Opinion ID: 685620
Heading Depth: 2
Heading Rank: 2

Heading: diversity and conflict of laws

Text: 46 The Carrieres, domiciliaries of Louisiana, brought suit against Grey Wolf, a Texas corporation, in a federal district court in Louisiana, with jurisdiction grounded in diversity of citizenship. Federal courts sitting in diversity are bound to apply the substantive law of the forum state, including the forum state's conflict of laws provisions. 3 Thus, argue appellants (and none disputes) the court must look to Louisiana's conflict of laws provisions to determine whether the substantive law of Texas or Louisiana governs this claim. 47
48 Appellants assert that, as their dispute involves a choice of law between the statutory immunity provisions of the workers' compensation laws of Louisiana and Texas, it fits within the scope of Civil Code article 3544, the conflict of laws rule covering issues of loss distribution and financial protection. 4 The Carrieres and Aetna rely on Kennington v. H. Blume Johnson, Inc., 5 which resolved a statutory employer immunity conflict of laws issue between Louisiana and Texas workers' compensation laws by applying Civil Code article 3544 to the conflict. 6 A threshold issue in Kennington was whether the appropriate Louisiana conflicts provision was article 3543, the Civil Code provision governing standards of conduct and safety, or article 3544, the provision governing issues of loss distribution and financial protection. In resolving the choice of law issues by applying article 3544, the Kennington court reasoned that statutes that provide immunity from suit are appropriately classified as rules of loss distribution or financial protection. 7 Once the court determined that article 3544 governed the choice of law issue and applied the facts of the dispute to the provision, it concluded that Louisiana law was the substantive law to apply to the dispute. 49 The Carrieres and Aetna point out that, like the choice of law issue in Kennington, their dispute against Grey Wolf involves a conflict between the statutory employer provisions of Texas and Louisiana workers' compensation law. The appellants suggest that, as Kennington represents Louisiana's interpretation of the state's recently revised conflict of laws provisions, we should be led by the state court's reasoning and resolve the instant conflict according to the elements of article 3544. They argue that, when the facts of the instant dispute are plugged into article 3544(2), the Code mandates that Texas law governs their claim against Grey Wolf. 8 50 We agree that statutory employer immunity provisions involve issues of financial protection and loss distribution. We also agree that article 3544 of the Louisiana Civil Code is the appropriate conflicts provision with which to begin the choice of law analysis for this dispute. We do not agree, however, that, for this particular dispute, the choice of law analysis ends with the definitive result mandated by article 3544(2). We distinguish the facts of the instant case from Kennington and, for the reasons discussed below, conclude that the choice of law issue here presents an exceptional situation. It thus comes within the scope of the Code's conflict of laws provision for exceptional cases, which in this instance requires the application of Louisiana law to the dispute despite the fact that article 3544(2) mandates that Texas law applies. 51 In distinguishing the facts of the instant case from those of Kennington we first observe that previous adjudication has already determined that Carriere is entitled to Louisiana workers' compensation benefits, whereas, the Louisiana Supreme Court, in reversing and remanding Kennington, concluded that Kennington's statutory employer was not entitled to evoke Louisiana's statutory employer defense because it had not satisfied its burden of showing that Kennington was entitled to Louisiana benefits. In addition, we consider significantly distinguishable the fact that unlike the plaintiff in Kennington, Carriere has already received compensation from his direct employer pursuant to Louisiana's workers' compensation law. Moreover, we note that, unlike Kennington, in which the court reasoned that Louisiana law was the appropriate substantive law to apply because the same result was reached using either an article 3544 analysis or a separate interest analysis, we are unable to reach an analogous result. 9 We are convinced that even though a conflicts analysis under article 3544(2) would mandate the application of Texas law, a separate interest analysis reveals that Louisiana law would be most seriously impaired if Texas law were applied to the dispute. In light of these incompatible conclusions, we determine that we must look to the Code's conflict of laws provision that addresses this type of conflict within a conflict. Thus, we carry the choice of law analysis presented in this appeal a step further and analyze it under article 3547, the Code provision governing exceptional cases. 10
Article 3547 provides the following: 52 [t]he law applicable under Articles 3543-3546 shall not apply if, from the totality of the circumstances of an exceptional case, it is clearly evident under the principles of Article 3542, that the policies of another state would be more seriously impaired if its law were not applied to the particular issue. In such event, the law of the other state shall apply. 11 53 Commentary to article 3547 notes that the choice of law rules contained in Articles 3543-3546 were established to avoid the laborious analysis required by Article 3542, the general rule for choice of law issues. The commentary also notes, however, that the rules contained in Articles 3543-3546 may, in exceptional cases, produce a result that is incompatible with the principles of Article 3542. Thus, article 3547 provides an escape mechanism for avoiding otherwise incompatible results in resolving choice of law issues. 54 When a court is convinced that the laws of a state other than the one designated by Articles 3543-3546 would be significantly impaired if not applied to a dispute, then the law that is designated by Articles 3542-3546 must yield to Article 3542 and the law of the state whose policies would be most seriously impaired governs the particular dispute. 12 As we are convinced that Louisiana law would be most seriously impaired if Texas law were applied to the dispute, thereby concluding that Texas law must yield to Louisiana law, we discuss briefly the key elements of article 3547, namely the principles of Article 3542 and the totality of the circumstances that lead us to conclude that this is an exceptional case. 55
