Washington v. Trinity Industries Inc et al
Filing
106
MEMORANDUM OPINION AND ORDER signed by JUDGE LORETTA C. BIGGS on 02/27/2017, that Defendants' Motion to Apply North Carolina law (ECF No. 97 ) is DENIED, and Texas substantive and punitive damages laws shall be applied in this case.(Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
DANIELLE WASHINGTON,
)
)
Plaintiff,
)
)
v.
)
)
TRINITY INDUSTRIES, INC. &
)
TRINITY HIGHWAY PRODUCTS, LLC, )
)
Defendants.
)
1:15-cv-517
MEMORANDUM OPINION AND ORDER
LORETTA C. BIGGS, District Judge.
Plaintiff originally filed this diversity action, on November 13, 2014, in the United
States District Court for the Eastern District of Texas, alleging claims for negligence and
product liability against Defendants. (ECF No. 1.) Defendants then filed a motion to transfer
the action to the Northern District of Texas, the location of their headquarters. (ECF No. 14
at 6.) The District Court for the Eastern District of Texas denied Defendants’ motion and sua
sponte entered an order transferring the case to this Court. (ECF No. 30.) Before the Court is
Defendants’ Motion to Apply North Carolina Law. (ECF No. 97.) For the reasons that
follow, the Court concludes that Texas law should apply.
I.
BACKGROUND
Defendants are corporations organized under the laws of Delaware with their principal
place of business in Dallas, Texas. (ECF No. 89 ¶¶ 2–3.) They are in the business of
manufacturing and selling various highway safety and construction products across the United
States. (Id. ¶ 12.) On the morning of November 29, 2013, Plaintiff, a resident of Greensboro,
North Carolina, was driving to work on Interstate 40 when she fell asleep and collided with a
“guardrail end terminal fitted on the blunt end of a line of guardrail.” (Id. ¶¶ 1, 7.) Plaintiff
contends Defendants “designed, manufactured and marketed” the “impact head” of the
guardrail and that “[a]t the time of the accident, the guardrail and impact head in question was
defective and unreasonably dangerous.” (Id. ¶¶ 8, 10.)
Following transfer of the action to this Court, Defendants raised for the first time that
North Carolina law applied and that North Carolina’s contributory negligence defense barred
Plaintiff’s claims.1 (See ECF No. 40 ¶¶ 4–5; ECF No. 41 at 6.) Plaintiff then moved to amend
her Complaint. (ECF No. 68.) On August 31, 2016, the Court granted in part and denied in
part Plaintiff’s motion to amend, and Plaintiff filed her First Amended Complaint asserting
the following claims: (1) negligence/product liability; (2) strict liability/product liability; and
(3) gross negligence, intentional, willful, wanton conduct/punitive damages. (ECF No. 89 at
10–13.) Defendants now move for a determination of whether Texas or North Carolina law
applies to this action.
II.
TEXAS CHOICE-OF-LAW PRINCIPLES
Ordinarily, a federal district court sitting in diversity jurisdiction must apply the choice-
of-law rules of the forum state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487,
496–97 (1941). The parties agree that, because this case was originally filed in the Eastern
District of Texas and was transferred to this Court, Texas choice-of-law principles must be
1
Before the action was transferred to this Court, Defendants answered the Complaint and, like
Plaintiff, also relied on Texas law for their affirmative defenses. (ECF No. 8 ¶¶ 28–29, 33; ECF No.
9 ¶¶ 28–29, 33.)
2
applied to determine whether North Carolina or Texas law governs this action. (ECF No. 98
at 7; ECF No. 99 at 3.) Which state law should govern an issue “is a question of law for the
court to decide”; however, “the state contacts to be considered by the court in making this
legal determination involves a factual inquiry.” Hughes Wood Prods., Inc. v. Wagner, 18 S.W.3d
202, 204 (Tex. 2000). Under Texas choice-of-law principles, the party urging application of
another state’s substantive law bears the burden of providing sufficient information to
establish that the law of another state applies. Janvey v. Suarez, 978 F. Supp. 2d 685, 692 (N.D.
Tex. 2013). Thus, Defendants bear the burden of proof here.
When presented with a choice-of-law question, Texas courts first determine whether
there is an actual conflict between the laws of the applicable jurisdictions. See Duncan v. Cessna
Aircraft Co., 665 S.W.2d 414, 419 (Tex. 1984). If no conflict exists, then a choice-of-law
analysis is unnecessary. Schneider Nat’l Transp. v. Ford Motor Co., 280 F.3d 532, 536 (5th Cir.
