COLLOTON, and BENTON, Circuit Judges.

BENTON, Circuit Judge.

Ruth Baldwin developed osteonecrosis of the jaw (ONJ) after two of her teeth
were extracted. She sued, alleging Novartis Pharmaceuticals Corporation
negligently failed to provide adequate warnings for two drugs she took, Aredia
and Zometa. After a jury trial, Baldwin, by her executor, received $225,000 in
compensatory damages, plus certain costs. Novartis appeals, 408*408 arguing the
district court: (1) improperly found that inadequate warnings proximately caused
Baldwin's injuries; (2) erred in applying Missouri law to the punitive damages claim;
(3) abused its discretion in admitting hearsay evidence; and (4) abused its
discretion in awarding the costs for depositions conducted as part of multi-district
litigation. Having jurisdiction under 28 U.S.C. § 1291, this court affirms in part,
vacates in part, and remands.

I.

Novartis seeks judgment as a matter of law, arguing Baldwin did not establish that
her injuries were proximately caused by inadequate warnings. This court reviews
de novo a district court's grant or denial of a motion for judgment as a matter of
law. Liberty Mut. Fire Ins. Co. v. Scott, 486 F.3d 418, 422 (8th Cir. 2007). This court
reviews the evidence most favorably to the non-moving party, drawing all
reasonable inferences and resolving all factual disputes in its favor. Id.

Under Missouri law, "it is incumbent upon the manufacturer to bring the warning
home to the doctor." Krug v. Sterling Drug, Inc., 416 S.W.2d 143, 146 (Mo.1967)
(internal quotations omitted). To establish proximate causation in a failure-to-warn
claim, a plaintiff "must show that a warning would have altered the behavior of
the individuals involved in the accident." Moore v. Ford Motor Co., 332 S.W.3d 749,
761-63 (Mo. banc 2011) (internal quotations omitted). Missouri presumes that a
warning, if given, will be heeded. Id. Absolute certainty is not required to prove a
causal connection between a defendant's acts or omissions and the plaintiff's
injuries. Howard v. Missouri Bone & Joint Ctr., Inc., 615 F.3d 991, 996 (8th Cir.2010).
A submissible case requires substantial evidence that the injury is a natural and
probable consequence of the defendant's behavior. Id. Absent compelling
evidence that causation is wanting, causation is for the jury. Id.

When Dr. James N. Hueser first prescribed Aredia for Baldwin in July 2003 (and
Zometa in September 2003), the risk of ONJ was not mentioned in the package
inserts. The company modified the inserts in September 2003, when ONJ was
mentioned only in the "Post-Marketing Experiences" section, not in the "Warnings"
section.

Novartis focuses on Dr. Hueser's testimony that he did not read the inserts before
prescribing the drugs (and in fact, claimed to never read inserts before prescribing
any drugs). Novartis believes this severs any link between its duty to warn and
Baldwin's injuries. Novartis maintains, "The majority of courts that have examined
the issue have held that when a physician fails to read or rely on a drug
manufacturer's warnings, such failure constitutes the `intervening, independent,
and sole proximate cause' of the plaintiff's injuries, even where the drug
manufacturer's warnings were inadequate." Thom v. Bristol-Myers Squibb Co., 353
F.3d 848, 856 (10th Cir.2003) (emphasis in original). See also Johnson v. Medtronic,
Inc., 365 S.W.3d 226, 233 (Mo.App.2012) (finding no proximate causation where a
doctor failed to read instructions and warnings printed on a defibrillator before
using it); Nelson v. Ford Motor Co., 150 F.3d 905, 907 (8th Cir.1998) (stating "it was
not shown that modified or additional warnings would likely have prevented the
accident" after plaintiff testified "he had not consulted the existing warnings
because he thought he knew how to use the [car] jack") (applying Missouri law).

Novartis's focus ignores the other ways Dr. Hueser would receive warnings. See In
re Levaquin Prods. Liab. Litig., 700 409*409 F.3d 1161, 1168-69 (8th Cir.2012) (stating
that "failure to read a warning does not necessarily bar recovery" and discussing
the importance of sales representatives and "Dear Doctor" letters in providing
warnings) (applying Minnesota law). In this case, there is evidentiary support for
other ways that warnings could have reached Dr. Hueser. See Pustejovsky v. Pliva,
Inc., 623 F.3d 271, 277 (5th Cir. 2010) (affirming summary judgment because there
was no "evidentiary support" for "other ways an adequate warning might have
reached" a physician). While Dr. Hueser did not read drug inserts, there was
testimony that he obtained pharmaceutical warnings through other means —
continuing medical education, review of medical literature, discussion with other
physicians, and statements by Novartis's sales representative.

Novartis knew of the risk of ONJ as early as 2002, but instructed its sales force not
to mention the disease when making calls to physicians. The sales representative
assigned to Dr. Hueser testified that he did not discuss the disease with Dr. Hueser
until late September 2004. By then, Baldwin had been taking the drugs for 13
months, and ONJ had been triggered by the extraction of two of her teeth. Also,
the "Dear Doctor" letter warning of ONJ was not sent to Dr. Hueser until September
2004, after ONJ had been triggered. By that time, Baldwin's expert testified that
ONJ had become a "growing epidemic." On these facts, a reasonable jury could
find that Novartis prevented warnings about ONJ from reaching Dr. Hueser.

Novartis finally argues that, even if Dr. Hueser had received a warning, he would
still have prescribed Aredia and Zometa. According to Novartis, Baldwin should
have submitted proof that Dr. Hueser would not have prescribed the drugs if he
had received the warnings the company eventually provided. See Moore, 332
S.W.3d at 761 (requiring a plaintiff to "show that a warning would have altered the
behavior of the individuals involved in the accident"). Novartis claims the lack of
such testimony severs proximate causation.

