State Courts, State Territory, State Power: Reflections on the Extraterritoriality Principle in Choice of Law and Legislation
78 Pages Posted: 27 Feb 2013
Date Written: 2009
An important (if sometimes poorly understood) extraterritoriality principle constrains the reach of the laws state legislatures may constitutionally enact. Indeed, the Supreme Court has at times suggested that this principle serves to invalidate any “application of a state statute to commerce that takes place wholly outside of the State’s borders.” In the choice-of-law context, however, state courts make the decision to apply state law (including state statutory law) to out-of-state activities (including commercial activities) constantly and routinely. Yet because state courts’ choice-of-law decisions are subject only to the very minimal constraints of the Due Process Clause, the application of forum law to out-of-state events has seldom been thought to raise constitutional concerns.
This Article argues that no principled justification exists for this distinction between the activities of state courts and of state legislatures. When a state court applies forum law to out-of-state events, it exercises a similar sort of state power as does a state legislature that purports to pass a regulation governing out-of-state conduct. As a result, the separation of the lines of cases applicable to choice-of-law decisions and to state regulations is conceptually impossible to maintain. Indeed, in many areas of law – most notably, the Supreme Court’s punitive damages jurisprudence in Gore v. BMW and State Farm v. Campbell – the distinction between these lines of cases is already breaking down. In light of this blurring of boundaries between judicial choice-of-law decisions and legislative activities, this Article argues for a comprehensive re-examination of the extraterritoriality principle that incorporates an understanding of the extraterritorial effects of state courts’ choice of forum law.
Keywords: Extraterritoriality, jurisdiction, conflict of laws, litigation
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