2002). Here, the parties agree that the laws of Texas and North Carolina are in conflict with
respect to each of Plaintiff’s claims. (ECF No. 98 at 7; ECF No. 99 at 3–4.) The Court must,
therefore, conduct a choice-of-law analysis to determine which state law governs.
III.
THE RESTATEMENT’S MOST-SIGNIFICANT-RELATIONSHIP TEST
Texas follows the most-significant-relationship test, set out in §§ 6 and 145 of the
Restatement (Second) of Conflict of Laws (1971) (“Restatement”), to resolve choice-of-law
issues. Gutierrez v. Collins, 583 S.W.2d 312, 318 (Tex. 1979). Under this test, the court must
first determine which state law has the most significant relationship to each issue involved in
the action. Hughes, 18 S.W.3d at 205. Section 6 of the Restatement outlines the basic policy
3
considerations to be used to decide a choice-of-law question in any given case and directs the
Court to consider the following factors:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
the needs of the interstate and international systems,
the relevant policies of the forum,
the relevant policies of other interested states and the relative
interests of those states in the determination of the particular
issue,
the protection of justified expectations,
the basic policies underlying the particular field of law,
certainty, predictability and uniformity of result, and
ease in the determination and application of the law to be applied.
Restatement § 6(2); Gutierrez, 583 S.W.2d at 318–19. Section 145 is the more specific rule,
which sets out the factual contacts to be considered when applying the § 6 policy factors. See
Gutierrez, 583 S.W.2d at 318–19. Section 145 provides that “[t]he rights and liabilities of the
parties with respect to an issue in tort are determined by the local law of the state which, with
respect to that issue, has the most significant relationship to the occurrence and the parties
under the principles stated in § 6.” Restatement § 145(1). Thus, the Court must analyze how
the following factual contacts outlined in § 145 impact the policy factors contained in § 6. See
Hughes, 18 S.W.3d at 205. Section 145 factual contacts include the following:
(a)
(b)
(c)
(d)
the place where the injury occurred,
the place where the conduct causing the injured occurred,
the domicil, residence, nationality, place of incorporation and
place of business of the parties, and
the place where the relationship, if any, between the parties is
centered.
Restatement § 145(2). The Restatement further advises that “[t]hese contacts are to be
evaluated according to their relative importance with respect to the particular issue.” Id. The
number of contacts with a state is not determinative; rather the contacts are to be evaluated
by their qualitative character using the policy factors outlined in § 6. See Torrington Co. v.
4
Stutzman, 46 S.W.3d 829, 848 (Tex. 2000). Because § 145 sets out the factual contacts specific
to this case that must be used when applying § 6’s general policy principles, the Court will
begin its discussion with the § 145 contacts.
A. Section 145 Factual Contacts
Place Where the Injury Occurred
Section 145 provides that “[i]n the case of personal injuries or of injures to tangible
things, the place where the injury occurred is a contact that, as to most issues, plays an
important role in the selection of the state of the applicable law[.]” Restatement § 145 cmt. e.
Here, there is no dispute that the place of injury is North Carolina where the collision occurred.
Defendants argue that where, as in this case, the particular claim involves personal
injuries, § 146 of the Restatement creates a presumption that the state where the injury
occurred determines the rights and responsibilities of the parties unless some other state,
applying the principles set out in §§ 6 and 145, has a more significant relationship to the
particular issue. (ECF No. 98 at 9.) It does not appear, however, that the Texas Supreme
Court has explicitly adopted the § 146 presumption. See Burleson v. Liggett Grp., 111 F. Supp.
2d 825, 829 n.4 (E.D. Tex. 2000) (explaining that “Texas has only adopted part of the
Restatement and has not adopted the presumption in § 146”). Nevertheless, some Texas
courts have relied on the presumption in § 146. See, e.g., Enter. Prods. Partners, L.P. v. Mitchell,
340 S.W.3d 476, 480 (Tex. App. 2011). While the Texas Supreme Court has not definitively
stated whether § 146’s presumption applies in cases involving personal injuries, it is clear that
the Texas Supreme Court follows a “flexible approach to conflicts problems” in that the place
of injury is not dispositive, but is one contact to be considered in determining which state has
5
the most significant relationship to a particular issue. Gutierrez, 583 S.W.2d at 318; accord
Herrera v. Michelin N. Am., Inc., No. B-07-114, 2009 WL 700645, at *9 (S.D. Tex. Mar. 16,
2009); Baird v. Bell Helicopter Textron, 491 F. Supp. 1129, 1139 (N.D. Tex. 1980); see Denman v.