Novartis's argument fails because a change in prescribing patterns after receiving

a warning is enough to create a submissible case. Hanrahan v. Wyeth, Inc., No.
4:04CV01255ERW, 2012 WL 2395881, at *10 (E.D.Mo. June 25, 2012). See also In re
Levaquin Prods. Liab. Litig., 700 F.3d at 1168-70 (applying Minnesota law); In re
Prempro Prods. Liab. Litig., 586 F.3d 547, 569-70 (8th Cir.2009) (applying Arkansas
law). Baldwin introduced evidence that Dr. Hueser stopped prescribing the drugs
once he learned of the risk of ONJ. A reasonable jury could conclude that Dr.
Hueser would not have prescribed the drug for Baldwin if he had been warned.

On these facts, a jury could reasonably find that Baldwin's injury was the "natural
and probable consequence" of Novartis's behavior. See Howard, 615 F.3d at 996
("A submissible case is made if substantial evidence is presented that shows the
injury is a natural and probable consequence of a defendant's negligence.")
(internal quotations omitted).

II.

Novartis alternatively seeks a new trial, arguing the district court erred in applying
Missouri law to Baldwin's punitive damages claim. Though the jury did not award
punitives, Novartis asserts that the punitive evidence impermissibly tainted the
jury's consideration of liability and compensatory damages. This court reviews de
novo the district court's choice-of-law determination. Dorman v. Emerson 410*410
Elec. Co., 23 F.3d 1354, 1358 (8th Cir. 1994).

District courts sitting in diversity apply the choice-of-law rules of the state where
they sit. Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1320 (8th Cir.1991), citing Klaxon
Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941).
Under Missouri's choice-of-law rules, courts apply the substantive law of the state
with the "most significant relationship" to the occurrence and the parties. Fuqua
Homes, Inc. v. Beattie, 388 F.3d 618, 621 (8th Cir.2004), citing Thompson v.
Crawford, 833 S.W.2d 868, 870 (Mo. banc 1992). Missouri, adopting the
Restatement (Second) of Conflict of Laws, requires consideration of four factors in
determining the applicable law for tort actions: "the place where the injury
occurred," "the place where the conduct causing the injury occurred," "the
domicil, residence, nationality, place of incorporation and place of business of the
parties," and "the place where the relationship, if any, between the parties is
centered." Fuqua Homes, 388 F.3d at 621, citing Restatement (Second) of Conflict
of Laws § 145 (1971). More importantly, for personal injury actions, Missouri applies
the law of the place of injury, unless some other state has a more significant
relationship. Thompson, 833 S.W.2d at 870. Missouri's formulation "essentially
establishes a presumption that the state with the most significant relationship is the
state where the injury occurred." Dorman v. Emerson Elec. Co., 23 F.3d 1354, 1358
(8th Cir.1994). See also Restatement (Second) of Conflict of Laws § 146 (1971).

Novartis argues that New Jersey has the most significant relationship to the punitive
damages claim because that state is the site of any labeling and marketing
misconduct. Baldwin's punitive damages claim would be barred by the New
Jersey Products Liability Act. See N.J. Stat. Ann. § 2A:58C-5c (2013) ("Punitive
damages shall not be awarded if a drug ... which caused the claimant's harm was
subject to premarket approval or licensure by the federal Food and Drug
Administration ... and was approved or licensed."). Novartis's domestic operations
are headquartered in New Jersey, where it interacts with the Food and Drug
Administration (FDA). Moreover, Novartis contends that Missouri's interest is only to
compensate Baldwin, not to impose punitive damages, and these claims are
severable under the Second Restatement's rule of depecage. See Restatement
(Second) of Conflict of Laws § 146 cmt.d (1971) ("The courts have long recognized
that they are not bound to decide all issues under the local law of a single state.").

The district court correctly held that Missouri has the "most significant relationship"
to the punitive damages claim. Missouri is the place where the injury occurred,
making it presumptively the state with the most significant relationship. Dorman,
23 F.3d at 1358; Thompson, 833 S.W.2d at 870. Missouri is where Novartis's sales
representatives failed to warn Baldwin's doctor, making it also, at least in part, the
state of the conduct causing the injury. New Jersey may have an interest in its
corporations being governed by its punitive damages provisions, but as the district
court held, Missouri has a strong interest in applying its punitive damages laws to
deter conduct by corporations doing business in Missouri that harms Missouri
residents. New Jersey's interest, balanced against Missouri's, does not overcome
Missouri's presumption that the law of the place of injury should apply. See In re
Nuvaring Prods. Liab. Litig., Nos. 4:08-MD-1964, 4:08-CV-00558, 2013 WL 3716390, at
*6 (E.D.Mo. July 12, 2013) 411*411 (holding in a pharmaceutical action that Missouri
has a more significant relationship to a punitive damages claim than New Jersey
under Missouri's choice-of-law approach). The district court did not err in applying
Missouri punitive damages law.

III.

Novartis seeks a new trial for another reason, that the district court admitted
hearsay evidence that tainted the jury. This court "review[s] de novo the district
court's interpretation and application of the rules of evidence, and review[s] for
abuse of discretion the factual findings supporting its evidentiary rulings." Weems
v. Tyson Foods, Inc., 665 F.3d 958, 964 (8th Cir.2011). A new trial will be awarded
only if an evidentiary ruling constituted a clear and prejudicial abuse of discretion
affecting a substantial right of the objecting party. Id.

Through MedWatch — the FDA's "adverse event reporting" program — medical

providers tell the FDA and the drug manufacturer about pharmaceutical
problems. The district court admitted several ONJ-related MedWatch forms from
2002. Each had a checkmark by (unidentified) healthcare providers that copies
of the forms were sent to the manufacturer, Novartis. Baldwin used these forms to
prove that Novartis received reports of ONJ as early as September 2002. Novartis
responded that the checkmarks did not indicate receipt, offering evidence that
it did not receive the forms until 2005.

