1. Dowis et al vs. Mud Slingers, Inc et al, 279 Ga.

808 (2005)
Digest: https://www.scribd.com/document/462125833/001-Dowis-et-al-v-Mud-Slingers

S05G0336.

DECIDED OCTOBER 24, 2005.

Certiorari to the Court of Appeals of Georgia — 269 Ga.App. 805.

Ronald P. Jayson, for appellants.

Bovis, Kyle Burch, Gregory T. Presmanes, Amy R. Perkins, for appellees.

HINES, Justice.

This Court granted certiorari to the Court of Appeals in Dowis v. Mud Slinger Concrete, 269 Ga.
App. 805 ( 605 SE2d 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 SE2d 108) (1983); see also Mullins v. M.G.D. Graphics Systems Group, 867 FSupp.
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. 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. Ga. Farm Bureau
Mut. Ins. Co. v. Williams, 266 Ga. App. 540, 541, n. 4 ( 597 SE2d 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 SW2d 53, 57 (Tenn. 1992). These approaches have gained
acceptance in deciding which state's substantive law should apply. 16 AmJur2d Conflict of Laws
§ 124.

The following cases from sister states apply the lex loci delicti rule: Fitts v. Minnesota Mining Mfg.
Co., 581 S2d 819 (Ala. 1991); Ling v. Jan's Liquors, 703 P2d 731 (Kan. 1985); Hauch v. Connor, 453
A2d 1207 (Md.Ct.App. 1983); Kemp v. Allstate Ins. Co., 601 P2d 20 (Mont. 1979); Boudreau v.
Baughman, 368 SE2d 849 (N.C. 1988); Dawkins v. State, 412 SE2d 407 (S.C. 1991); Rhoades v.
Wright, 622 P2d 343 (Utah 1980), cert. denied, 454 U.S. 897 ( 102 SC 397, 70 LE2d 212)
(1981); McMillan v. McMillan, 253 S.E.2d 662 (Va. 1979); Paul v. Nat. Life, 352 SE2d 550 (W.Va.
1986); Ball v. Ball, 269 P2d 302 (Wyo. 1954). See 16 Am Jur2d Conflict of Laws § 124, n. 15.

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.

The first such approach is based upon a concept of "governmental interest." Id. This approach,
developed by Professor Brainerd Currie, involves an analysis 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 AmJur2d 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).

The following cases have utilized a "governmental interest" analysis: Wallis v. Mrs. Smith's Pie Co., 550
SW2d 453 (Ark. 1977); Bernhard v. Harrah's Club, 546 P2d 719 (Cal. 1976), cert. denied, 429 U.S. 859 (
97 SC 159, 50 LE2d 136) (1976); District of Columbia v. Coleman, 667 A2d 811 (D.C. Ct. App,
1995); Gantes v. Kason Corp., 679 A2d 106 (N.J. 1996); Padula v. Lilarn Properties Corp., 644 NE2d
1001 (N.Y Ct. App. 1994). See 16 AmJur2d Conflict of Laws § 129, n. 42.

Another approach is that of "choice-influencing considerations" 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).

The following cases have employed "choice-influencing considerations" to resolve a conflict of

laws: Clark v. Clark, 222 A2d 205 (N.H. 1966); Busby v. Perini Corp., 290 A2d 210 (R.I.
1972); Zelinger v. State Sand Gravel Co., 156 NW2d 466 (Wis. 1968). See 16 AmJur2d Conflict of Laws
§ 132, n. 48.

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. Hataway v. McKinley, supra at 58.

The following cases have utilized a concept of lex fori: Foster v. Leggett, 484 SW2d 827 (Ky.Ct.App.
1972); Olmstead v. Anderson, 400 NW2d 292 (Mich. 1987). See Hataway v. McKinley, supra at 59.