Snapper Div., 131 F.3d 546, 550 (5th Cir. 1998).
Because North Carolina is the place of injury, this factual contact supports the
application of North Carolina law. However, the weight to be given this contact must be
determined in relation to the § 6 policy considerations.
Place of Conduct Causing Injury
This contact requires the Court to consider where the conduct causing the injury
occurred. In this case, there are several issues presented that must be considered separately to
determine the location of the relevant conduct with respect to each issue. Plaintiff brings three
claims: (1) negligence/product liability, (2) strict product liability, and (3) gross negligence,
intentional, willful, wanton conduct/punitive damages. (ECF No. 89 at 10–13.) In addition,
Defendants’ defense of contributory negligence may impact resolution of some of these
claims. (ECF No. 94 at 15; ECF No. 95 at 15.)
Regarding Plaintiff’s claims, the Amended Complaint alleges that Defendants
“defectively designed, manufactured, assembled, marketed and/or distributed the altered ETPlus in a manner that prevent[ed] the impact head system from operating properly, safely, and
as intended.” (ECF No. 89 ¶ 50.) Plaintiff further alleges that Defendants “knew of the
dangerous conditions created by [their] unapproved, modified ET-Plus system” but, despite
such knowledge, “knowingly and intentionally produced, marketed, and sold the altered ETPlus system.” (Id. ¶¶ 56, 58.) The parties do not appear to dispute that, if the product at issue
6
in this case was manufactured by Defendants,2 then it was manufactured in Texas. As such,
Plaintiff’s lawsuit is based not on any actions taken by Defendants in North Carolina; rather,
the lawsuit alleges negligence and intentional conduct involving the design, manufacture, and
distribution of a defective and unsafe product by Defendants in Texas that they placed into
the marketplace in Texas. Texas would appear to have the most significant relationship related
to these allegations of wrongdoing. See Perry v. Aggregate Plant Prods. Co., 786 S.W.2d 21, 25
(Tex. App. 1990) (“[S]ince the silo was designed and manufactured in Texas, the cause of
action is directed at the design and manufacture of the silo, and . . . it seems that Texas is the
place where the conduct causing the injury occurred.”); accord Norwood v. Raytheon Co., 237
F.R.D. 581, 595 (W.D. Tex. 2006) (“In a products liability case alleging defective design, courts
generally consider the place where the conduct causing the injury occurred to be the place
where the product was designed and manufactured.”); Sloss v. Gen. Motors Corp., No.
Civ.A.3:00CV1036-M, 2001 WL 1081303, at *4 (N.D. Tex. Sept. 12, 2001) (same).
In addition, Texas is the place of the alleged conduct causing injury for purposes of
evaluating which state law governs the punitive damages issue. See Vargas v. Kiewit La. Co., No.
H-09-2521, 2012 WL 1029517, at *7 (S.D. Tex. Mar. 26, 2012) (holding that Louisiana, not
2
Defendants argue that “the evidence is inconclusive on when, where or by whom the guardrail end
terminal was manufactured or sold.” (ECF No. 98 at 18.) Specifically, Defendants contend that there
is a lack of evidence to establish that the guardrail end terminal was manufactured in Texas, and thus
there is an insufficient basis to conclude that this factor weighs in favor of applying Texas law. (Id.)
However, as Plaintiff points out, there is sufficient evidence in the record that Defendants
manufactured the guardrail end terminal at issue here. (See, e.g., ECF No. 73-3; ECF No. 94 ¶¶ 10–
11; ECF No. 95 ¶¶ 10–11; ECF No. 99-1 at 7; ECF No. 99-2 at 5; ECF No. 99-3 § 2 at ¶¶ 6–7.)
Further, if the jury determines that the evidence does not show, by a preponderance of the evidence,
that Defendants manufactured the guardrail end terminal, then Defendants would be absolved of
liability, making any choice-of-law determination of little consequence.
7
Texas, had the greatest interest in applying its punitive damages law because defendants
allegedly committed the tort in Louisiana, not Texas); Black v. Toys R US–Delaware, Inc., No.
4:08-cv-3315, 2010 WL 4702344, at *11 (S.D. Tex. Nov. 10, 2010) (concluding that South
Africa had greatest connection to the punitive damages issue because conduct causing the
plaintiff’s injury occurred in South Africa).
