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Choice of Law and Predictability of Decisions in Products Liability Cases

The tale of American choice of law principles has become the story of a thousand and one inconsistent tort cases. (1) --Alan Reed INTRODUCTION The unique political landscape of the United States, where each state is a sovereign over its territory and can enact its laws within broad limits of the federal Constitution, leads to the lack of "uniformity in rules of law from state to state." (2) In cases that implicate the legal systems of two or more states, courts have to decide which law will govern the case, but the choice of law rules, as well as their application by different courts, are all but uniform. (3) Choice of law questions often arise in products liability cases because the product in question was produced in one state, purchased in another state, and caused an injury in yet another state. (4) This presents a significant challenge to courts, especially in mass tort actions arising from a long-term exposure to harmful substances in many different states. (5) Before a court can proceed on adjudicating the merits, it needs to decide which law to apply, and in many cases the court's choice of law decision may mean the difference between dismissing the case on a certain motion and allowing the plaintiff to proceed with discovery and trial. (6) It is not surprising that in such cases parties vigorously litigate choice of law questions, and the appeals process often reaches the state high courts or even the Supreme Court of the United States. (7) Lack of uniformity in the choice of law methodologies that American courts use, combined with differences in the rules of law among states, lead to highly inconsistent and often unpredictable decisions. (8) Even within a single state, courts often lack a coherent approach to choice of law issues because the state's choice of law methodology provides inadequate guidance to the courts. (9) While the certainty, predictability, and uniformity of results are generally less important in tort cases, in the products liability context, predictability of judicial decisions is an important factor in evaluating business risks associated with the marketing of a particular product. (10) A profusion of laws applicable to mass-produced and mass-marketed undifferentiated products generates substantial costs of compliance and may lead to uncertainty and economic inefficiency. (11) The uncertainty may force manufacturers to forgo development, production, and marketing of otherwise valuable products that might expose them to unpredictable risk. (12) This risk, in turn, may negatively affect the variety of products available to consumers. (13) The utility of products, however, has to be balanced with the need to make products reasonably safe, which prevents manufacturers from externalizing their costs at the expense of consumers. (14) This Comment proposes that it is unrealistic to expect a comprehensive solution to the consistency and predictability of court decisions in the products liability area. Value judgments and policy considerations that underlie court decisions, combined with the wide discretion that modern choice of law methodologies provide, make the uniformity of decisions practically impossible. (15) Part I analyzes the relevant historical background and development of the two prevailing choice of law methodologies for tort cases--the traditional rule of lex loci delicti of the First Restatement of Conflict of Laws (16) and the "most significant relationship" rule of the Second Restatement of Conflict of Laws. (17) It shows how the evolution of American society led to changes in choice of law methodologies that sacrificed the need for consistent and predictable choice of law decisions in favor of flexibility and fairness. Part II closely examines the two leading choice of law methodologies and shows how courts in New Jersey and Indiana apply them in tort cases. While New Jersey adopted the Second Restatement approach, Indiana courts still adhere to the lex loci delicti rule. …