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" to  the dispute, based
upon several sets of factors. 16 AmJur2d 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 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 SE2d 84) (2003); Gen. Tel. Co. of the
Southeast v. Trimm, 252 Ga. 95, 96 ( 311 SE2d 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 following cases have applied the "most significant relationship" approach: Ehredt v. DeHavilland
Aircraft Co. of Canada, Ltd., 705 P2d 446 (Alaska 1985); Bryant v. Silverman, 703 P2d 1190 (Ariz.
1985); First Nat. Bank in Fort Collins v. Rostek, 514 P2d 314 (Colo. 1973); O'Connor v. O'Connor, 519
A2d 13 (Conn. 1986); Travelers Indem. Co. v. Lake, 594 A2d 38 (Del. 1991); Bishop v. Florida Specialty
Paint Co., 389 S2d 999 (Fla. 1980); Johnson v. Pischke, 700 P2d 19 (Idaho 1985); Fuerste v. Bemis, 156
NW2d 831 (Iowa 1968); Adams v. Buffalo Forge Co., 443 A2d 932 (Me. 1982); Mitchell v. Craft, 211
S2d 509 (Miss. 1968); Kennedy v. Dixon, 439 SW2d 173 (Mo. 1969); Harper v. Silva, 399 NW2d
826 (Neb. 1987); Morgan v. Biro Mfg. Co., 474 NE2d 286 (Ohio 1984); Brickner v. Gooden, 525 P2d
632 (Okla. 1974); Myers v. Cessna Aircraft Corp., 553 P2d 355 (Or. 1976); Chambers v. Dakotah
Charter, 488 NW2d 63 (S.D. 1992); Hataway v. McKinley, supra; Gutierrez v. Collins, 583 SW2d
312 (Tex. 1979); Amiot v. Ames, 693 A2d 675 (Vt. 1997); Baffin Land Corp. v. Monticello Motor
Inn, 425 P2d 623 (Wash. 1967). See 16 AmJur2d Conflict of Laws § 124, n. 16.

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 R. Co. v. Decker, 5 Ga. App. 21 ( 62 SE 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 SE2d
839) (1975); see also In re J.M., 276 Ga. 88, 91 ( 575 SE2d 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 S2d
819 (Ala. 1991); Mills v. Quality Supplier Trucking, 510 SE2d 280 (W.Va. 1998); Paul v. Nat.
Life, 352 SE2d 550 (W.Va. 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, 514 P2d 314, 317 (Colo. 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, 229 A2d 625 (N.J. 1967); Chambers v. Dakotah Charter, 488 NW2d
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, 191 NE2d
279 (N.Y.Ct.App. 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. Gen.
Motors Corp., 267 Ga. 339 ( 478 SE2d 123) (1996); Karimi v. Crowley, 172 Ga. App. 761 ( 324
SE2d 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.
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 Conflict 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 nonexclusive 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. Nat. 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 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 Conflict 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. In fact, the array of "modern"  conflict approaches and their seemingly unending
variations have been described as creating "a veritable playpen for judicial
policymakers." Shirley A. Wiegand, Fifty Conflict of Laws "Restatements": Merging Judicial
Discretion and Legislative Endorsement, 65 La. L. Rev. 1, 4 (2004). This Court declines to
engage in such a policymaking exercise.

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.

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. Life, supra at 551; Friedrich K. Juenger, Choice of Law and
Multistate Justice 235 (1993).

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 (Sears, P.J., concurring).

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, are preferable to the
inconsistency and capriciousness that the replacement choice-of-law approaches have
wrought. Paul v. Nat. Life, supra at 555; First Nat. 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, 248 NE2d 901, 906 (N.Y. 1969).
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.

The rule of lex loci delicti remains the law of Georgia, and the judgment of the Court of Appeals
is affirmed. Judgment affirmed. All the Justices concur.

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.

2. Melton vs. Stephens, 13 N.E.3d 533 (2014)

No. 14A01–1308–CT–356.

07-22-2014

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.

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.

RILEY, Judge.

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. We
affirm.

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.

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

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) 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.

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.

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 ;
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. 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  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 

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.

--------
Rules about the choice of law are among the few fields still dominated by judge-  made 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  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  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,

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  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.

3. Saudi Arabian Airlines vs. CA, 297 SCRA 469 (1998)

Digest: http://www.philippinelegalguide.com/2013/07/conflicts-of-laws-case-digest-
saudi.html

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
Resolution  dated September 27, 1995 and the Decision  dated April 10, 1996 of the Court of
1 2

Appeals  in CA-G.R. SP No. 36533,  and the Orders  dated August 29, 1994   and February 2,
3 4 5 6

1995  that were issued by the trial court in Civil Case No. Q-93-18394.
7 8

The pertinent antecedent facts which gave rise to the instant petition, as stated in the
questioned Decision , are as follows:
9

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,   she was
12

terminated from the service by SAUDIA, without her being informed of the cause.

On November 23, 1993, Morada filed a Complaint   for damages against SAUDIA, and Khaled
13

Al-Balawi ("Al-Balawi"), its country manager.

On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss   which raised the
14

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)  . Saudia filed a
15

reply   thereto on March 3, 1994.