The Court next considers which state has the most significant relationship to the
contributory fault issue.3 Ordinarily, “[t]he law selected by application of . . . § 145 determines
whether contributory fault on the part of the plaintiff precludes h[er] recovery in whole or in
part.” Restatement § 164(1). Where the plaintiff’s conduct that is claimed to constitute
contributory fault takes place in the state of injury, the local law of that state “will usually be
applied to determine whether the plaintiff’s conduct amounted to contributory fault and if so,
whether the effect of this fault is to preclude recovery by the plaintiff in whole or in part.” Id.
§ 164 cmt. b. North Carolina is, therefore, the location of the injury causing conduct for
purposes of determining which state has the most significant relationship to the contributory
negligence issue. See Black, 2010 WL 4702344, at *11.
In sum, the negligent and gross/intentional conduct involving the design, manufacture,
assembly, marketing and/or distributing of the guardrail end unit and the punitive damages
3
Although Texas and North Carolina laws differ on the impact a plaintiff’s negligence may have on
her ability to recover, both states take into consideration a plaintiff’s conduct in determining recovery.
North Carolina’s contributory negligence defense operates as a complete bar to recovery. See Champs
Convenience Stores, Inc. v. United Chem. Co., 406 S.E.2d 856, 861 (N.C. 1991). Texas, on the other hand,
uses a comparative fault model. See Dugger v. Arredondo, 408 S.W.3d 825, 836 (Tex. 2013).
8
issues favor application of Texas law. The location of the conduct which is alleged to
constitute contributory fault favors application of North Carolina law.
The Domicile, Residence, Nationality, Place of Incorporation, and Place of Business of the
Parties
Plaintiff is a North Carolina resident. Defendants are Delaware companies with their
business operations in Texas. This contact is thus neutral as to which law applies.
The Place Where the Relationship, if any, Between the Parties is Centered
The final contact under Restatement § 145 asks where the parties’ relationship is
centered. “When there is a relationship between the plaintiff and the defendant and when the
injury was caused by an act done in the course of the relationship, the place where the
relationship is centered is another contact to be considered.” Restatement § 145 cmt. e.
Defendants argue that, because “the only relationship alleged to exist arises from an
automobile crash that occurred in North Carolina,” which is the place of injury, this contact
weighs in favor of applying North Carolina law. (ECF No. 98 at 20.) Plaintiff, on the other
hand, urges that this contact weighs in favor of applying Texas law, arguing that for product
liability claims, as in this case, Texas courts hold that the relationship between the parties
centers on where the product was manufactured, designed, and marketed. (ECF No. 99 at
15–16.)
This Court finds neither of the parties’ arguments persuasive or their cited cases directly
on point. Here, there was no indirect or direct relationship between Defendants and Plaintiff.
Thus, the Court is persuaded by Texas courts that have concluded that this contact was
inapplicable when there was no relationship between the parties before the accident. See, e.g.,
Crisman v. Cooper Indus., 748 S.W.2d 273, 278 (Tex. App. 1988) (holding that where the
9
relationship was centered was inapplicable in case alleging product liability “because the
opposing parties had no relationship between them prior to the accident”); accord Grosskopf v.
Chrysler Grp. LLC, No. A-14-CA-801-SS, 2015 WL 6021851, at *5 (W.D. Tex. Oct. 14, 2015)
(“A plaintiff’s mere contact with a defendant’s product does not constitute the type of
relationship Section 145 contemplates.”). Because Plaintiff and Defendants had no direct or
indirect relationship prior to the accident, the Court concludes that this contact is neutral.
Summary of Section 145 Contacts
Having considered the factual contacts outlined in § 145, the Court finds that the first
and second contacts emerge as the only relevant contacts for the Court to consider. The first
contact, the location of the injury, clearly weighs in favor of applying North Carolina law. The
second contact, the location of the conduct causing the injury, however, is not so
straightforward. While the conduct causing the injury as alleged in Plaintiff’s Complaint favors
application of Texas law, the conduct allegedly giving rise to the contributory fault issue favors
application of North Carolina law.