56 Article 3542 provides that, except as otherwise provided, issues of delictual or quasi-delictual obligations are governed by the law of the state whose policies would be most seriously impaired if its laws were not applied to the issue in dispute. 13 That state is determined by evaluating the strength and pertinence of the state's policies in light of the pertinent contacts of each state to the parties' and the events giving rise to the dispute, including the place of conduct and injury; the domicile or place of business of the parties; the state in which the relationship was centered; and the policies of Article 3515 (the policies and needs of interstate systems, the policies of upholding the justified expectations of the parties, and the policy of minimizing the adverse consequences that might follow from subjecting a party to the law of more than one state). 57 We compare the policies and interests of both Texas and Louisiana to support our conclusion that, as Louisiana's interests and contacts are greater than those of Texas, the policies of Louisiana would be most seriously impaired if its laws were not applied to the instant dispute. Texas' interests are (1) Grey Wolf is incorporated in Texas; (2) the place of conduct and injury are in Texas; and (3) Texas, we surmise, has an interest in deterring wrongful conduct and repairing the consequences of injurious acts. Louisiana's interests--stronger by comparison--are (1) Carriere is domiciled in Louisiana; (2) Grey Wolf is qualified to do business in Louisiana, and is doing business in Louisiana; (3) Carriere was working for Grey Wolf pursuant to a Louisiana contract for hire; (4) Carriere's direct employer, with whom Grey Wolf established the contractual relationship to hire Carriere is domiciled in Louisiana; (5) Carriere has received workers' compensation benefits for his injury pursuant to Louisiana law; (6) Louisiana has an interest in protecting both citizens who are recruited and hired in Louisiana and employers that are doing business in the state; (7) Louisiana has an interest in protecting foreign corporations in order to create a friendly business atmosphere in which to promote commerce and industry; (8) Louisiana has an interest in the consistent and comprehensive implementation of its workers' compensation laws; and (9) as articulated by article 3515, the policies and needs of the interstate system, which includes the expectations of the parties and the minimization of adverse consequences that might follow from subjecting a party to the law of more than one state are best served in this dispute by the application of Louisiana law. When the totality of these factors is considered it is evident that the policies of Louisiana would be more seriously impaired if Texas law were applied to this dispute than would Texas if Louisiana law were applied. 58
59 To reach our classification of this case as exceptional, we analyze it in the perspective of the totality of the circumstances: Carriere's accident yielded claims against two contractually related defendants, Chandeleur and Grey Wolf; the Carrieres' claim against Chandeleur, a foreign corporation and Carriere's direct employer, was resolved properly by application of Louisiana's workers' compensation law; Carriere was compensated for his injury pursuant to Louisiana law; Appellants' claims against Grey Wolf--which are based on the same accident--are made against a second defendant which, like Chandeleur, is also a foreign corporation; under Louisiana law--the same law that has already compensated Carriere for his injury vis a vis the first defendant (Chandeleur)--the second defendant (Grey Wolf) clearly qualifies as an immunized statutory employer, 14 yet in this dispute, Carriere urges us to apply Texas law so that he can recover in tort against Grey Wolf; and finally if, by running Appellants' claims simplistically through a Civil Code article 3544(2) checklist, we were to conclude that Texas law applies, we would be guilty of failing to consider the effect that such a ruling would have on Louisiana's workers' compensation law--again, the law under which Carriere has already applied for and received benefits. 60
61 When an analysis under article 3547 is viewed in conjunction with Louisiana's interest in the consistent and comprehensive application of its workers' compensation law we see clearly that, if Texas law were to be applied to this dispute, Louisiana law and the policy it embodies would be seriously impaired. The propriety of this conclusion is bolstered by the recognition that once an injured employee elects to seek and receive worker's compensation benefits under the workers' compensation law of Louisiana, he is bound to its provisions, including specifically the exclusivity provisions. 15 Agreeing with the reasoning of the district court in Crane, we conclude that if, under the totality of its circumstances of the instant case, Mansel Carriere were permitted to bring suit against Grey Wolf in Louisiana but were also permitted to have Texas law apply--despite his having received benefits under the Louisiana regime--we would not be giving full faith and credit to the policies which [Louisiana] wants to preserve in providing for employer immunity. 16 62 Our Erie-bound decision to protect Louisiana's workers' compensation law to its full extent comports with an earlier Louisiana state court case, Wayne v. Olinkraft, 17 in which the court reviewed a choice of law issue almost identical to the one at issue in the instant case. 18 In Wayne the state appellate court discussed the Restatement (Second) Conflict of Laws in detail before holding that an employee who accepts an award under the workers' compensation scheme of a given state may be bound by the provisions of that scheme insofar as immunity from tort and wrongful death liability is concerned. 19 The state court concluded that the principles of the Restatement offered a logical, fair, and stable solution to the conflict of laws issue. 20 63 We are satisfied that Crane and Wayne still tender good law despite their antedating the substantial revision of the Louisiana Civil Code's conflict of laws provisions. These cases highlight the exceptional status of this dispute, provide analogous support for our conclusion that Louisiana law would be seriously impaired if Texas law were applied to the instant dispute, and dictate our ultimate conclusion that once an injured employee applies for and receives benefits from the workers' compensation laws of a given state, the laws of that state apply in full to related claims of the injured employee. 64 Today's holding should not be interpreted, however, as blanket protection for foreign corporations under Louisiana law. Rather, it is a particularized response to an exceptional case; a response that avoids the piecemeal application of different laws to an equally piecemeal attempt to obtain double--or at least overlapping--recovery for the same injury. III