16

On June 23, 1994, Morada filed an Amended Complaint   wherein Al-Balawi was dropped as
17

party defendant. On August 11, 1994, Saudia filed its Manifestation and Motion to Dismiss
Amended Complaint  . 18

The trial court issued an Order   dated August 29, 1994 denying the Motion to Dismiss
19

Amended Complaint filed by Saudia.

From the Order of respondent Judge   denying the Motion to Dismiss, SAUDIA filed on
20

September 20, 1994, its Motion for Reconsideration   of the Order dated August 29, 1994. It
21

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   (To Defendant's Motion for
22

Reconsideration).

In the Reply   filed with the trial court on October 24, 1994, SAUDIA alleged that since its
23

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   dated February 2, 1995, denying
24

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   with the Court of Appeals.
26

Respondent Court of Appeals promulgated a Resolution with Temporary Restraining

Order   dated February 23, 1995, prohibiting the respondent Judge from further conducting
27

any proceeding, unless otherwise directed, in the interim.

In another Resolution   promulgated on September 27, 1995, now assailed, the appellate
28

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   for Review
29

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   dated April 10, 1996, now also assailed. It ruled that the Philippines is an
30

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   dated April 30, 1996, given due course by this Court. After both parties
31

submitted their Memoranda,   the instant case is now deemed submitted for decision.
32

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   and 21   of the Civil Code, then the instant case is properly a matter of
35 36

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   dated June 23, 1994:
38

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.

x x x           x x x          x x x

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.   The foreign element may
41

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   confronts the
43

court a quo.

After a careful study of the private respondent's Amended Complaint,   and the Comment
44

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,   this Court held that:
45

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   in the Amended Complaint, read in the light of the Rules of Court
46

on jurisdiction   we find that the Regional Trial Court (RTC) of Quezon City possesses
47

jurisdiction over the subject matter of the suit.   Its authority to try and hear the case is
48

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:

x x x           x x x          x x x

(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)
 x x x           x x x          x x x

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   praying for the
50

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."   The purpose of "characterization" is to enable the
55

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.   An essential element of conflict rules is the indication of a "test" or
57

"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.   These "test factors" or "points of contact" or
59

"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.   (Emphasis
60

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   have been advanced to offer fresh judicial
61

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,   raised by private respondent as plaintiff below against defendant (herein
63

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."   As aptly said by private respondent, she has "no obligation to plead and prove the
64

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.   And as correctly held by the
65

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.

Davide, Jr., Bellosillo, Vitug and Panganiban, JJ., concur.

4. First Natl Bank in Fort Collins v. Rostek, 514 P.2d 314 (1973)
Digest: https://www.scribd.com/document/462125849/007-First-National-Bank-in-Fort-
Collins-v-Rostek

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 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 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. *317 145,
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 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 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 notin the absence of special circumstancesbe 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 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.

5. Kamelgard v. Macura, 585 F.3d 334 (2009)

Digest: https://www.scribd.com/document/403213395/Kamelgard-vs-Macura-digest-docx

Nos. 08-4254, 09-1030.

Argued September 15, 2009.

Decided October 23, 2009. Rehearing Denied November 12, 2009.

Appeal from the United States District Court for the Northern District of Illinois, Suzanne B.
Conlon, J. 

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. 

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 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 (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  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;  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.  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  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  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).  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.

6. Lankenau v. Boles, 119 A.D.3d 1404 (2014)

2014-07-11

Laura LANKENAU, Plaintiff–Appellant, v. Patrick K. BOLES, M & S Leasing Co., LLC,

Deena Lankenau and Douglas Lankenau, Defendants–Respondents. (Appeal No. 1.).

Smith, Sovik, Kendrick & Sugnet, P.C., Syracuse (Edward J. Smith, III, of Counsel), for
Plaintiff–Appellant. Rupp, Baase, Pfalzgraf, Cunningham & Coppola LLC, Buffalo (Melissa L.
Vincton of Counsel), for Defendants–Respondents Patrick K. Boles And M & S Leasing Co.,
LLC.

Smith, Sovik, Kendrick & Sugnet, P.C., Syracuse (Edward J. Smith, III, of Counsel), for
Plaintiff–Appellant. Rupp, Baase, Pfalzgraf, Cunningham & Coppola LLC, Buffalo (Melissa L.
Vincton of Counsel), for Defendants–Respondents Patrick K. Boles And M & S Leasing Co.,
LLC.
Burke, Scolamiero, Mortati & Hurd, LLP, Albany (Mark G. Mitchell of Counsel), for
Defendants–Respondents Deena Lankenau and Douglas Lankenau.