According to the Restatement, where the conduct and personal injury occur in different
states, “the local law of the state of injury will usually be applied to determine most issues
involving the tort.” Restatement § 146 cmt. e; see also id. § 156 cmt. b. Further, § 164 of the
Restatement indicates that application of the law of the state of injury is perhaps more likely
when the plaintiff’s conduct that constitutes the alleged contributory fault occurs in the state
of injury. See id. § 164 cmt. b. While these sections of the Restatement appear to support the
application of North Carolina law as it relates to the second contact, both the Texas Supreme
Court and the Restatement make clear that the § 145 contacts “must [be] evaluat[ed] . . . in
10
light of the state policies underlying the particular substantive issue.” Torrington, 46 S.W.3d at
848; Restatement § 145(2). It is the significance of the § 145(2) contacts in relation to the § 6
policy considerations, not the number of the § 145(2) contacts, that governs the choice-of-law
analysis. Rosenthal v. Ford Motor Co., 462 F. Supp. 2d 296, 303 (D. Conn. 2006); see Duncan, 665
S.W.2d at 421. Thus, the Court must evaluate the significance of the § 145(2) contacts in light
of the § 6 policy considerations to determine whether Texas or North Carolina law applies
here.
B. Section 6 Policy Factors
Not all of § 6’s policy factors will be equally important in every case. Rosenthal, 462 F.
Supp. 2d at 303. The Restatement states that choice-of-law factors (d) the protection of
justified expectations of the parties, (e) the basic policies underlying the particular field of law,
and (f) certainty, predictability and uniformity of result are “of lesser importance in the field
of torts.”4 Restatement § 145 cmt. b. The remaining factors therefore “assume greater
importance,” id.; however, the Restatement does caution that factor (g) ease in determination
and application of the law to be applied, “should not be overemphasized, since it is obviously
of greater importance that choice-of-law rules lead to desirable results,” id. § 6 cmt. j.
Ultimately, choice-of-law rules lead to desirable results where the court evaluates the
competing interests of each state and identifies the state most significantly related to the
particular issue that needs to be resolved.
4
While the Restatement states that factor (e) is not as important in tort cases, Texas courts have
emphasized this policy factor in determining which forum has the most significant relationship to an
issue. See, e.g., Vizcarra v. Roldan, 925 S.W.2d 89, 91 (Tex. App. 1996).
11
Defendants primarily argue that the § 6 policy factors favor application of North
Carolina law to Plaintiff’s claims because North Carolina has an interest in having its laws,
including its contributory negligence framework, applied to a collision involving a North
Carolina resident on a North Carolina highway. (ECF No. 98 at 10–14.) Plaintiff, on the
other hand, contends, among other things, that Texas’ interest in consumer protection and
regulation of manufacturers within its borders outweighs North Carolina’s interest in applying
its product liability and contributory negligence laws. (See ECF No. 99 at 19.) The Court
concludes that the policy factors weigh in favor of application of Texas law to the claims in
this action.
The Needs of the Interstate and International Systems
The first factor “seek[s] to further harmonious relations between states and to facilitate
commercial intercourse between them.” Restatement § 6 cmt. d. Neither party has provided
any evidence or argument that the resolution of the choice-of-law issues in this case will have
any impact on the goal of facilitating commerce between Texas and North Carolina. Thus,
the Court finds this factor to be neutral to its analysis.
Relevant Policies of Texas and North Carolina and Basic Policies Underlying Tort Issues
The Court will analyze policy factors (b), (c), and (e) together.5 They are: (b) the
relevant policies of the forum; (c) the relevant policies of other interested states in the
determination of the particular issue; and (e) the policies underlying the particular field of law.
5
See Sulak v. Am. Eurocopter Corp., 901 F. Supp. 2d 834, 845 (N.D. Tex. 2012) (analyzing (b), (c), and
(e) together).
12
The Restatement advises that courts should not only have regard for the forum state’s
policy in a common law rule or statute but also of the relevant policies of all other interested
states. See Restatement § 6 cmts. e & f. Ultimately, the court should “seek to reach a result
that will achieve the best possible accommodation of these policies.” Id. § 6 cmt. f. Because
this case was transferred from a Texas forum, for purposes of the choice-of-law analysis, Texas
is considered the forum state. Volvo Constr. Equip. N. Am., Inc. v. CLM Equip. Co., 386 F.3d
581, 600 (4th Cir. 2004) (“[W]hen a lawsuit is transferred from one federal court to another
pursuant to 28 U.S.C. § 1404(a), the transferee court is obliged to apply the choice-of-law rules
that the transferor court would have applied.”); see also Van Dusen v. Barrack, 376 U.S. 612, 639
(1964) (“A change of venue under § 1404(a) generally should be, with respect to state law, but
a change of courtrooms.”).
a. Texas’ Policy Interests
According to the United States Court of Appeals for the Fifth Circuit:
The Texas legislature and courts have developed an almost paternalistic
interest in the protection of consumers and the regulation of the conduct
of manufacturers that have business operations in the state. The
expansive Texas system of tort liability for defective products serves as
an incentive to encourage safer design and to induce corporations to
control more carefully their manufacturing processes. This interest is
particularly strong when the defective product in question was
manufactured and placed in the stream of commerce in the State of
Texas.
