Conflict of Laws
Final Examination
Model Answer
Spring, 2000
Dean Perritt

Question I.

A.

Mr. White must do two things to obtain an enforceable judgment against Australia On Line ("AOL").  First, he must establish personal jurisdiction.  Second, he must persuade the Superior Court to choose Australian law, which is the only body of law that avoids immunity for Internet intermediaries.

First, personal jurisdiction:  Mr. White has two arguments in support of personal jurisdiction over AOL.  First, he can argue that AOL established minimum contacts with Georgia under International Shoe.  His argument would be that AOL transmitted the harmful message impliedly knowing that it would reach everywhere in the world.  It thus purposely availed itself of Georgia law and subjected itself to the jurisdiction of Georgia courts.  There are two problems with this argument.  First, the Supreme Court in Asahi, rejected the stream of commerce argument, thus reinforcing the World Wide Volkswagen rule that mere foreseeability of contacts is not enough.  There is nothing in the facts that would show any targeting by AOL of Georgia and thus satisfy the purposefulness requirements.  The second problem is that the argument attributes to AOL the conduct and intent of Mr. Coe.  It is clear for purposes of personal jurisdiction that the purposeful contacts must be those of the defendant and not a third party.

Mr. White's second argument in support of personal jurisdiction is that the systematic and continuous contacts of the parent AOL-Time Warner can be attributed to AOL.  This personal jurisdiction argument requires resolution of a subsidiary choice of law issue.  Whose law is to be applied to determine whether the corporate veil can be pierced and the contacts of the parent attributed to the subsidiary?  The only one of the three relevant jurisdictions that allows the corporate veil to be pierced is Virginia, and Mr. White must come up with the choice of law argument as to why Virginia law should be applied to this issue.  Traditional choice of law principles for corporation law questions choose the law of the place of incorporation—Delaware, not Virginia.  But a modern governmental interest analysis may help.  The purpose for not allowing corporate veil piercing is to protect the owners of a corporation.  AOL-Time Warner is the Virginia owner of an Australian corporation.  Therefore the only jurisdiction with an interest in the matter—Virginia—allows the corporate veil to be pierced.  In this sense, Virginia has elected to lift the usual rule that would protect its own corporate owners, and therefore Virginia's governmental interest should be given effect by applying Virginia law to this question.

There are three problems with this argument, that AOL is sure to assert.  First, this is not the usual veil piercing, where someone seeks to hold the owner liable for the acts of the corporation it owns; it instead seeks to hold the subsidiary liable for the conduct of its owners.  Thus it is AOL that needs protecting and not AOL-Time Warner, and Australian law does protect the subsidiary against veil piercing in this instance.  Second, AOL-Time Warner is a Delaware corporation, not a Virginia one.  Third, and probably most serious, this is an issue of personal jurisdiction; not yet corporate liability.  Personal jurisdiction is a procedural question and the law of the forum applies to questions of procedure.  Accordingly, AOL will argue, Georgia law should be applied to this question and it would not allow the jurisdiction-invoking conduct of the parent to be attributed to the subsidiary.

Mr. White has a tough row to hoe in establishing personal jurisdiction.

As to establishing negligence, he must, as noted in the introductory paragraph, come up with a winning argument that Australian law applies, because that is the only law that does not immunize Internet intermediaries.  Here, he should have an easier time than with personal jurisdiction.  Of course, he must avoid the traditional interpretation of lex loci delicti because, under Alabama Great Southern Railway v. Carroll, the place of the tort is where the injury occurred, and that is Georgia.  Georgia law would immunize the defendant, and Mr. White would lose.  But, he should argue, the Georgia court is free to apply more modern choice of law rules for torts.  Under governmental interest analysis, Georgia may have expressed an interest in protecting its own Internet intermediaries by enacting its intermediary immunity law, and Virginia may have done likewise by adopting its immunity for Internet intermediaries.  But Mr. White does not seek to hold either a Georgia or a Virginia intermediary liable.  He seeks to hold an Australian Internet intermediary liable, and the law of Australia allows such liability to be imposed.  Australia is the relevant place to decide whether or not intermediaries should be liable, and it has decided they should.  Accordingly, Australian law should be applied, and AOL should not be immune.

B.

Questions of personal jurisdiction against Mr. Coe are addressed in the answer to Part (C).  Mr. White must establish a cause of action, and the only one he has pleaded against Mr. Coe is trespass.  He will lose if Georgia law is applied but will win if either Virginia or Australian law is applied.  There is no real contact here among Mr. Coe, Mr. White, and Virginia, so there is no basis for applying Virginia law.  There is, however, a basis for applying Australian law on trespass.  First of all, the decision whether or not to allow trespass claims for invasion of computers and computer files involves the balancing of interests of the victim to receive compensation and interests of the actor not to be held liable.  Australia is the place with an interest in either protecting Mr. Coe or deterring his conduct, and it has decided that people engaging in conduct like he did should be liable.  Accordingly, Mr. White will argue, Australian law should be applied allowing recovery for trespass.

Mr. Coe could have argued, if he had appeared, that trespass is closely associated with property, and the property arguably trespassed upon was located in Georgia.  Traditional choice of law rules apply the law of the place where the property is located to property matters.  Further, Mr. Coe could have argued that the traditional choice of law rule for tort is lex loci delicti which says that the law of the place of the injury applies.  That clearly is Georgia.

Since Mr. Coe did not appear to make these arguments, and Mr. White has prima facie arguments as to how he can win under Australian law and why Australian law should be applied, he is likely to be successful in obtaining his default judgment.

C.

If Mr. White seeks to enforce his Georgia default judgment against Mr. Coe by having an Australian court recognize and enforce the judgment, Mr. White would argue that the Doctrine of Comity under customary international law authorizes recognition and enforcement.  Full faith and credit is not involved because Australia is not a state of the United States.

