In Edwards v. Erie Coach Lines Co. (17 N.Y.3d 306, 929 N.Y.S.2d 41 ) The New York Court of Appeals clarified choice of law analysis in a multi-party case.
New York’s choice of law analysis, commonly referred to as an “interest analysis,” focuses on determining which jurisdiction, “because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation” (Cooney v. Osgood Mach., 81 N.Y.2d 66, 595 N.Y.S.2d 919 , quoting Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743 ). Assuming a conflict between the laws, a preliminary inquiry in the analysis is whether the substantive law at issue constitutes a “conduct-regulating” or a “loss-allocating” rule. Loss-allocating rules apply post-remedial, i.e., once there is admittedly tortious conduct, while conduct-regulating rules are those which people use as a guide to governing their primary conduct (see, Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 491 N.Y.S.2d 90 ).
The landmark case on this issue is Padula v. Lilarn Props. Corp. (84 N.Y.2d 519, 620 N.Y.S.2d 310 ). The Court of Appeals there explained the distinction as follows:
“Conduct-regulating rules have the prophylactic effect of governing conduct to prevent injuries from occurring. ‘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'” (citation omitted).
Examples of conduct-regulating rules would be New York Labor Law sections 240 and 241, rules of the road, and statutes dictating a standard of care.
Loss allocating rules, on the other hand, are those which prohibit, assign, or limit liability after the tort occurs, such as charitable immunity statutes, guest statutes, no-fault statutes, wrongful death statutes, wrongful birth statutes, vicarious liability statutes, workers’ compensation statutes and contribution rules (see, Padula v. Lilarn Props. Corp. supra). Where the conflicting rules at issue are loss allocating, the outcome depends on the application of the rules set forth in Neumeier v. Kuehner (31 N.Y.2d 121, 335 N.Y.S.2d 64 ).
The three Neumeier rules are as follows:
1. When the passenger [plaintiff] and the driver [defendant] are domiciled in the same state, and the vehicle is registered there, the law of that state controls;
2. This rule addresses the situation where the driver and the passenger are domiciled in different states, and the law of the place where the accident occurs favors its domiciliary. When the driver’s [defendant’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, and therefore driver’s state law applies. Conversely, if the law of the place where the accident occurred permits the injured passenger to recover, then the driver, “in the absence of special circumstances,” may not interpose a conflicting law of his state as a defense;
3. In other situations, when the passenger [plaintiff] and the driver [defendant] are domiciled in different states, the rule is necessarily less categorical. Normally, the applicable rule of decision will be that of the state where the accident occurred but not if it can be shown that displacing that normally applicable rule will advance the relevant substantive law purposes without impairing the smooth working of the multi-state system or producing great uncertainty for litigants.
Rejecting plaintiffs’ request for a ‘single joint, Neumeier analysis,’ for all defendants, the majority opinion in the Court of Appeals determined that to conduct a “Neumeier” choice-of-law analysis, a court must consider each plaintiff vis-a-vis each defendant. This is made clear by the Court of Appeal’s recent decision in Edwards v. Erie Coach Lines Co. (17 N.Y.3d 306, 929 N.Y.S.2d 41 ) which involved six personal injury and/or wrongful death lawsuits arising out of a tragic collision near Geneseo, New York on Jan. 19, 2005, when a charter bus carrying members of an Ontario women’s hockey team plowed into the back of a tractor-trailer parked on the shoulder of a highway. Three of the bus passengers and the trailer driver were killed, and several bus passengers were injured.
The injured passengers and representatives of those who died filed wrongful death and personal injury lawsuits against the bus driver, his employer, and the company that leased the bus, all of which were domiciled in Ontario (the “bus defendants”). They also asserted claims against the tractor-trailer driver, his employer, and the companies that hired the trailer, all of which were citizens of Pennsylvania (the “trailer defendants”). The choice-of-law issues presented by these split-domicile lawsuits were significant because Ontario caps non-economic damages where negligence causes catastrophic personal injury, whereas New York does not cap such damages in the case of a motor vehicle accident involving serious injury.
In Edwards, the Court explained that, while both the Supreme Court and the Appellate Division, Fourth Department, purported to apply the Neumeier analysis, both had done so incorrectly. The Supreme Court determined that Ontario law applied to all claims after undertaking a single choice-of-law analysis for both the bus defendants and the trailer defendants. The parties reached a settlement on the apportionment of fault (90 percent to the bus defendants and 10 percent to the trailer defendants) before there was a resolution of the issue of which substantive law would apply on the damages.
The Appellate Division affirmed, properly conducted separate choice-of-law analyses with respect to the two groups of defendants, but ultimately erroneously reached the same conclusion as the trial court, i.e., that Ontario law should be applied to the claims against all defendants.
Affirming in part and reversing in part, the Court of Appeals indicated that “the correct way to conduct a choice-of-law analysis is to consider each plaintiff vis-a-vis each defendant.” With respect to the bus defendants, the Court agreed that, under the first Neumeier rule, the Ontario cap controlled any award of non-economic damages (the plaintiffs and defendants were commonly domiciled in Ontario). As to the trailer defendants, the Court applied the third Neumeier rule, and found that New York law should govern because the conduct causing the injuries and the injuries themselves took place here (split domicile and the accident happened in a different jurisdiction). There was no reason to contemplate a jurisdiction other than New York because the trailer defendants did not ask the Supreme Court to consider the law of their domicile (Pennsylvania), and those defendants had no contacts whatsoever with Ontario.
Judge Ciparick issued a dissent, with which Judge Lippman concurred, arguing that Neumeier called for a single choice-of-law analysis when non-domiciliary defendants are jointly and severally liable to non-domiciliary plaintiffs in a tort action. The dissent contended that, because the claims all arose from a single incident, a separate Neumeier analysis for each defendant created unpredictability and lack of uniformity in litigation. Because plaintiffs and defendants are domiciled in different locations, the dissent argued, the law of the site of the tort should apply.