Novartis correctly reasons that the MedWatch checkmarks are inadmissible

hearsay, out-of-court assertions offered for their truth — that the forms were sent
to and received by Novartis. The checkmarks are not within any hearsay
exception.

Nonetheless, Novartis has not demonstrated the prejudice required for a new trial.
Admission of the checkmarks is harmless error because they are cumulative of
other trial testimony that Novartis knew of the risk of ONJ in December 2002,
months before Baldwin's prescription. Smith v. Firestone Tire & Rubber Co., 755 F.2d
129, 132 (8th Cir.1985) ("Improper admission of evidence which is cumulative of
matters shown by admissible evidence is harmless error."). Even without the
MedWatch forms, a reasonable jury could conclude that Novartis's warnings were
insufficient and untimely for Baldwin.

IV.
Novartis contends that the district court abused its discretion in awarding litigation-
wide costs to an individual plaintiff. This court reviews de novo the legal issues
about the award of costs and reviews for abuse of discretion the actual award of
costs. Craftsmen Limousine, Inc. v. Ford Motor Co., 579 F.3d 894, 896 (8th Cir.2009).

This case is one of over 650 cases in multidistrict litigation for consolidated pre-trial
proceedings and discovery. Baldwin, the prevailing party, sought transcription
costs for 18 depositions used throughout the consolidated MDL proceedings.
See Fed.R.Civ.P. 54(d). The district court, noting that this is the first case where costs
were requested, awarded the full cost of $88,930.25. Novartis claims the district
court should have allocated the costs pro rata among the various cases.

Where litigation costs are incurred in connection with more than one proceeding,
the district court should allocate the costs. See Marmo v. Tyson Fresh Meats, Inc.,
457 F.3d 748, 764 (8th Cir.2006) ("[A] division of ... costs among 412*412 the thirteen
cases was equitable.... [A]pportionment reduced the risk of duplicative cost
recovery."). See also Ortho-McNeil Pharm., Inc. v. Mylan Labs. Inc., 569 F.3d 1353,
1358 (Fed.Cir.2009) (applying Fourth Circuit law) (vacating a district court's award
of litigation-wide expenses and remanding for apportionment among all cases).
The district court abused its discretion in awarding the plaintiff full costs for
litigation-wide depositions.

******

The judgment in appeal 12-3121 is affirmed. The judgment in appeal 12-3409 is

vacated. The case is remanded.
CASE NO. 8

331 P.3d 29 (2014)

180 Wash.2d 954

FUTURESELECT PORTFOLIO MANAGEMENT, INC.; FutureSelect Prime Advisor II LLC;

The Merriwell Fund, LP; and Telesis IIW, LLC, Respondents,
v.
TREMONT GROUP HOLDINGS, INC.; Tremont Partners, Inc.; Oppenheimer
Acquisition Corporation; Massachusetts Mutual Life Insurance Co.; and Ernst &
Young LLP, Petitioners, and
Goldstein Golub Kessler LLP and KPMG LLP, Defendants.

No. 89303-9.

Supreme Court of Washington, En Banc.

July 17, 2014.

32*32 Timothy J. Filer, Foster Pepper PLLC, David F. Taylor, Cori Gordon Moore,
Perkins Coie LLP, Christopher Holm Howard, Averil Budge Rothrock, Claire Louise
Rootjes, Schwabe Williamson & Wyatt PC, Stephen Michael Rummage, Roger
Ashley Leishman, Davis Wright Tremaine LLP, Seattle, WA, Seth M. Schwartz, Jason
C. Vigna, Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, David A. Kotler,
Dechert LLP, Princeton, NJ, Robert B. Hubbell, Morrison Foerster, LLP, Los Angeles,
CA, for Petitioner.

Jeffrey M. Thomas, Jeffrey Iver Tilden, Gordon Tilden Thomas & Cordell LLP, Seattle,
WA, Emily Alexander, Steven W. Thomas, Thomas Alexander Forrester LLP, Venice,
CA, for Respondents.

GONZÁLEZ, J.

¶ 1 Between 1997 and 2008, FutureSelect, a Redmond based financial company,

invested nearly $200 million in Tremont's Rye Funds, which pooled and fed money
into Bernie Madoff's fraudulent securities investment scheme. These investments
were lost when Madoff's fraud unraveled. FutureSelect sued Tremont,
Oppenheimer Acquisition Corp. and MassMutual (Tremont's parent companies),
and Ernst & Young and Tremont's other auditors for their failure to conduct due
diligence on Madoff's operations. FutureSelect alleged violations of the
Washington state securities act (WSSA), chapter 21.20 RCW; negligence; and
negligent misrepresentation.

¶ 2 The trial court dismissed on the pleadings, finding Washington's security law did
not apply and that Washington courts did not have jurisdiction over Oppenheimer.
The Court of Appeals reversed. Defendants seek to reinstate the trial court's
findings. Oppenheimer argues that it lacks the requisite minimum contacts with
Washington for personal jurisdiction. The defendants collectively argue that
dismissing for failure to state a claim is appropriate because New York law — which
does not provide for a private cause of action under its state securities act, rather
than Washington law, which does — applies. Ernst and Young also contends that
it is not a "seller" under the WSSA. We affirm the Court of Appeals.

FACTS

¶ 3 The lead plaintiff, FutureSelect Portfolio Management Inc., is headquartered in

Washington and manages a number of investment funds. The first named
defendant, Tremont Partners Inc., is headquartered in New York and serves as the
general partner to the Rye Funds,[1] whose status as feeder funds to Bernard L.
Madoff Investment Securities LLC (Madoff) is at the heart of this dispute.