Mitchell v. Lone Star Ammunition, Inc., 913 F.2d 242, 250 (5th Cir. 1990) (citations omitted).
Consistent with its expansive system of tort liability, Texas adopted strict product liability laws 6
6
See Sanchez v. Brownsville Sports Ctr., 51 S.W.3d 643, 669–70 (Tex. App. 2001), vacated by settlement
agreement.
13
and a comparative fault model, which seeks to apportion liability according to the fault of the
parties, allowing a plaintiff to recover as long as his or her own responsibility does not exceed
50%, see Nabors Well Servs., Ltd. v. Romero, 456 S.W.3d 553, 559–60 (Tex. 2015). In addition,
Texas punitive damages law seeks to punish and deter wrongdoing by corporations within its
borders. See Tobin v. AMR Corp., 637 F. Supp. 2d 406, 422 (N.D. Tex. 2009) (“The Court finds
that Texas law should apply, because Texas has an interest in whether allegedly wrongful acts
committed by Texas corporations should be punished. Illinois has no interest in shielding a
foreign company from such liability.”). Thus, Texas’ interests would be furthered by the
application of Texas law in a case involving a company headquartered in Texas that allegedly
placed a defective product into the stream of commerce in Texas, leading to injury in North
Carolina. See Restatement § 6 cmt. e (“If the purposes sought to be achieved by a local statute
or common law rule would be furthered by its application to out-of-state facts, this is a weighty
reason why such application should be made.”); Sanchez, 51 S.W.3d at 670–71 (affirming trial
court’s application of Texas law, holding while Mexico has a great interest in seeing that its
citizens are compensated in product liability action and regulating the use of that product
within its borders, this matter involves the competing interest of Texas, where the product
entered the stream of commerce, giving Texas an “appreciable interest” in applying its law).
b. North Carolina’s Policy Interests
The North Carolina General Assembly enacted a statutory prohibition against strict
liability in product liability actions and codified its contributory negligence doctrine within the
statute. N.C. Gen. Stat. § 99B-1.1 (“There shall be no strict liability in tort in product liability
actions.”); Nicholson v. Am. Safety Utility Corp., 488 S.E.2d 240, 244 (N.C. 1997) (“At common
14
law, [a] plaintiff is contributorily negligent when he fails to exercise such care as an ordinarily
prudent person would exercise under the circumstances in order to avoid injury [and] N.C.G.S.
§ 99B-4(3) does not create a different rule for products liability actions[.]” (first alteration in
original) (internal quotation marks and citations omitted)); see id. (“In a product liability action
founded on negligence, ‘[t]here is no doubt that . . . [plaintiff’s] contributory negligence will
bar his recovery to the same extent as in any other negligence case.’” (alterations in original)
(quoting Smith v. Fiber Controls Corp., 268 S.E.2d 504, 510 (N.C. 1980))).
In a report to the North Carolina General Assembly, the Legislative Research Division
clearly explains that the purpose behind North Carolina’s Product Liability Act was to protect
the state’s business interests. The Legislative Research Commission explained:
In response to rapidly escalating premiums for products liability
insurance and to potential non-availability of such coverage, the 1979
General Assembly enacted comprehensive legislation to remedy these
problems. . . . By codifying North Carolina’s case law, . . . the General
Assembly intended to guarantee the continued availability of products
liability insurance coverage to North Carolina manufacturers,
wholesalers, and retailers; and thereby assure that these persons would
be able to continue their businesses without the fear of large monetary
losses and resultant insolvencies, bankruptcies, and cessation of
operations.
Products Liability Report to the 1981 General Assembly of North Carolina, at 2. (Jan. 14,
1981); see Boudreau v. Baughman, 356 S.E.2d 907, 911 (N.C. Ct. App. 1987) (explaining that “the
public policy of this State is to protect North Carolina manufacturers and designers . . . from
stale claims” in product liability case involving statute of repose), aff’d in part and rev’d in part on
other grounds, 368 S.E.2d 849 (N.C. 1988); see also Black, 2010 WL 4702344, at *16 (“North
Carolina’s more stringent products liability laws were intended to protect its own
manufacturers, and that in the absence of a North Carolina defendant, the state lacked a
15
significant interest in the application of its laws.”); Brewer v. Dodson Aviation, 447 F. Supp. 2d
1166, 1183 (W.D. Wash. 2006) (“[T]he purpose of North Carolina’s . . . prohibition on strict
liability in product liability actions, is to [presumably] protect North Carolina businesses[.]”).
