Settled Expectations in a World of Unsettled Law: Choice of Law after the Class Action Fairness Act

Abstract

This Essay examines the pressure placed upon choice of law doctrine by the newly enacted Class Action Fairness Act (CAFA). The core argument is that current choice of law doctrine, which assumes fidelity to the forum state choice of law rules as its basic premise, corresponds poorly to the national scope of economic activity in cases brought into federal court under CAFA. The Essay argues that there needs to be some conformity between the national scale of contemporary economic activity and the state-by-state presumption of inherited conflict of laws doctrine in order to provide some sensible legal oversight of national market conduct. Because of the multiplicity of potential forums for litigation of national market activity, the inherited doctrines of Klaxon Co. v. Stentor Electric Manufacturing Co. and Erie Railroad Co. v. Tompkins do little to provide settled expectations about the substantive laws governing broad-scale economic conduct.

The Essay offers an approach that should guide choice of law rules in the context of national market cases based on the need to facilitate common legal oversight of undifferentiated national market activity. The claim here is that conduct that arises from mass-produced goods entering the stream of commerce with no preset purchaser or destination should be treated as just that: goods in the national market. In the absence of national choice of law rules, this Essay suggests that courts should, as a default rule, apply the laws of the home state of the defendant to all standardized claims, regardless of the situs of the final injury. The upshot of this approach is to suggest a path for future development of national market cases that have been brought into the federal courts as a result of CAFA.

Keywords: Conflicts of Laws, class actions, CAFA

JEL Classification: K40, K41