¶ 4 The relationship between FutureSelect and Tremont began when a Tremont

representative visited FutureSelect's Redmond offices in 1997 to solicit
FutureSelect's investment in the Rye Funds. This initiated a series of discussions
between FutureSelect and Tremont regarding the Rye Funds. Tremont claimed
that it was offering Future-Select a rare, and potentially fleeting, opportunity to
invest with Madoff. Tremont also 33*33 made assurances about its oversight and
understanding of Madoff's operation. Relying on these assurances and the audit
opinions of the accounting firm hired by Tremont, FutureSelect decided to invest
in the Rye Funds in 1998. FutureSelect and Tremont had monthly ongoing
communications about Madoff and the performance of the Rye Funds. Tremont
claimed that its ongoing oversight and testing of Madoff proved satisfactory.
Tremont also provided FutureSelect with purported facts proving the health of the
Rye Funds.

¶ 5 Between 1998 and late 2008, when Madoff's Ponzi scheme finally came to light,
FutureSelect continued to invest more funds in the Rye Funds as a result of the
representations it regularly received from Tremont and its auditors. In all,
FutureSelect invested $195 million with Tremont. But, Madoff never invested any of
the capital he received through the Rye Funds or any other feeder. FutureSelect
lost its entire investment. Believing that Tremont had significantly misled it,
FutureSelect sued Tremont; MassMutual and Oppenheimer (Tremont's parent
companies); and Ernst & Young, KPMG,[2] and Goldstein Golub Kessler (Tremont's
auditors).[3]

¶ 6 In its complaint, FutureSelect alleged that the defendants are liable for (1)
violating RCW 21.20.010[4] and RCW 21.20.430, (2) negligence,[5] and (3) negligent
misrepresentation.[6] According to the complaint, Tremont's liability is based on the
direct misrepresentations made by Tremont to FutureSelect that FutureSelect
relied on in making, maintaining, and adding to its investment in the Rye Funds. It
alleged that Tremont acted as MassMutual and Oppenheimer's agent or
apparent agent.[7] It alleged Ernst & Young made direct misrepresentations[8] that
FutureSelect relied on in maintaining and adding to its investment in the Rye Funds.
The defendants filed separate motions to dismiss on the pleadings. Without stating
the specific grounds for dismissal, the trial court granted these motions in full after
conducting a hearing and considering a number of pleadings, declarations, and
briefs. Future-Select obtained a CR 54(b) order granting final judgment on the
dismissals, allowing this appeal.

¶ 7 The Court of Appeals reversed in part and affirmed in part, finding that (1)
Washington has the most significant relationship 34*34 to the state securities act
claims, negligent misrepresentation claims, and agency claims; (2) the complaint
sufficiently alleged personal jurisdiction over Oppenheimer; and (3) the trial court
properly dismissed the apparent agency claim against Oppenheimer and
negligence claim against Tremont. FutureSelect Portfolio Mgmt., Inc. v. Tremont
Grp. Holdings, Inc., 175 Wash.App. 840, 890-95, 309 P.3d 555 (2013). We granted
review and now affirm the Court of Appeals.

ANALYSIS

I. Standard of review

¶ 8 We review CR 12(b)(6) dismissals de novo. Kinney v. Cook, 159 Wash.2d 837,

842, 154 P.3d 206 (2007) (citing Tenore v. AT & T Wireless Servs., 136 Wash.2d 322,
329-30, 962 P.2d 104 (1998)). "Dismissal is warranted only if the court concludes,
beyond a reasonable doubt, the plaintiff cannot prove `any set of facts which
would justify recovery.'" Id. (quoting Tenore, 136 Wash.2d at 330, 962 P.2d 104). All
facts alleged in the complaint are taken as true, and we may consider
hypothetical facts supporting the plaintiff's claim. Id. "Therefore, a complaint
survives a CR 12(b)(6) motion if any set of facts could exist that would justify
recovery." Hoffer v. State, 110 Wash.2d 415, 420, 755 P.2d 781 (1988) (citing Lawson
v. State, 107 Wash.2d 444, 448, 730 P.2d 1308 (1986); Bowman v. John Doe Two,
104 Wash.2d 181, 183, 704 P.2d 140 (1985)). But, "[i]f a plaintiff's claim remains
legally insufficient even under his or her proffered hypothetical facts, dismissal
pursuant to CR 12(b)(6) is appropriate." Gorman v. Garlock, Inc., 155 Wash.2d 198,
215, 118 P.3d 311 (2005). Similarly, we review a CR 12(b)(2) dismissal de novo. In re
Estate of Kordon, 157 Wash.2d 206, 209, 137 P.3d 16 (2006) (citing State v. Squally,
132 Wash.2d 333, 340, 937 P.2d 1069 (1997)).

II. Personal jurisdiction

¶ 9 Oppenheimer argues that it lacks the requisite minimum contacts with

Washington and our courts' exercise of personal jurisdiction would offend due
process. See Suppl. Br. of Oppenheimer at 7. It is mistaken. At this stage of litigation,
the allegations of the complaint establish sufficient minimum contacts to survive a
CR 12(b)(2) motion. However, Oppenheimer may renew its jurisdictional challenge
after appropriate discovery has been conducted.