He can expect Mr. Coe to argue that a judgment in a case lacking personal jurisdiction is not entitled to recognition under the Comity doctrine.  Since Mr. Coe did not appear and contest personal jurisdiction in the Georgia proceeding, he is free to assert lack of personal jurisdiction now.  Personal jurisdiction is determined by the law of the rendering forum (unless recognition and enforcement would violate due process concepts in the enforcing jurisdiction).  Mr. Coe would attack the judgment under Georgia and U.S. personal jurisdiction concepts, which are similar to due process concepts applied elsewhere, probably including Australia.  Mr. Coe would argue he had no contacts at all with Georgia and, therefore, under International Shoe, Georgia could not assert personal jurisdiction over him.  Mr. White would argue that Mr. Coe targeted every place in the world, including Georgia, with his love bug virus and thus satisfied the purposeful availment test of World Wide Volkswagen.  Mr. Coe would counter that all he did was put his virus into the stream of world wide Internet commerce and, while it may have been foreseeable that someone in Georgia would trigger the virus, such foreseeability in world wide commerce is not sufficient to authorize personal jurisdiction under Asahi.  Moreover, Mr. Coe probably can establish that he did not send the virus directly to Mr. White, but only to someone else who sent it to another person, who sent it to another person and so on until it reached Mr. White.  The conduct of third parties is not attributable to the defendant to establish purposeful contact.  Mr. Coe is likely to succeed on his challenge to personal jurisdiction unless Mr. White can persuade the Australian court that U.S. personal jurisdiction law and more general personal jurisdiction concepts under international law allow personal jurisdiction to be asserted by a court anywhere in the world where effects of Internet borne misconduct are felt.  Mr. White does have an argument under the international law of jurisdiction, because the United States, and its component Georgia, would be entitled under passive territoriality (the "effects test") to assert jurisdiction over the conduct that resulted in injury in Georgia.

D.

There is no personal jurisdiction problem here because defendant Full Access is located in the forum state.  There are, however, two problems:  First, whether the forum selection clause divests the Georgia court of jurisdiction in favor of Illinois courts; and second, whether the choice of law clause defeats White's breach of contract claim on the merits.  As to the second issue, this may be an example of a false conflict.  Illinois law would not recognize the Force Majeure defense, and it is not clear that Georgia law would either since it is "favorable to claims for breach of contract against Internet Service Providers."  If Georgia law would allow the Force Majeure defense, Mr. White obviously should prefer Illinois law which would not.  He then is in the awkward position of wanting the choice of law clause to be valid, while he must oppose the forum selection clause which would divest his chosen forum (Georgia) of jurisdiction.

Full Access has a similarly awkward position on the other side.  It wants the forum selection clause to be enforceable, but if the choice of law clause is valid, it will be deprived of its Force Majeure defense.

Tactically, Mr. White is probably better off to attack both the forum selection and choice of law clauses and take his chances with the Force Majeure defense under Georgia law.  He can argue that party autonomy with respect to choice of law and forum selection only extends to chosen jurisdictions that have some relationship to the case, and Illinois has no relationship whatsoever to this case.  The relationship requirement is explicitly set forth in the UCC and in the Restatement for choice of law clauses, and Mr. White would want to do research seeking to establish a similar forum-relationship requirement for forum selection clauses.  He also can argue that he is not bound by the forum selection and choice of law clauses because he did not see them, but this will be an uphill battle.  He must accept the contract, because his claim is based on the contract, and he is in the position of arguing that he wants to take some parts of the contract but not other parts.

Full Access has few arguments to overcome the forum-relationship requirement in the absence of a relationship with Illinois.  On the other hand, it can argue that Georgia should apply modern concepts that allow full autonomy to the parties regardless of whether the chosen forum or chosen law has any relationship to the dispute.
 

Question II.

No question of personal jurisdiction is presented here because the sister has appeared and not contested jurisdiction.  Under Erie and Klaxon, the Federal district court is obligated to apply the law of the state in which it sits to choice of law questions.  It thus must apply Alabama choice of law rules.

Because resolution of the property dispute depends upon of the status of Williams and Blair, the law of the place of domicile should be applied, Blair will argue.  Williams and Blair were domiciled in Vermont because they did not have a present intent to change their domicile to Alabama, although they spent time there.  Under Vermont law, they had the status of domestic partners and Vermont law expressly allows domestic partners to hold property as tenants by the entireties.

The sister, however, has some powerful counter arguments.  First, she will argue that even if Alabama choice of law requires application of the law of the domicile, the content of that law is repugnant to Alabama's public policy, which does not recognize domestic partnerships between gay couples.  The full faith and credit cases on family law are mixed, allowing somewhat broader scope for public policy defenses than in other kinds of cases.  The Maryland bigamy case comes to mind.

Independently, the sister will argue that the appropriate choice of law rule to be applied to this case is lex loci rei sitae.  Because the case involves ownership to real property, the law of Alabama should be applied.   The law of Alabama presumably reserves tenancies by the entireties to traditional married couples and thus she is entitled to the property.

Two somewhat weaker arguments by the sister are (1) that the Vermont law was intended to have only local effect, and therefore even if the Alabama choice of law rule looks to Vermont, the Vermont domestic partnership law has no effect in Alabama.  (2) she also might argue that the Vermont domestic partnership status is not within the scope of the full faith and credit clause because it does not involve judgments or public acts.  But Vermont domestic partnership policy is embodied in a statute, which surely is entitled to be given full faith and credit.

There is no due process or full faith and credit issue under Allstate, because the situs of the property in Alabama give Alabama sufficient contacts with the case to apply its own law constitutionally.