Likewise, studies reveal that North Carolina’s primary motivation in its contributory
negligence doctrine is concern regarding the impact of insurance rates on the state’s
businesses. See Legis. Res. Comm’n, Laws of Evidence and Comparative Negligence Report
to the 1981 General Assembly of North Carolina, at 2, 7, 13–18 (Jan. 14, 1981) (studying
North Carolina’s contributory negligence system and addressing the primary concern
involving the impact on insurance rates if the state moved away from a contributory fault
system); see Steven Gardner, Contributory Negligence, Comparative Negligence, and Stare Decisis in
North Carolina, 18 Campbell L. Rev., 1, 33, 42–43, 47 54–55 (1996) (explaining that one of the
principle arguments in maintaining North Carolina’s contributory fault system is concern
regarding insurance costs). Like Texas, the purpose of punitive damages in North Carolina is
“to punish a defendant for egregiously wrongful acts and to deter the defendant and others
from committing similar wrongful acts.” N.C. Gen. Stat. § 1D–1.
c. Texas’ Interests Outweigh North Carolina’s Interests
Balancing both states’ respective interests, the Court concludes that Texas’ interests
outweigh North Carolina’s interests on the facts of this case. Texas, through its strict liability
and comparative fault model, has a powerful interest in regulating the conduct of its
manufacturers and vindicating the rights of individuals harmed by their conduct. See Greenberg
Traurig of N.Y P.C. v. Moody, 161 S.W.3d 56, 73 (Tex. App. 2004) (“Generally, the state where
the act or omission occurs has a real interest in applying its law in order to implement the
16
state’s regulatory policy as reflected in that law.”); see also Sico N. Am., Inc. v. Willis, No. 14-08000158-CV, 2009 WL 3365856, at *4–6, 11 (Tex. App. 2009) (affirming trial court’s judgment
that Minnesota law applied because the Minnesota corporation designed, manufactured, and
placed the allegedly defective product into the stream of commerce, implicating Minnesota’s
interest in regulating companies that operate within its borders); Crisman, 748 S.W.2d at 277–
78, 280, 282 (affirming trial court’s judgment that Texas law did not apply because the “issue
in tort” between the parties “is the design, manufacture, and placing in the stream of
commerce” a product that was not designed, manufactured, or placed into the stream of
commerce in Texas).
By not recognizing strict liability and recognizing contributory negligence, “North
Carolina’s product liability law ‘expresses no interest in regulating the conduct of the
defendant, but rather limits the liability exposure to which his conduct subjects him.’”
Rosenthal, 462 F. Supp. 2d at 305 (quoting O’Connor v. O’Connor, 519 A.2d 13, 24 (Conn. 1986)).
Defendants are Texas companies that have allegedly designed and manufactured an allegedly
defective product in Texas that caused injury to a North Carolina resident. Applying Texas
law not only furthers that state’s interests but in no way offends North Carolina’s policy
interests, which primarily concern protecting the state’s business industry against escalating
insurance costs. On the other hand, Texas’ interests in regulating products manufactured in
Texas and providing compensation for persons injured by its companies may be significantly
frustrated by application of North Carolina law to Plaintiff’s claims against Defendants.
Defendants, nevertheless, argue that North Carolina remains interested because
Plaintiff’s injury occurred in North Carolina and Plaintiff’s conduct the night before and the
17
morning of the collision implicates the state’s contributory negligence framework. (ECF No.
98 at 12.) Defendants state further that North Carolina’s contributory negligence doctrine is
based on North Carolina’s policy that “all of the circumstances during the plaintiff’s use of
the product must be considered, not just plaintiff’s conduct with respect to the product itself.”