A. Specific jurisdiction

¶ 10 For the exercise of specific jurisdiction under Washington's long arm statute to
be proper, the defendant's conduct must fall under RCW 4.28.185 and the
exercise of jurisdiction must not violate constitutional principles. Grange Ins. Ass'n
v. State, 110 Wash.2d 752, 756, 757 P.2d 933 (1988) (citing Werner v. Werner, 84
Wash.2d 360, 364, 526 P.2d 370 (1974)). "In order to subject nonresident defendants
and foreign corporations to the in personam jurisdiction of this state under RCW
4.28.185(1)(a)," Washington's long arm statute, we must find the following factors:

"(1) The nonresident defendant or foreign corporation must purposefully do some

act or consummate some transaction in the forum state; (2) the cause of action
must arise from, or be connected with, such act or transaction; and (3) the
assumption of jurisdiction by the forum state must not offend traditional notions of
fair play and substantial justice, consideration being given to the quality, nature,
and extent of the activity in the forum state, the relative convenience of the
parties, the benefits and protection of the laws of the forum state afforded the
respective parties, and the basic equities of the situation."

Shute v. Carnival Cruise Lines, 113 Wash.2d 763, 767, 783 P.2d 78 (1989) (quoting
Deutsch v. W. Coast Mach. Co., 80 Wash.2d 707, 711, 497 P.2d 1311 (1972)). This
inquiry encompasses both the statutory and due process concerns of exercising
personal jurisdiction.

¶ 11 FutureSelect alleges jurisdiction is proper under RCW 4.28.185(1)(a), which

extends jurisdiction arising out of "[t]he transaction of any business within this state,"
on the theory that Oppenheimer transacted business in Washington through
Tremont, its agent. RCW 4.28.185(1) explicitly permits Washington courts to exercise
jurisdiction over a principal based on the actions of its 35*35 agent.[9] We apply
the Shute factors to the allegations contained in FutureSelect's complaint, which
we accept as true given the procedural posture of this case.

B. Shute factors
¶ 12 First, we find the complaint sufficiently establishes that Tremont acted as
Oppenheimer's agent for purposes of the CR 12 motion. The complaint asserts that
Oppenheimer (1) owned, directed, influenced management, and provided
support services[10] to Tremont; (2) directed Tremont to change its auditor from Ernst
& Young to KPMG; (3) placed its own president and director, who was also a vice
president at MassMutual, on Tremont's board of directors;[11] and (4) actively
managed and used its image to help Tremont with marketing and soliciting
investment activity. For the purposes of the motion to dismiss, we find agency.

¶ 13 Accepting the agency relationship, we find the complaint also adequately

alleges that Tremont's misrepresentations, which we presume without deciding
were made on Oppenheimer's behalf and received in Washington, satisfy the first
two Shute factors. Tremont directed numerous representations at FutureSelect. As
a result of these representations, FutureSelect maintained and contributed millions
of dollars to its initial investment in the Rye Funds. Much of this occurred after
Oppenheimer's acquisition of Tremont. Accordingly, the allegations in the
complaint sufficiently establish that Oppenheimer transacted business with
FutureSelect in Washington through its agent.

¶ 14 We turn now to whether the assumption of jurisdiction offends traditional

notions of fair play and substantial justice. Weighing (1) the quality, nature, and
extent of Oppenheimer's activity in Washington, (2) the convenience of the
parties, (3) the benefits and protection of Washington law, and (4) the basic
equities of the situation, we conclude it does not.

¶ 15 First, the quality, nature, and extent of Tremont's activity in Washington were
significant. The business relationship with FutureSelect extended from 2001 until
2008; involved the solicitation, offer, and sale of securities; and resulted in ongoing
transfers of extremely large sums of money from Washington to Oppenheimer via
Tremont.

¶ 16 Second, nothing in the record suggests that Washington courts exercising

jurisdiction would pose an undue burden on Oppenheimer.

¶ 17 Finally, the benefits and protections of Washington law as well as the equities
of the situation cut squarely in favor of our courts exercising jurisdiction. Our law
explicitly protects investors from fraud and misrepresentations made by sellers of
securities. See RCW 21.20.010. Not allowing Washington courts to enforce our
statutes and regulations against nonresident companies that solicit, offer, and sell
securities in this state would undermine the efficacy of this regulatory regime and
create a perverse incentive for principals to insulate themselves from liability by
operating exclusively through agents.

¶ 18 Given these considerations, we reverse the trial court and remand for further
proceedings. Though we leave open Oppenheimer's ability to renew its motion,
we find the trial court dismissed prematurely. Some limited discovery and a
resolution of disputed jurisdictional facts are warranted. The trial court should
determine whether an agency relationship existed between Oppenheimer and
Tremont at any point during the relevant time period and, if so, whether jurisdiction
is proper under the Shute factors.

36*36 III. Choice of law

¶ 19 Next, we turn to whether Washington or New York law applies to this case.
Defendants argue that New York law applies because New York has the more
significant relationship to the dispute and that dismissal on the pleadings was
warranted because there is no private cause of action under New York's state
security law. On this record, we disagree.[12] The allegations in the complaint are
sufficient to survive the defendants' CR 12(b)(6) motion.

A. Actual conflict

¶ 20 As a preliminary matter, when choice of law is disputed, "there must be an

actual conflict between the laws or interests of Washington and the laws or
interests of another state before Washington courts will engage in a conflict of
laws analysis." Seizer v. Sessions, 132 Wash.2d 642, 648, 940 P.2d 261 (1997) (citing
Burnside v. Simpson Paper Co., 123 Wash.2d 93, 100-01, 864 P.2d 937 (1994)). Here,
an actual conflict exists between the WSSA, ch. 21.20 RCW, and New York's Martin
Act, N.Y. Gen. Bus. Law art. 23-A, §§ 352-359. Specifically, the WSSA provides for a
private right of action, see RCW 21.20.430, while New York's Martin Act does not,
see N.Y. Gen. Bus. Law art. 23-A, §§ 352-359.

