A new conflict of law

Next year will bring new meaning to “conflicts of laws.”

We have seen growing differences among the states on matters of public policy. Employee protections, abortion, and other issues have led states not only to enact laws for domestic consumption, but to expand the reach of their public policies to other jurisdictions. Some states punish movement outside the state – even counseling someone to do so – if in aid of abortion; some states, e.g., California, refuse to cooperate with those states. As of 2024, California will void most non-compete agreements, even if signed in foreign states and favoring companies domiciled outside of California. Senate Bill 699. California case law already bars venue transfers in cases involving California plaintiffs to states where California’s jury right protections aren’t available. EpicentRx, Inc. v. Superior Court of San Diego County, 95 Cal.App.5th 890 (2023).

In 2022 California enacted Assembly Bill 2223, prohibiting a person from being criminally or civilly liable for miscarriage, stillbirth, abortion, or perinatal death due to causes that occurred in utero; Assembly Bill 2091 barred health care providers from releasing medical information on people seeking abortion care in response to an out-of-state subpoena, and Assembly Bill 1242 prohibited law enforcement and California companies from cooperating with out-of-state entities regarding a lawful abortion in California, and blocked law enforcement from arresting a person for aiding in a lawful abortion in California. Senate Bill 107 barred health care providers, law enforcement, and courts from aiding in another state’s criminal investigation related to a minor receiving gender-affirming care in California. These protections were augmented by 2023 bills, such as Assembly Bill 2091 and Senate Bill 107.

These interstate conflicts will play out in venue transfer motions, decisions on choice of law, motions to enforce sister state judgments and law (such as under the Full Faith and Credit clause), discovery battles, and other motions seeking to void or enforce a state’s public policy contrary to some other state’s policies.

Some of these laws – those of California and of other states – may be attacked under the Commerce Clause, and still others will be attacked as inconsistent with federal statutes. For example, it has long been true that California’s public policy barring arbitration of certain claims is in part preempted by the federal arbitration act. See also e.g., Chamber of Commerce of the United States of America v. Bonta, 62 F.4th 473, 480 (9th Cir. 2023) (federal law preempts state law barring employers from requiring arbitration).

Whether or not to defer to another state’s law is tricky, because the tests aren’t exactly the same, and none is clear.

Foreign arbitral judgments are permissible unless violative of a state’s “explicit, well-defined and dominant” public policy. Bevles Co., Inc. v. Teamsters Local, 986 791 F.2d 1391, 1393 (9th Cir. 1986). Recognizing a foreign judgment may be barred if it violates a state’s public policy, Tak Chun Gaming Promotion Company Limited v. Long (Oct. 26, 2023) 2023 WL 7036332, at *2, but there may be a different standard in federal court- violating a specific public policy may not be enough: to bar enforcement it must injure “public health, the public morals, or the public confidence in the administration of law, or would undermine that sense of security for individual rights,” De Fontbrune v. Wofsy, 39 F.4th 1214, 1223 (9th Cir. 2022). Classically, choice of law depends not just on whether foreign law is contrary to “fundamental” state law but also on which state has a “greater interest” in the issue. Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459, 464–465 (1992); 1-800-Got Junk? LLC v. Superior Court, 189 Cal.App.4th 500, 515 (2010).

Most statutes embody public policy: When is it “fundamental,” as opposed, I suppose, to a trivial policy? What is a “dominant” policy? To injure public morals? What’s a “greater interest?” For many of these tests, there is no clear answer, and state and federal courts may have differing views.

There is a risk that courts – here or elsewhere – will simply decide that their own domestic policy is the more strongly valued, which may appear a cynical and unconsidered conclusion.

A state’s “fundamental” or “dominant” law can be difficult to discern. Consider, for example, that while one might think constitutional values are more fundamental than statutory mandates, a recent case reiterated that due process concerns do not bar the strict application of CCP § 36 preference rights. Pabla v. Superior Court of Merced County, 90 Cal.App.5th 599, 604 n.5 (2023). And consider that the statutory policy favoring arbitration affects interpretation of an arbitration clause to cover claims which otherwise enjoy a constitutional right to a jury. (Although it’s now an open question whether any pro-arbitration policy survives Morgan v. Sundance, Inc., 596 U.S. 411 (2022) when federal law applies.)

I am sure Justice Brandeis was right when he told us the states were laboratories, and might “try novel social and economic experiments without risk to the rest of the country.” New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting). But some experiments now collide, and it’s not clear how the country will react.