(Id. at 11–12 (quoting Nicholson, 488 S.E.2d at 244).) While Defendants are correct that the
injury occurred in North Carolina, the significance of the location where the injury occurred
is diminished in cases involving product liability claims. See McLennan v. Am. Eurocopter Corp.,
245 F.3d 403, 426 (5th Cir. 2001) (affirming district court’s determination that Texas law
applied, explaining that, while the plaintiff was injured in Canada and was a Canadian resident,
“the relevant conduct that [the plaintiff] claims gave rise to his injuries [included] the marketing
and manufacturing of the helicopter, [which] took place in Texas, where [the defendant]
maintained its principal place of business”); Linden v. CNH Am. LLC, 753 F. Supp. 2d 870,
875 (S.D. Iowa 2010) (explaining that in a product liability case, the place where the design,
manufacture, and marketing conduct occurred is of greater importance than the place of
injury); Rosenthal, 462 F. Supp. 2d at 304–05 (noting that the place of injury, though a significant
factor in many tort cases, should not be given undue weight in product liability actions); Perry,
786 S.W.2d at 24–26 (reversing trial court’s decision to apply Indiana law, explaining that while
it is undisputed that the injury occurred in Indiana to Indiana residents, the product was
manufactured in Texas by a company located and registered to do business in Texas and thus
Texas is the place where the conduct causing the injury occurred).
Moreover, North Carolina’s interest in regulating conduct and accidents on its
highways is not frustrated by application of Texas law. North Carolina’s interests are protected
18
by its ability to charge criminal penalties for violations of its laws. See Sinnott v. Thompson, 32
A.3d 351, 357 (Del. 2011) (“[W]e conclude that North Carolina’s interests are sufficiently
protected by its ability to impose criminal penalties for violating its motor vehicle laws.”)
Resolving a civil case between a North Carolina resident and a Texas company under Texas
law does not negatively impact such interests. See id.
Considering the underlying policy considerations of each state, Texas has a greater
interest in having its product liability and punitive damages laws applied to a case involving a
Texas company that allegedly designed, manufactured, and placed into the stream of
commerce a product in Texas that caused injury.7 This result aligns with two of the basic
policies underlying the field of tort law: deterrence of tortious conduct and compensation for
injured victims. See Restatement § 145 cmt. b. The Court concludes that policy factors (b),
(c), and (e) weigh decisively in favor of applying Texas substantive law to Plaintiff’s claims.
Remaining Factors
The remaining § 6 policy factors include (d) the protection of justified expectations, (f)
certainty, predictability, and uniformity of result, and (g) ease in the determination and
application of the law to be applied.
Policy factors (d) and (f) generally carry more weight in commercial cases, where the
7
Although the policies underlying punitive damages in both states seek to deter and punish elevated
forms of misconduct, because Texas is the place where the alleged intentional and gross negligent
conduct occurred, Texas’ interest in having its punitive damages law applied to this case outweighs
North Carolina’s interest. See Restatement § 145 cmt. c (“If the primary purpose of the tort rule
involved is to deter or punish misconduct, . . . the state where the conduct took place may be the state
of dominant interest and thus that of most significant relationship.”); see also Black, 2010 WL 4702344,
at *11 (noting that place where the conduct causing injury occurred is where punitive damages issue
is properly situated).
19
parties are likely to have molded their conduct to conform to the requirements of another
state. See Restatement § 6 cmts. g & i. In tort cases, however, it is unlikely the parties have
given any thought to the consequences of their conduct. See id.; see also Avram v. Samsung Elecs.
Am., Inc., Nos. 2:11-6973(KM), 2:12-976(KM), 2013 WL 3654090, at *16 (D. N.J. July 11,
2013); Sulak, 901 F. Supp. 2d at 845–46. The final policy factor, ease in determination and
application of the law, is designed to make choice-of-law rules simple and easy to apply, but
should not be overemphasized in the choice-of-law analysis. Restatement § 6 cmt. j. As a
federal court sitting in diversity jurisdiction, the Court is often called upon to apply the law of
states other than the one in which the Court sits and thus can apply either Texas or North
Carolina law with the same degree of ease. Section 6 factors (d), (f), and (g) are thus neutral
and do not aid the Court in resolution of the choice-of-law issues in this case.
IV.
CONCLUSION
Balancing the contacts and policy factors under §§ 6 and 145 of the Second
Restatement of Conflict of Laws, the Court concludes that Texas substantive and punitive
damages laws must be applied to this case.
For the reasons outlined herein, the Court enters the following:
ORDER
IT IS THEREFORE ORDERED that Defendants’ Motion to Apply North Carolina
law (ECF No. 97) is DENIED, and Texas substantive and punitive damages laws shall be
applied in this case.
This, the 27th day of February, 2017.
/s/ Loretta C. Biggs
United States District Judge
20
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?