B. Significant relationship test.

¶ 21 To settle choice of law questions, Washington uses the most significant

relationship test as articulated by Restatement (Second) of Conflict of Laws § 145
(1971).[13] Johnson v. Spider Staging Corp., 87 Wash.2d 577, 580-81, 555 P.2d 997
(1976). FutureSelect argues we should also formally adopt § 148, which refines the
§ 145 factors for the fraud and misrepresentation context. See Suppl. Br. of Resp'ts
at 6. Defendants, on the other hand, urge us to take an orthodox interpretation of
Haberman v. Washington Public Power Supply System, 109 Wash.2d 107, 135-36,
744 P.2d 1032 (1987),[14] and apply § 145 exclusively. See Suppl. Br. of Tremont et
al. at 5; Ernst & Young LLP's Suppl. Br. at 2-3. We agree with FutureSelect.

¶ 22 Haberman and § 145 provide a basic framework for choice of law

questions.[15] But we have not shied from applying a different, more specific
section of the Restatement when warranted by a particular tort. E.g., Williams v.
Leone & Keeble, Inc., 171 Wash.2d 726, 735 n. 6, 254 P.3d 818 (2011) ("On remand
the Court of Appeals will have to review the trial court's choice of law ruling, giving
application to the Restatement (Second) of Conflict of Laws § 146 [Personal
Injuries]"). Given the nature of misrepresentation, we find the factors in § 148 to be
more helpful than those in § 145.

¶ 23 Previously, we developed a two-step analysis for the significant relationship

inquiry under § 145. Southwell v. Widing Transp., Inc., 101 Wash.2d 200, 204, 676
P.2d 37*37 477 (1984). Our adoption of § 148 does not alter this approach.
Accordingly, first, courts will continue to evaluate the contacts with each
interested jurisdiction. Id. The "approach is not merely to count contacts, but rather
to consider which contacts are most significant and to determine where these
contacts are found." Johnson, 87 Wash.2d at 581, 555 P.2d 997 (citing Baffin Land
Corp. v. Monticello Motor Inn, Inc., 70 Wash.2d 893, 900, 425 P.2d 623 (1967)).
Second, courts will continue to evaluate the interests and public policies of
potentially concerned jurisdictions. Southwell, 101 Wash.2d at 204, 676 P.2d 477.
"The extent of the interest of each potentially interested state should be
determined on the basis, among other things, of the purpose sought to be
achieved by their relevant local law rules and the particular issue involved." Id.
(citing Johnson, 87 Wash.2d at 582, 555 P.2d 997).

1. Evaluation of contacts

¶ 24 Under § 148, to determine the jurisdiction with the most significant relationship
to the dispute, we must consider (1) the place where plaintiff acted in reliance on
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 that he has been induced to enter by
the false representations of the defendant. RESTATEMENT § 148.

¶ 25 Much like in Southwell, this case has "not presented this court with a record
that is sufficiently developed to enable us to undertake the factual analysis
necessary for proper resolution of the conflicts issue involved." 101 Wash.2d at 205,
676 P.2d 477. But for purposes of reviewing dismissal under a CR 12(b)(6) motion,
we look to the complaint and conclude that FutureSelect could show that (1)
Washington was the place where FutureSelect acted in reliance on the
representations, (2) Washington was the place where FutureSelect received the
representations, (3) Washington and New York were the places where the
defendants made the representations, (4) Washington and New York were the
primary places of business of the parties, and (5) it cannot be determined either
way where FutureSelect was to render performance under the contract that it had
been induced to enter by the false representations of the defendant.[16]

¶ 26 To complete this analysis, we must "consider which contacts are most

significant" in addition to finding out where they are found. Johnson, 87 Wash.2d
at 581, 555 P.2d 997 (citing Baffin Land Corp., 70 Wash.2d at 900, 425 P.2d 623).
The record is insufficient to permit us to engage in this inquiry, and so we leave it
open.

¶ 27 In short, we find the contacts pleaded by FutureSelect to be sufficient to

survive the defendants' CR 12(b)(6) motions on the choice of law issue.[17]

2. Interests and public policies of jurisdictions

¶ 28 Next, we turn to the second step of our analysis, which asks us to evaluate the
interests and public policies of the jurisdictions. Southwell, 101 Wash.2d at 204, 676
P.2d 477. Here, Washington has a more compelling interest in protecting its
investors from fraud and misrepresentation than New 38*38 York does in regulating
sellers of securities that may have perpetrated fraud or misrepresentation in
another state.

¶ 29 At its core, this case does not involve a generalized regulation of securities
sales, but the weighing of specific representations and assurances that allegedly
targeted Washington investors. Washington has a strong interest in giving
Washington investors the benefit of Washington law and in requiring the sellers of
securities to comply with it.

¶ 30 We recognize the legislature's directive to interpret the WSSA to promote

uniformity with federal securities law and those of others states. RCW 21.20.900. But
"[o]ur examination does not end there." Kinney, 159 Wash.2d at 844, 154 P.3d 206.
"The Washington Act is unique; special emphasis is placed on protecting investors
from fraudulent schemes." Id. at 844, 154 P.3d 206 (citing Hoffer v. State, 113
Wash.2d 148, 152, 776 P.2d 963 (1989) (Hoffer II)). Indeed, we have stated that "the
`primary purpose' of the Act is `to protect investors from speculative or fraudulent
schemes of promoters.'" Go2Net, Inc. v. FreeYellow.com, Inc., 158 Wash.2d 247,
253, 143 P.3d 590 (2006) (emphasis omitted) (quoting Cellular Eng'g, Ltd. v. O'Neill,
118 Wash.2d 16, 23, 820 P.2d 941 (1991)). "The Act `is remedial in nature and has
as its purpose broad protection of the public.'" Id. (emphasis omitted) (quoting
McClellan v. Sundholm, 89 Wash.2d 527, 533, 574 P.2d 371 (1978)). Applying New
York rather than Washington law, which would deprive FutureSelect of a private
cause of action, would necessarily frustrate this purpose. We decline to do so
without clear evidence that New York has the more significant relationship to the
dispute, which does not necessarily follow from this record.

