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Agenda for 6th Class

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  1. Agenda for 6th Class • Choice of law clauses (continued) • Restatement 2nd § 187 (review) • Cases involving covenants not to compete • Marriage • Introduction • Traditional cases • Miscegenation cases • California cases • Assignment for the next class • To be emailed and/or posted tomorrow • Want hard copies too? • Nedlloyd. Fiduciary duty claim • Seawinds argued that Nedlloyd as controlling shareholder owed a fiduciary duty to the company. Such a duty exists under California law, but does not seem to exist under Hong Kong law.

  2. Restatement 2nd and Choice-of-Law Clauses I • § 187. Law Of The State Chosen By The Parties • (1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue. • (2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either • (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or • (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties. • Comment on Subsection (1). Whether the parties could have determined a particular issue by explicit agreement directed to that issue is a question to be determined by the local law of the state selected by the application of rule § 188. Usually, however, this will be a question that would be decided the same way by the relevant local law rules of all potentially interested states. On such occasions, there is no need for the forum to determine the state of applicable law.

  3. Restatement 2nd and Nedlloyd • Contract says “Contract to be governed by Hong Kong Law.” • Issue. Whether controlling shareholder (Nedlloyd) owes fiduciary duties to corporation (Seawind) • California Law. Yes; Hong Kong Law. No. • Analysis under Restatement 187(1) • Suppose the contract did not have a choice of law clause, but instead said, “Nedlloyds shall not have fiduciary duties to Seawind” • Would that provision be enforceable? • Whose law governs that question? See Restatement 188 (choice of law in the absence of effective choice by the parties). Assume Cal. • Need to ask whether California law would allow parties to waive fiduciary duties by contract (e.g. whether default or mandatory rule) • If yes (mandatory rule), then need to do analysis under 187(2) • If no (default rule), then choice of law clause governs fiduciary duty question • Note that this is not the way that the California Supreme Court decided Nedlloyd

  4. Restatement 2nd and Covenants Not to Compete • Contract says “Contract to be governed by Maryland Law.” • Issue. Whether covenants not to compete are enforceable • California Law. No; Maryland Law: Yes • Analysis under Restatement 187(1) • Suppose the contract did not have a choice of law clause, but instead said, “This covenant not to compete is enforceable” • Or just had covenant, “employee may not work for competitor for 1 year after separation from company.” • Would that provision be enforceable? • Whose law governs that question? See Restatement 188 (choice of law in the absence of effective choice by the parties). • If Cal law would govern under 188, then provision unenforceable, so need do analysis under 187(2) • If MD law would govern under 188, then provision enforceable, so choice of law clause enforceable • Basic idea. • Fine to use choice of law clause as shorthand for contractual provisions that could have written out in detail. • May be problematic to use choice of law clauses to accomplish things that couldn’t accomplish by more specific contractual language

  5. Covenants Not to Compete I • Cook Sign • The Minnesota Court of Appeals applied the Better Law approach to choice of law. • How is that approach different from the Restatement 2nd approach to choice of law clauses? • What do you think of this approach to choice of law? • Compare this case to Applications Group • Which approach to the enforceability of choice of law clauses did you find more persuasive? • Do you think the fact that one court enforced the choice of law clause while the other did not reflects the different choice of law approaches chosen by California and Minnesota? Or some other factor?

  6. Covenants Not to Compete II • Applications Group • According to the opinion, Hunter admitted that it used covenants not to compete to deter and prevent solicitation, recruitment and hiring of its employees and “to avoid a bidding war that would increase the salary of its consultants.” If you were representing Hunter, can you think of reasons to use covenants not to compete that might been more effective? • If California courts invalidate covenants not to compete between employers and employees in other states, who bears the cost of such invalidation? Who benefits? • After this case, if Hunter wants to avoid liability for unfair competition under California Unfair Practices Act §17200, what would it need to do (or not do)?

  7. Intro to Marriage • Divorce is judgment • Full Faith & Credit Clause requires states to respect divorces entered in other states • Will discuss on 4/15 (“Recognition of Judgments”) • Marriage is not a judgment • Full Faith & Credit Clause is inapplicable • Whether states respect marriages entered into in other states is almost entirely a matter of discretion or comity • Like other choice of law issues • Very little constitutional constraint • Constitutional constraints on choice of law generally (and marriage specifically) discussed on 4/1 (“Constitutional Limitations”) • DOMA was largely unnecessary

  8. Marriage: May’s Estate • In re May’s Estate • Should it matter that the parties seem to have gone to Rhode Island solely to get married? • Should it matter that the decedent could have written a will directing his assets to be distributed in a way that would have matched the distribution under the assumption that he had been married? • How would this case have been resolved under the 1st Restatement? • How would this case be resolved under the 2nd Restatement? • How would this case be resolved, if the parties were domiciled in California and the case was brought in California? • How would this case have been resolved if New York applied interest analysis or comparative impairment? • Consider the statutory interpretation in Lanham v Lanham in the paragraph that spans pp. 74-75. If the interpretation there were applied to In re May’s Estate, what would the result have been? What is the best interpretation of a statute declaring a particular kind of marriage void? • Should there be a policy in favor of marriages?

  9. Marriage: Lanham • Lanham v Lanham • Should it matter that the parties seem to have gone to Michigan solely to get married? • Should it matter that the decedent could have written a will directing his assets to be distributed in a way that would have matched the distribution under the assumption that he had been married? • How would this case have been resolved the Wisconsin court applied New York choice of law and precedents circa 1953? • How would this case have been resolved under the 1st Restatement? • How would this case be resolved under the 2nd Restatement? • How would this case be resolved, if the parties were domiciled in California and the case was brought in California? • How would this case have been resolved if Wisconsin applied interest analysis or comparative impairment?

  10. Marriage: Miscegenation • State v Ross • Were you surprised by the outcome? • How would this case have been resolved under the First Restatement? Restatement 2nd? Interest Analysis? Comparative Impairment? • What is Judge Rodman’s attitude toward mixed race marriages? • How could Judge Rodman respond to Judge Reade’s arguments about polygamy and marriages between nine year olds? • Why does Judge Reade think that voiding the marriage would not disturb the legitimacy of children and property rights? • State v Bell • Why does the court in this case reach a different result than in State v Ross? • Which opinion is more persuasive, State v Bell or State v Ross? • What, if anything, do these cases suggest about recognition of same-sex marriages, when such marriages were contracted in states which allow such marriages, but where recognition is sought in states which do not?

  11. Marriage:California • In re estate of Grant V. Levie • The court alludes to an argument based on Hurtado. What do you think that argument was? Is it persuasive? • Should it matter that the decedent could have written a will directing his assets to be distributed in a way that would have matched the distribution under the assumption that he had been married?