When faced with the problem of choosing between the laws of two states as to which governs a tort action, courts make an analysis of the respective interests of the states involved, the objective of which is to determine the law that most appropriately applies to the issue involved[i].
When a federal court sitting in diversity hears state law claims, the conflicts laws of the forum state are used to determine which state’s substantive law applies[ii].
A court first determines whether the interest or policy underlying the law will be significantly furthered by its application to the case at hand. If both forum state and the foreign state have a strong interest in applying their own law, a true conflict exists. The court then engages in a comparative impairment analysis, and applies the law of the state whose interest would be the more impaired if its law were not applied[iii].
Once a preliminary analysis has identified a true conflict of the governmental interests involved as applied to the parties under the particular circumstances of a case, the comparative impairment approach to the resolution of such conflict seeks to determine which state’s interest would be more impaired if its policy were subordinated to the policy of the other state. Comparative impairment analysis proceeds on the principle that true conflicts should be resolved by applying the law of the state whose interest would be the more impaired if its law were not applied[iv].
In Cable v. Sahara Tahoe Corp., 93 Cal. App. 3d 384 (Cal. App. 2d Dist. 1979), the court held that the methodology of deciding which state’s interests would be the more impaired if its law were not applied does not involve the court in weighing the conflicting governmental interests in the sense of determining which conflicting law manifests the better or the worthier social policy on the specific issue. Rather, the resolution of true conflict cases may be described as essentially a process of allocating respective spheres of lawmaking influence.
[i] Bernhard v. Harrah’s Club, 16 Cal. 3d 313 (Cal. 1976)
[ii] 389 Orange St. Partners v. Arnold, 179 F.3d 656 (9th Cir. Or. 1999)
[iii] Am. Bank of Commerce v. Corondoni, 169 Cal. App. 3d 368 (Cal. App. 2d Dist. 1985)
[iv] Cable v. Sahara Tahoe Corp., 93 Cal. App. 3d 384 (Cal. App. 2d Dist. 1979)