IV. Definition of "seller" under WSSA

¶ 31 The final question at issue involves whether Ernst & Young can be considered
a seller under the WSSA. Ernst & Young argues that because FutureSelect refers
only to its audits and audit reports, which are purely professional services, and
nothing related to the sale of securities, the trial court properly granted its motion
to dismiss. Ernst & Young LLP's Suppl. Br., at 17-18. We disagree.

¶ 32 The WSSA imposes civil liability on anyone who sells a security in violation of
certain provisions of the act. RCW 21.20.430(1). A "seller" includes any party whose
acts were a "substantial contributive factor" to the sale. Haberman, 109 Wash.2d
at 131, 744 P.2d 1032. This is meant to be an expansive definition. Even so, we do
require plaintiffs to establish "`something more'" in addition to the provision of
routine professional services. Hines v. Data Line Sys., Inc., 114 Wash.2d 127, 149-50,
787 P.2d 8 (1990). Because it is possible that FutureSelect can establish the requisite
"something more," dismissal on the pleadings was inappropriate.

¶ 33 In Hines, we found that there was no evidence to indicate that the attorneys
that were being sued under the WSSA had any personal contact with any of the
investors or were in any way involved in the solicitation process. Id. at 149, 787 P.2d
8. There, we found "[t]he advice given by Perkins Coie to Data Line was not a
catalyst in the sales transaction between Data Line and the investors." Id. at 150,
787 P.2d 8. This meant that Perkins Coie could not be held liable as a seller. Id.

¶ 34 The situation here is different. Among other things, Hines was resolved on
summary judgment, not on a CR 12(b)(6) motion. Id. at 148, 787 P.2d 8. Because
the question of whether someone was a substantial contributive factor is
"necessarily a question of fact," Haberman, 109 Wash.2d at 132, 744 P.2d 1032, it is
not easily resolved on the pleadings as long as the complaint contains sufficient
allegations.

¶ 35 Here, FutureSelect has met this requirement. Its complaint alleges that
FutureSelect "would not have invested in the Rye Funds if the funds were not
audited" by Ernst & Young. Clerk's Papers at 37. Moreover, FutureSelect has also
alleged that Ernst & Young "knew that its audits would be used by Tremont to solicit
investors [and] also knew and intended that current investors would rely on the
audits when deciding to maintain and increase their investments in the Rye Funds."
Id. Finally, Ernst & Young 39*39 asked FutureSelect to verify its investment in the Rye
Funds and addressed its audits directly to the partners of the Rye Funds, which
included FutureSelect. Id. at 23.

¶ 36 FutureSelect is entitled to an opportunity to prove what it alleged. We reverse

the trial court's CR 12(b)(6) dismissal.

CONCLUSION

¶ 37 Because FutureSelect has met its initial burden of production, we reverse the
trial court's dismissal on the pleadings. On remand, the trial court shall (1) allow
limited discovery on the jurisdictional issue and, if necessary, conduct a
jurisdictional hearing to resolve any contested material facts and (2) give the
parties an opportunity to fully develop the record surrounding the sale of securities
to FutureSelect so that the trial court can properly consider the Restatement § 148
factors as they apply to the various defendants and determine whether Ernst &
Young's acts were a substantial contributing factor to FutureSelect's decision to
continue investing in the Rye Funds. We affirm the Court of Appeals and remand
to the trial court for further proceedings consistent with this opinion.

WE CONCUR: MADSEN, C.J., JOHNSON, OWENS, FAIRHURST, STEPHENS, and

WIGGINS, JJ., and KULIK, J.P.T.

MARY I. YU, J., not Participating.

GORDON McCLOUD, J. (concurring).

¶ 38 I fully agree with the majority's well-reasoned analysis and conclusions about
jurisdiction and choice of law. I write separately only to comment on how broadly
that opinion construes the word "sell[er]" in RCW 21.20.430(1) — so broadly that it
includes the nonseller accounting firm Ernst & Young.

¶ 39 The majority is correct that in 1987, this court imported into Washington's
securities law the majority rule in the federal circuits for interpreting the word
"sell[er]" under federal securities law; we held that "sell[er]" must be construed
broadly to include those whose actions were a "substantial contributive factor" in
the sale. Haberman v. Wash. Pub. Power Supply Sys., 109 Wash.2d 107, 130-31, 744
P.2d 1032, 750 P.2d 254 (1987). But one year after Haberman, the United States
Supreme Court decided Pinter v. Dahl, 486 U.S. 622, 653-54, 108 S.Ct. 2063, 100
L.Ed.2d 658 (1988). Pinter construed the word "sell[er]" in the related federal
securities law, and it expressly rejected the broad interpretation that most circuit
courts had adopted under federal law and that we had adopted under state law.

¶ 40 Predictably, in 1989, we considered a post-Pinter challenge to the Haberman

court's interpretation of our state's securities law. In Hoffer v. State, 113 Wash.2d
148, 152, 776 P.2d 963 (1989), we rejected the argument that the Supreme Court's
analysis was more persuasive than our own and adhered to the "substantial
contributive factor" interpretation of "sell[er]" as adopted in Haberman. The dissent
in Hoffer, by contrast, asserted that "RCW 21.20.430(1), by its plain language,
requires privity of the seller and the person buying the security." Id. at 153, 776 P.2d
963 (Pearson, J., dissenting). It also noted that "[t]he underpinnings of Haberman
came from lower federal court decisions which are no longer authoritative in light
of the Pinter ruling." Id.

