Bootstrapping in Choice of Law after the Class Action Fairness Act
29 Pages Posted: 13 Dec 2005
This article will appear in a larger symposium on the twentieth anniversary of the Supreme Court's decision in Phillips Petroleum Co. v. Shutts. There, the Court famously overturned the application of Kansas substantive law to a nationwide class action brought in Kansas state court concerning a contractual dispute over royalties associated with natural gas leases. In overturning the choice of Kansas law on due process grounds, the Court voiced two concerns: first, concern about potential arbitrariness in the choice made and, second, resistance to what the Court deemed "something of a 'bootstrap' argument" - the invocation by the Kansas court of the class-wide nature of the litigation as a consideration in the choice-of-law analysis.
Part I of this article situates the anti-bootstrapping stricture in Shutts as the intellectual precursor for the Court's later encounters with the class action as an engine for law reform in both Amchem Products, Inc. v. Windsor and Ortiz v. Fibreboard Corp. Amchem and Ortiz contain within them a significant, though largely unarticulated, theory about the limited authority of the class action to achieve law reform. Both decisions embody the proposition that the class action device enjoys no freestanding authority to alter preexisting rights as delineated by substantive law. Part I shows how the anti-bootstrapping stricture in Shutts both anticipates and fits within this broader account of the institutional position occupied by the class action vis-a-vis public legislation.
Part II observes that the impulse to use choice of law to drive the certification of nationwide class actions has not ended with Shutts. A small but consequential minority of courts in recent years have certified nationwide classes in consumer litigation based upon the choice to apply a single body of law - this time, the law of the defendant's principal place of business. Part II focuses on what may well emerge as the trickiest scenario for application of the anti-bootstrapping stricture in the legal world since the enactment of the Class Action Fairness Act (CAFA) in 2005: a nationwide class brought in, or removed to, a federal court sitting in a state where the highest state court has clearly established bootstrapping as part of its choice-of-law principles for consumer class actions. The Court's 1941 decision in Klaxon v. Stentor Manufacturing Co. directs a federal court in a diversity case to apply the choice-of-law principles of the state in which that court sits. The CAFA, however, offers grounds to deviate from this approach where the applicable state choice-of-law principles encompass bootstrapping. The article develops an argument along these lines grounded in existing Court precedent on the parameters of the Erie doctrine - specifically, the notion of the CAFA as an "affirmative countervailing consideration" that should trump the ordinary application of Klaxon where it would lead to bootstrapping.
Keywords: Amchem, bootstrapping, CAFA, choice of law, Class Action Fairness Act, class actions, conflicts of law, diversity jurisdiction, due process, Erie, Klaxon, preexistence principle, removal, Shutts
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