PRESENT: CENTRA, J.P., PERADOTTO, CARNI, LINDLEY AND WHALEN, JJ.

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
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 N.Y.2d 519, 522, 620 N.Y.S.2d 310, 644 N.E.2d 1001; see
generally Schultz v. Boy Scouts of Am., 65 N.Y.2d 189, 198, 491 N.Y.S.2d 90, 480 N.E.2d 679).
“ ‘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 N.Y.2d at 522, 620 N.Y.S.2d 310, 644 N.E.2d 1001,
quoting Cooney v. Osgood Mach., 81 N.Y.2d 66, 72, 595 N.Y.S.2d 919, 612 N.E.2d 277).
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 N.Y.2d at 198, 491 N.Y.S.2d
90, 480 N.E.2d 679; Burnett v. Columbus McKinnon Corp., 69 A.D.3d 58, 60–62, 887 N.Y.S.2d
405).

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 ( see75 Pa.
CSA § 4581[e]; Gaudio v. Ford Motor Co., 976 A.2d 524, 536 [PA Super], appeal denied605
Pa. 686, 989 A.2d 917), 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 N.Y.2d 444, 449–450, 363 N.Y.S.2d 916, 323 N.E.2d 164; Ruiz
v. Rochester Tel. Co., 195 A.D.2d 981, 981, 600 N.Y.S.2d 879). We therefore conclude that the
court properly determined that the seat belt defense “allocate[s] losses after the tort occurs”
(Cooney, 81 N.Y.2d at 72, 595 N.Y.S.2d 919, 612 N.E.2d 277).

We further conclude that Pennsylvania has at best a minimal interest in applying its own law in
this case ( see Schultz, 65 N.Y.2d at 198, 491 N.Y.S.2d 90, 480 N.E.2d 679; Burnett, 69 A.D.3d
at 60–62, 887 N.Y.S.2d 405). The plaintiff and her 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 N.J. 238,
269–270, 544 A.2d 357, 373–374). 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 N.Y.2d 121, 128, 335
N.Y.S.2d 64, 286 N.E.2d 454).
We recognize that New York has adopted a statutory seat belt defense subsequent
to Spier, which is largely conduct-regulating ( seeVehicle 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 A.D.2d 91, 93, 563
N.Y.S.2d 163; 1A N.Y. 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 A.D.2d 41, 47, 536 N.Y.S.2d 303, lv.
dismissed74 N.Y.2d 715, 543 N.Y.S.2d 401, 541 N.E.2d 430; see Ruiz, 195 A.D.2d at 981, 600
N.Y.S.2d 879).

We have reviewed plaintiff's remaining contentions and conclude that they lack merit.

It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.

7. Winter vs. Novartis, 739 F.3d 405 (8th Cir. 2014)

Nos. 12–3121 12–3409.

2014-01-9

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.

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.

BENTON

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,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 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 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)
(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 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.

8. Future Select vs. Tremont Grp Holdings, 331 P.3d 29 (Wash. 2014)

No. 89303–9.

2014-07-17

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.

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

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, whose status as
feeder funds to Bernard L. Madoff Investment Securities LLC (Madoff) is at the heart of this
dispute.

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).

¶ 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 FutureSelect a rare, and potentially fleeting,
opportunity to invest with Madoff. Tremont also 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,  and Goldstein Golub Kessler (Tremont's auditors).

KPMG and FutureSelect have since entered arbitration.

Goldstein Golub Kesseler and FutureSelect have since settled.

¶ 6 In its complaint, FutureSelect alleged that the defendants are liable for (1) violating RCW
21.20.010  and RCW 21.20.430, (2) negligence, and (3) negligent misrepresentation. 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.  It alleged Ernst & Young made direct misrepresentations  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. FutureSelect obtained a CR 54(b) order granting final
judgment on the dismissals, allowing this appeal.

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.

FutureSelect brings the negligence claim against Tremont only.

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

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.

¶ 7 The Court of Appeals reversed in part and affirmed in part, finding that (1) Washington has
the most significant relationship 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 agent. 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

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).

¶ 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  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;  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.
These services consisted of compliance, audit, finance, and human resources.

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

¶ 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. SeeRCW 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. 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. The allegations in the
complaint are sufficient to survive the defendants' CR 12(b)(6) motion. A. Actual conflict

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.

¶ 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, seeRCW 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). 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), 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.

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.

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

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.

¶ 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 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.

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.

¶ 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. 

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.

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 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 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 alleged40that Ernst & Young was a “sell[er]” to avoid dismissal on
the pleadings.