¶ 41 The Hoffer dissent made good sense at the time it was written. The very federal
cases upon which the Haberman decision relied were expressly disapproved by
Pinter. In fact, that dissent makes even more sense now, 27 years later, as even
more circuits that the Haberman majority relied on have repudiated their earlier
adoption of the nontextual "substantial contributive factor" test. For example, the
Haberman majority explicitly relied on a Ninth Circuit case in adopting our test.
Haberman, 109 Wash.2d at 127, 744 P.2d 1032, 750 P.2d 254 (citing Anderson v.
Aurotek, 774 F.2d 927, 930 (9th Cir.1985) (per curiam)). In 2007, that case was
repudiated by the Ninth Circuit in light of Pinter. Sec. & Exch. Comm'n v. Phan, 500
F.3d 895, 906 n. 13 (9th Cir.2007).

¶ 42 Nevertheless, the majority is absolutely correct that Haberman is controlling,

not the Hoffer dissent. I therefore concur in the majority's decision. In light of
Haberman and Hoffer, FutureSelect has sufficiently alleged 40*40 that Ernst &
Young was a "sell[er]" to avoid dismissal on the pleadings.

[1] Tremont Partners serves as the general partner of the Rye Select Broad Market
Fund, LP, the Rye Select Broad Market Prime Fund LP, and the Rye Select Broad
Market XL Fund LP (collectively Rye Funds).

[2] KPMG and FutureSelect have since entered arbitration.

[3] Goldstein Golub Kesseler and FutureSelect have since settled.

[4] FutureSelect believes all the defendants are liable for violations of the WSSA.
Under the WSSA,

It is unlawful for any person, in connection with the offer, sale or purchase of any
security, directly or indirectly:

(1) To employ any device, scheme, or artifice to defraud;

(2) To make any untrue statement of a material fact or to omit to state a material
fact necessary in order to make the statements made, in the light of the
circumstances under which they are made, not misleading; or

(3) To engage in any act, practice, or course of business which operates or would
operate as a fraud or deceit upon any person.

RCW 21.20.010.

[5] FutureSelect brings the negligence claim against Tremont only.

[6] FutureSelect brings the negligent misrepresentation claim against Tremont and
Ernst & Young, not Oppenheimer and MassMutual.

[7] MassMutual and Oppenheimer purchased Tremont in 2001. FutureSelect

believes that these companies exerted sufficient direct control over Tremont that
the subsidiary's liability should be imputed to the parent companies. Further,
FutureSelect alleges that both MassMutual and Oppenheimer stood to gain profit
from Tremont's relationship with Madoff and were complicit in the
misrepresentations made to FutureSelect.

[8] Ernst & Young audited the Rye Funds from 2000 to 2003. During that time,
FutureSelect continued and enhanced its investment in the Rye Funds in reliance
on Ernst & Young's audit statements. FutureSelect believes that Ernst & Young
falsely claimed that it followed generally accepted auditing standards and that it
improperly verified Madoff's trades purportedly made on behalf of the Rye Funds.
FutureSelect also claims that Ernst & Young omitted material facts such as that it
could not rely on Madoff's auditor and that it had not actually audited Madoff's
own books. Because of a required verification of investment in the Rye Funds and
the way the audit statements were addressed, FutureSelect alleges these
misrepresentations were made directly to it and the other partners of the Rye
Funds.

[9] In relevant part, the statute provides that

(1) Any person, whether or not a citizen or resident of this state, who in person or
through an agent does any of the acts in this section enumerated, thereby submits
said person, and, if an individual, his or her personal representative, to the
jurisdiction of the courts of this state as to any cause of action arising from the
doing of any of said acts....

RCW 4.28.185 (emphasis added).

[10] These services consisted of compliance, audit, finance, and human resources.

[11] Specifically, FutureSelect alleges that "all five of Tremont's board members
became MassMutual, Oppenheimer and/or OppenheimerFunds employees."
Clerk's Papers at 18.

[12] It is important to remember that for choice of law questions "the ultimate
outcome, in any given case, depends upon the underlying facts of that case."
Southwell v. Widing Transp., Inc., 101 Wash.2d 200, 204, 676 P.2d 477 (1984). This
requires a subjective analysis of objective factors. Id. Though we hesitate to
articulate any categorical rules, such an analysis does not lend itself readily to
disposition on a CR 12(b)(6) motion.

[13] In relevant part, § 145 asks us to consider the following contacts:

(a) the place where the injury occurred,

(b) the place where the conduct causing the injury occurred,

(c) the domicil, residence, nationality, place of incorporation and place of

business of the parties, and

(d) the place where the relationship, if any, between the parties is centered.

These contacts are to be evaluated according to their relative importance with

respect to the particular issue.

RESTATEMENT § 145.

[14] In Haberman, we were faced with a choice of law question involving the
WSSA and we resolved the issue by looking exclusively at § 145. 109 Wash.2d at
135-36, 744 P.2d 1032.

[15] It is worth noting that in Haberman "[n]o party contend[ed] that another
state's securities act applie[d]." Id. at 135, 744 P.2d 1032. The question was whether
the WSSA could apply to "an action brought in a Washington forum where out-of-
state parties are under [Washington's] jurisdiction." Id. at 134, 744 P.2d 1032. This is
a different dispute than the one we face today, where parties are disputing
whether Washington or New York law applies.

[16] The remaining factor — "the place where a tangible thing which is the subject
of the transaction between the parties was situated at the time," Restatement §
148 — is inapplicable because this transaction did not involve a tangible thing.

[17] Ernst & Young encourages us to run a separate analysis for the choice of laws
issue. This is proper because the record may show different significant contacts for
the claims against Ernst & Young than for the claims against Tremont. However, at
this procedural stage, a single analysis is sufficient because too many facts are in
dispute and we must accept the allegations in the complaint as true. Accordingly,
we accept that Ernst & Young can be established to be a seller of securities under
the WSSA, as discussed in the analysis below, and so, the claims against Ernst &
Young have many of the same contacts as Tremont.